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Memorandum on project for Tengiz field’s future expansion under discussion in Kazakhstan

Oil&Gas Materials 2 August 2013 15:01 (UTC +04:00)
The Government of the Republic of Kazakhstan jointly with the oil company TCO discusses in Astana the text of the memorandum on the project for future expansion of the Tengiz field, a source at the Ministry of Industry and New Technologies of Kazakhstan told Trend.

Kazakhstan, Astana, August 2 / Trend K.Konyrova /

The Government of the Republic of Kazakhstan jointly with the oil company TCO discusses in Astana the text of the memorandum on the project for future expansion of the Tengiz field, a source at the Ministry of Industry and New Technologies of Kazakhstan told Trend.

"Currently, a heated discussion of all points of the memorandum on future expansion of the Tengiz project is underway in the walls of government. The work on this document, which is very important for the oil and gas sector, is scheduled for completion by the end of this month," the source said.

According to him, the discussion involves such agencies as the Ministry of Industry and Trade and the Ministry of Oil and Gas, as well as representatives of TCO and the National Company KazMunaiGas.

"The sides are currently discussing all the details of the future memorandum to find an acceptable model for cooperation. It is about a list of consumable goods, works and services. It is important to achieve adequate participation of Kazakh companies in the future expansion project," the official said.

According to him, the Ministry of Industry and Trade remains the only party that has not given its consent to the pre-compiled version of the memorandum, and insists on its detailed examination.

"This is a matter of principle, since we are talking about increasing the proportion of local content in the Tengiz project. The project's preliminary cost is estimated at $ 23 billion. These are significant funds to be invested in the development of national economy," the source said.

According to the source, negotiations on the memorandum are conducted daily.
"The results on this memorandum should be ready by the end of August this year," the official said.

As the Chairman of the Industry Committee of the Ministry of Industry and New Technologies of Kazakhstan Erlan Muratov told Trend earlier, tender procedures are still ongoing in accordance with special regulations, which leave "domestic oil and gas engineering companies" behind "multi-billion dollar projects".

"According to our ministry, the project for future expansion of Tengiz, implementation of the third phase of the Karachaganak project and the second phase of Kashagan will require a $ 200 billion investment in the next 13-15 years," Muratov told reporters on the sidelines of the first Forum of Kazakh Engineers.

He noted that in terms of size and volume of attracted investments, the oil and gas sector in Kazakhstan is among the ten largest in the world.

According to him, 31 projects worth over two trillion tenge will be implemented in the oil and gas sector of the country until 2014 in the framework of the State Program of Forced Industrial-Innovative Development of Kazakhstan.

According to Muratov, there are currently about 60 companies operating in the oil and gas sector of Kazkahstan.

"However, the policy is determined by major oil companies, of which nine companies form 75 percent of the portfolio of orders for goods and services," Muratov concluded.

The future expansion project is the next major project to increase production volumes on Tengiz by 12 million tons per year, resulting in an overall annual oil production of nearly 36 million tons.

Tengiz is one of the largest fields in Kazakhstan with recoverable oil reserves of 750 million -1.1 billion tons (six to nine billion barrels).

An important role in ensuring such rates was played by implementation of projects for crude gas pumping with the aggregate value of about $ 7.4 billion, which at the time faced a number of delays due to various reasons. Technological developments, proven in the course of their implementation also lie at the heart of the future expansion project, with which key expectations to increase production and export of Tengiz oil are associated.

The Tengizchevroil LLP participants are Chevron (50 percent) and ExxonMobil Kazakhstan Ventures Inc (25 percent), KazMunayGas (20 percent), and the Russian-American joint venture LUKArco (five percent). The company has been operating since 1993.

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