Tengizchevroil Awaits Approval For SGP At Huge Tengiz Field In Kazakhstan

The international oil venture Tengizchevroil expects Kazakhstan to approve its Second Generation Project (SGP) this year, enabling it to embark on an ambitious three billion dollar expansion plan on the mammoth Tengiz field.

”We are confident we will get the green light in the fourth quarter of this year,” Bharat Gael, TCO general manager of projects, told Reuters in an interview in the Kazakh oil capital, Atyrau.

”The authorisation of the project is tied to the approval of the technological scheme of developing the field,” he added. “The project we are talking about is really massive. Its value is very large even for the size of Kazakhstan.”

Earlier this week TCO, led by the US oil major ChevronTexaco, launched an $800 million Sour Gas Injection (SGI) project to boost oil output by three million tonnes a year (60,000 barrels per day) by re-injecting gas into the reservoir.

The venture is now awaiting Kazakhstan's approval to kick-start the implementation of the $2.2 billion SGP plan to increase crude output by a further seven million tonnes a year (140,000 bpd) by increasing oil fractionation capacity and bringing new wells on stream.

TCO officials say that, if implemented successfully, the SGI-SGP expansion programme will boost annual oil output to 22 million tonnes after 2005.

The venture, set up in 1993 under a 40-year contract, expects to produce 12.7 million tonnes of crude this year, roughly flat on last year's volume.

Experts say the giant onshore field in western Kazakhstan holds recoverable reserves of six to nine billion barrels.

Kazakhstan, a vast resource-rich Central Asian state of 15 million sprawling between Russia and China, is pinning its hopes of future prosperity on projects like TCO and plans to triple its oil output in 15 years from the current 900,000 bpd.

Gael said Kazakh oil specialists had been actively involved in the expansion programme since mid-1999. He said some early contracts had already been signed under the SGP plan, and Kazakhstan had also allocated plots of land for construction.

Gael said TCO would start talks with the multinational Caspian Pipeline Consortium, which operates a vital oil export pipeline running to Russia's Black Sea port of Novorossiisk from western Kazakhstan, on raising its crude shipment capacity.

TCO General Director Tom Winterton told Reuters that in the past the venture had had to transport up to 70 per cent of its crude by rail. This year almost all oil is being shipped via CPC which became operational late last year, he said.

"But in all projects we also need to have a secondary plan," Gael said. "In case CPC doesn't expand, we have intentions and plans to be able to have other outlets...including going by rail as before," he said.

He said all partners within TCO were determined to implement the expansion programme even if today's favourable oil prices tumbled one day.

"We intend to get agreement amongst TCO partners to commit to this project and to go through this expansion irrespective of the oil price," he said.

Apart from ChevronTexaco with 50 per cent, TCO unites Kazakhstan with 20 per cent, US major ExxonMobil with 25 per cent and LukArco with five per cent.

Asked how long it may take for the giant project to pay off, Gael said: "The expansion plan will pay back in several years."

©

&to=http://www.chevrontexaco.com/' target=_blank>ChevronTexaco