ASTANA – A group of oil companies led by Chevron have approved a $36.8 billion plan to boost production at Kazakhstan’s Tengiz oil field, the largest oil field in the world, Reuters.com reports. The field already accounts for more than a third of Kazakhstan’s total crude output. The first oil as a result of new expansion is expected in 2022.
“The Future Growth and Wellhead Pressure Management Project (FGP-WPMP) represents an excellent opportunity for the company. The project builds on a record of strong performance at Tengiz and will add value for Chevron and its stockholders,” said Chevron Chairman and CEO John Watson, according to a July 5 Chevron press release.
Tengizchevroil (TCO) began exploring expansion under a new Future Growth Project (FGP) in 2012 and the Tengiz expansion is the biggest final investment decision in the oil industry this year, the Chevron press release and Reuters.com state.
The project’s cost breaks down to $27.1 billion for facilities, $3.5 billion for wells and $6.2 billion for contingency and escalation. Tengizchevroil General Director Ted Etchison said the project would be financed by a combination of funds from the company, contributions from partners and borrowing, Reuters writes.
“This project builds on the successes of prior expansions at Tengiz and is ready to move forward. … It has undergone extensive engineering and construction planning reviews and is well-timed to take advantage of lower costs of oil industry goods and services,” said Chevron Executive Vice President of Upstream Jay Johnson, according to the Chevron press release .
Sour gas injection technology that will help increase output to 850,000 barrels per day, 39 million tonnes a year, by 2022 is about to be applied, according to a joint statement made July 5 by the Kazakh Ministry of Energy and its foreign partners. With production peak rates, this index will exceed 900,000 barrels per day, as per the TCO press service.
“The future expansion project of Tengizchevroil is indeed the biggest gift for the country. … The investment amount is about $37 billion. This covers creating 20,000 new jobs and increasing the volume of oil extraction by 12 million per year. And these are extra billions of dollars of income for our country,” said Kazakh Minister of Energy Kanat Bozumbayev, Tengrinews.kz reports.
The consortium managing the Tengiz oil field, Tengizchevroil, is a joint venture in which Kazakhstan holds a 20 percent stake via the KazMunayGas state oil and gas firm, Chevron owns 50 percent, ExxonMobil has 25 percent and LukArco the remaining 5 percent. TCO was formed by Kazakhstan’s government and the Chevron Corporation in April 1993.
“This decision made by major international companies re-affirms that Kazakhstan is a country with a favourable business climate where long-term investments can be made with confidence,” Bozumbayev said, according to a TCO press release.
FGP-WPMP has completed the front-end engineering and design phase and 52 percent of the detailed engineering design and is currently engaged in early construction works onsite in Tengiz, the TCO press release reported.