Chevron Corp. remains confident problems hobbling its Tengiz megaproject in Kazakhstan will be resolved and predicts output will reach 750,000 b/d by 2010.
The project, long seen as a litmus test for foreign petroleum investment projects in the former Soviet Union, recently has garnered headlines about rumored big spending cuts by Chevron on the project and its imminent participation in a related export pipeline promoted by a group made up of Oman, Kazakhstan, and Russia. Chevron later described the cuts as minor and clarified its position on the pipeline (OGJ, May 16, Newsletter).
In a speech to the American Association of Petroleum Geologists annual meeting in Denver last week, Chevron Overseas Petroleum Inc. Pres. Richard Matzke said Tengiz will be Chevron's biggest and most important project since the opening of Saudi Arabia to exploration and development about 50 years ago.
Matzke's remarks to AAPG parallel the situation almost 3 years ago, when in an interview with Oil & Gas journal he sought to dispel a flurry of rumors that Chevron's then tentative Tengiz joint venture (JV) agreement with Soviet and Kazakh agencies was on the verge of collapse (OGJ, Aug. 5, 1991, p. 18).
The stalled agreement was further delayed, in part by fallout from the collapse of the Soviet Union a few months later.
The Tengiz project involves phased expansion of supergiant Tengiz and nearby Korolev oil fields. Tengiz, with extremely sour crude, is believed to hold 9 billion bbl of recoverable oil plus trillions of cubic feet of gas.
The project ultimately could consume as much as $20 billion in total investment.
TENGIZ UPDATE
Since Chevron and Kazakhstan signed the 50-50 Tengizchevroil joint venture agreement in April 1993, about one third of the JV's initial $1.5 billion development budget has been spent.
Outlays currently are running about $1 million/day, and the project employs 3,000.
Long term development depends on establishing an export pipeline, Matzke said.
That project remains stalled in negotiations, but Matzke is confident unresolved issues will be dealt with soon.
The pipeline project, proposed by Caspian Pipeline Consortium (CPC), would move crude from Tengiz on the eastern Caspian Sea coast to Novorossiisk on the Black Sea. From there, Tengiz crude would move via tanker through the Bosporous Strait and to the Mediterranean Sea.
Chevron has not decided whether to join CPC, which has extended to Azerbaijan an offer to join. Financing issues are the main sticking point.
Meantime, Tengizchevroil is exporting Tengiz crude by a series of exchanges through Russia's crude oil supply system. Although Tengiz production is below target a recent push to boost exports has had good results, Matzke said.
CHEVRON'S PHILOSOPHY
Matzke also outlined some of Chevron's philosophy in doggedly sticking with the Tengiz project despite its many pitfalls.
"If you read the papers, you know Chevron has invested hundreds of millions of dollars in the Tengiz project," Matzke said.
"And you know we've had cost overruns and that production has been down by half because we can't export as much as we'd like.
"And you know we still don't have an agreement to get a major export pipeline built and that this pipeline is essential to success at Tengiz.
"So I can't... tell you we think we have all the answers. But I can tell you we've learned it takes commitment, patience, and trust-in that order-to succeed in oil and gas ventures in the former Soviet Union (FSU)...
"Commitment is the price of getting in a position to start earning trust. Patience is what you need to survive paying the price of a true commitment in that part of the world-large investments of time, money, staff, technology ... Trust is ultimately what you build, from making the commitment and exercising your patience. And when you've achieved all three, you get more than a partnership. You get a working relationship. "
Matzke noted that many companies are waiting for change and stability in the FSU before they can feel comfortable investing there. But he said, "The reality is that until you're invested, you won't make the commitment of full participation.
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