This year, Chevron is celebrating 20 years in Kazakhstan in the remarkable partnership that began on April 6, 1993, when President Nursultan Nazarbayev and then Chevron Corporation Chairman and CEO Kenneth T. Derr, signed the agreement that established the joint venture company Tengizchevroil (TCO). The 40-year foundation agreement to develop the supergiant Tengiz and the Korolev oil fields made Chevron the first major international oil company to invest in the newly independent Kazakhstan. Today Chevron remains the nation’s largest foreign investor.
In 1997, Chevron also became a partner in the Karachaganak Petroleum Operating consortium (KPO) developers of Karachaganak, one of the world largest oil and gas fields.
Commenting on this important milestone Chairman and CEO of Chevron Corporation John Watson said: “Today, we’re proud of so many things we’ve been able to achieve together. We’ve seen our shared vision grow from an idea on paper to enormous and complex facilities. As partners, we safely produce from some of the most technically challenging oilfields in the world. And we set standards throughout the industry. Chevron and our partners have also helped create thousands of jobs and billions of dollars in revenue for Kazakhstan. And in that relatively short period of time, the republic has become a global energy leader. It has strengthened and begun diversifying its entire economy.”
Chevron and its partners have invested more than $20 billion to develop the reserves and increase production from Tengiz. TCO and its partners have executed a progression of strategic projects of historical scope and scale in pursuit of higher production in tandem with finding transportation paths to world markets from landlocked Kazakhstan.
2001 marked a turning point in the history of Chevron and TCO. The Caspian Pipeline Consortium (CPC; Chevron share 15%), began operation of the 935-mile (1,505 km) crude oil export pipeline that runs from Tengiz to the Black Sea port of Novorossiysk in Russia. Because of the CPC system, TCO could reduce oil transportation expenses and increase the export opportunities necessary to expand production.
Expansion began in July 2002, with groundbreaking in Tengiz for the Second Generation Plant (SGP) and Sour Gas Injection Facilities (SGI/SGP), a $7.4 billion project that increased TCO’s crude oil production capacity by approximately 80 percent. Coinciding with TCO’s 15th anniversary year in 2008, the TCO team brought SGI/SGP online — all while achieving excellent safety, environmental and production performance. The SGI/SGP projects brought TCO’s daily production capacity to more than 75,000 tons (600,000 barrels) of crude oil and 22 million cubic meters (800 million cubic feet) of natural gas.
To move this new production to market, CPC received approval in 2011 to begin a $5.4 billion three- phase expansion project that will increase pipeline capacity progressively until 2016.
Throughout the years, Chevron has simultaneously grown production and significantly contributed to the diversity, growth and strength of Kazakhstan’s economy. Development of Tengiz from 1993 to 2012 resulted in direct financial payments to the Republic of Kazakhstan of more than US $77 billion, contracts for local enterprises worth more than US $13 billion, and safe and dignified working conditions for employees, most of them Kazakhstan citizens.
When TCO was founded, the workforce was about 50 percent national employees with about 2,300 Kazakhstanis, including contractors, working at Tengiz. Today, TCO’s workforce is 87 percent Kazakhstani, with nationals holding 76 percent of supervisory positions.
To help diversify Kazakhstan’s economy, in 2003, Chevron invested US $24 million in the construction of its Polyethylene Pipe Plant in Atyrau (APPP). The first such plant in Kazakhstan it uses state-of-the-art equipment and innovative technologies and is staffed entirely by citizens of Kazakhstan. The plant produces high-density polyethylene pipe for use in building Kazakhstan’s infrastructure as well as for export. With an expansion project completed in 2011, APPP began producing metal-plastic bonded pipe for use in heating and hot water supply. Chevron is building another plant in Atyrau managed and operated by national employees that will produce up to 30,000 iron gate valves per year for water supply and natural gas transportation.
Chevron also is helping diversify the Kazakh economy through its investment in the Samal Wind Park project. The project is in the early evaluation phase and is estimated to generate between 30 and 50 MW of electricity. The project supports the nation’s strategic renewable energy initiative.
Of no less importance than the production of energy resources are the social investment programmes that Chevron and its partners have implemented over the past two decades. Over the years, Chevron and partners have invested more than $500 million in social investment projects throughout Kazakhstan. In addition, Chevron has initiated and continues to implement long-term social investment programs benefitting various regions of the country– programs in education and career training, provision of basic human needs and small-and-medium-size business development.