Kazak Contract on Hold

Tengizchevroil, operator of the Tengiz Field projects in Kazakhstan, has announced the suspension of the second phase of development of the Tengiz Field.

Tengizchevroil is a joint venture partnership of ChevronTexaco (50%), ExxonMobil (25%), Kazmunaigaz (20%), and LukArco, itself a joint venture of LukOil and BP, (5%).

ChevronTexaco said that Tengizchevroil (TCO) has postponed the planned expansion of TCO's Second Generation and Sour Gas Injection Projects. Reasons forwarded for suspension of the contracts include partners not being able to agree on a funding plan that would support TCO expansion plans while at the same time provide for the diverse financial needs of the partners themselves.

ChevronTexaco's decision to suspend the SGP and SGI phases of the development of Tengiz puts around US$3 billion in planned investment on hold and leaves Kazakhstan unable to fulfill its plans to increase oil production. If the projects had proceeded, the output at Tengiz Field would have more than doubled its present 240,000 b/d to approximately 600,000 b/d and would have solved the problem of the field's high sulphur content.

The impact of the decision to suspend the contract is expected to filter through to contractors based both in the UK and in Kazakhstan within the next few weeks.

Back