The Chevron Corp.-led Tengizchevroil (TCO) consortium will increase its planned production of oil by yearend to 22.5 million tonnes from 21.5 million tonnes, according to a senior Kazakh official.
"Planning is expected to increase TCO's oil production by a million tonnes and there remains an unresolved issue of supplementary flaring of gas in the volume of 33 million cu m," said Vice-Minister of Energy and Mineral Resources Duysenbay Turganov during a conference call.
In January, oil companies operating in the country paid more than 14 billion tenge in fines for excess gas flaring in 2008, according to Murat Rakhimbetov, chair of Kazakhstan's committee on environmental regulation and control.
"KPO (Karachaganak Petroleum Operating) was fined 1.8 billion tenge in damages for the excessive associated gas flaring, TCO paid 1 million tenge in fines, KazGerMunay paid 8 billion tenge, Kazakhoil-Aktobe paid over 4 billion tenge, and CNPC-AktobeMunayGas was fined 767 million tenge," Rakhimbetov said.
KMG-SOCAR agreements
Meanwhile, Turganov's announcement coincided with reports that Kazakhstan's state-owned KazMunaiGaz and State Oil Co. of the Azerbaijani Republic (SOCAR) have reached several agreements to ensure that the rising volumes of Kazakh oil will reach world markets.
The agreements, signed during a visit to Baku by Kazakhstan President Nursultan Nazarbayev, envisage shipments of Kazakh crude by tanker across the Caspian Sea and then by rail from to Georgia's Black Sea ports of Batumi and Kulevi, as well as through the existing Baku-Supsa pipeline.
According to KazMunaiGaz, the agreements cover "joint work on the technical and economic feasibility study for the TransCaspian project, a memorandum of understanding about cooperating in the oil pipeline Baku-Black Sea; and a memorandum about the joint use of gas and oil infrastructure that belongs to SOCAR for the development of Kazakhstan's hydrocarbon reserves."
"These documents are the next step in the development of bilateral cooperation between the two national oil and gas companies in the joint use of SOCAR's onshore infrastructure and the realization of the TransCaspian project, which was set out in an agreement signed in June 2006 by the president of the republics of Kazakhstan, Nursultan Nazarbaev, and Azerbaijan, Ilham Aliev," KazMunaiGaz said.
"The memorandum of joint use of SOCAR's oil and gas infrastructure for developing Kazakhstan's hydrocarbon reserves envisages the placing of orders for commodities, labor, and services necessary to develop Kazakhstan's reserves and determines the next stages in the implementation of this cooperation," the Kazakh firm said.
The TransCaspian project will include oil loading terminals on the Kazakh shore of the Caspian Sea, tankers and vessels, offloading terminals on the Azerbaijan coast of the Caspian Sea and equipment to link into the Baku-Tbilisi-Ceyhan line, KazMunaiGaz said.
Depending on the results of the feasibility study, the parties "will as soon as possible plan to create a project company to realize the TransCaspian project," KazMunaiGaz said.
According to analyst IHS Global Insight, "The agreements between the two state-owned oil and gas firms should serve both countries' interests, giving Kazakhstan additional clarity on exports of future oil production from the Kashagan and Tengiz fields while ensuring Azerbaijan's prime transit role in the export of this growing output."
Tengizchevroil, which is developing Tengiz field in western Kazakhstan, is owned jointly by Chevron 50%, ExxonMobil Corp. 25%, KazMunaiGas 20%, and LukArco 5%.
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