MOSCOW (MRC) -- A USD36.8bn expansion of the Tengiz oilfield in Kazakhstan, the largest investment by private sector oil companies this decade, has been given the go-ahead by Chevron of the US, bucking the trend of delays and cancellations resulting from the slump in crude prices since mid-2014, said The Financial Times.
The green light for the plan is a rarity at a time when oil companies worldwide have been slashing capital spending and holding back on new commitments to large developments in particular. The decision to go ahead is a sign of the importance of Kazakhstan to Chevron's long-term future.
The investment will add 260,000 barrels a day of crude to production at Tengiz. That would increase the output at TCO, the Chevron-led consortium that runs the field, by 44 per cent from its average of 595,000 b/d last year. The expansion is scheduled to deliver oil from 2022.
The industry’s expected spending between 2015 and 2020 has dropped by about USD1tn, or 22 per cent, since 2014, according to Wood Mackenzie, the consultancy.
Chevron is cutting its planned capital spending from nearly USD42bn in 2013 to a planned USD25bn this year. It has several mega-projects coming on stream between 2014 and 2017, including the giant Australian liquefied natural gas plants Gorgon and Wheatstone, and it has set a strategy of shifting towards smaller, more flexible investments.
The TCO consortium is 50 per cent owned by Chevron, 25 per cent by ExxonMobil, 20 per cent by KazMunaiGas, Kazakhstan’s state oil company, and 5 per cent by Lukoil of Russia.
In terms of additional production, the Tengiz expansion is comparable to the large commitments to increased capacity at the Shaybah and Khurais fields in Saudi Arabia made by Saudi Aramco, the national oil company, in 2013.
In terms of the investment by private sector companies, it is larger than any of the other big oil and gas projects approved this decade, including BP’s USD28bn expansion of the Shah Deniz gas development in Azerbaijan, and Total and Novatek's USD26.9 Yamal LNG plant in Russia, both given the go-ahead in 2013,
MRC