BAKU, Azerbaijan, Nov.4
By Nargiz Sadikhova - Trend:
Chevron Corporation has increased the cost estimate for the Future Growth (FGP) and Wellhead Pressure Management of Kazakhstan’s Tengiz oil field projects (WPMP) to $45.2 billion, Jay Johnson, Executive Vice President of Chevron said, Trend reports with reference to the company.
The cost update was made as a result a detailed cost and schedule review of the project completed in 3Q2019.
The expected start-up of FGP has shifted to mid-2023 and will now follow WPMP, which remains on schedule for start-up in late 2022. The updated estimate has been submitted by Tengizchevroil (TCO) for shareholder approval. Overall, the increase in total cost, including contingency, is about 25 percent.
“Additional construction costs represent the largest category of the revised estimate. More than half of the increase in construction cost is due to higher quantities than originally estimated. The balance is primarily driven by higher unit construction rates, due to higher market rates and more complex work than originally anticipated,” Johnson said.
“Beginning in 2020, we expect spending to ramp-down as we complete the project. The project is approximately 70 percent complete. Detailed engineering and procurement are essentially complete, mitigating the risk of further impact on fabrication or construction. Work at three of the four fabrication yards is finished. The logistics system is working well, and the 2019 sealift has successfully concluded. Modules are being delivered, restacked, and set on foundations as planned. Drilling is ahead of schedule with 40 of the 55 wells drilled and completed,” Johnson said.
He added that given the work completed, including two full years of on-site construction experience, the company believes that its on-track to deliver the project in line with the updated estimate.
“Importantly, we’re not changing Chevron’s capital guidance. Our 2020 capital, to be announced in December, will be in the range of $18 to $20 billion, and we’re reaffirming our capital guidance of $19 to $22 billion for 2021 through 2023,” he said.
Kazakhstan’s Tengiz oil field ranks as the world’s deepest producing giant oil field and the largest single-trap producing reservoir in existence. Nearby is another world-class reservoir called the Korolev Field. Chevron company holds a 50 percent interest in Tengizchevroil (TCO), which operates the two fields.
According to the company, the integrated Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP) is designed to further increase total daily production from the Tengiz reservoir and maximize the ultimate recovery of resources.
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