Tengizchevroil - the largest oil project in Kazakhstan

Kazakhstan is developing the country's natural wealth jointly with foreign investors and one of the largest joint enterprises in the oil sector of this young Central Asian state is Tengizchevroil (TCO). Set up in April 1993, its main goal was to develop the Tengiz oil field, one of the gigantic oil fields in the world situated in the Western Kazakhstan on the territory of Atyrau Oblast. According to the contract, foreign investments required for this project sum up to USD20 billion. Currently TCO is made up partners, which include the national oil and gas company KazMunaiGaz (20%), Chevron Overseas Petroleum Ink (50%), ExxonMobil Kazakhstan Ventures Inc. (25%) and LukArko (5%). Extractable reserves from this gigantic deposit are estimated between 750 million to 1.125 billion tonnes of crude oil. Figures for predicted volumes of geological reserves are put at 3.133 billion tonnes.

In 2004 Tengizchevroil produced a total of 13.7 million tonnes of oil putting the daily average production at 296 thousand barrels. Looking back during the past decade, the company increased volumes of production by 13 times compared to production volumes of 1993. TCO is also developing the neighboring Korolev oil fields where oil passes through collectors to functioning production capacities, with production starting in November 2001.

Transportation limitation which existed until then took a positive turn with the launch of the Caspian Pipeline Consortium late 2001. Today the CPC plays an important role as the main pipeline along which Tengiz oil is transported.

Targeting different sales markets has always been the strategy of Tengizchevroil and the company will continue to search for the best possible options to transport its products to its end customers, in the safest and most profitable manner.

The completion in 2001 of work on "Programme-12" (auxiliary capacities) allowed TCO process all the volumes of raw gas for the production of European standard propane and butane which is mainly sent for export. Presently, two industrial sulfur units located in Tengiz are producing granulated and prilled sulfur. Their commissioning has allowed TCO to export sulfur to markets such as China, Russia, Kazakhstan and countries in the Mediterranean. Sulfur sales reached more than 900 thousand tonnes in 2004. In 2005 this number is expected to be over

1 million and TCO will continue to increase sulfur marketing opportunities in line with strict safety norms and constant care of the environment.

Tengizchevroil strives to continue to be among the world leaders in Safety and Environmental Protection. Behavioral Based safety Program and a comprehensive Contractor Safety Management Process and Motor Vehicle Program are among the world class safety initiatives that TCO has lately implemented, with safety records indicating their success.

TCO's new solid waste handling facility provides state-of-the-art environmental protection and is the most advanced such facility in Kazakhstan.

It is considered at Tengizchevroil that a joint business does not only concern production. Development of their oilfield right from the onset was blended with a program for local development.

The company took it upon itself to help development in the surrounding districts and it has become an integral part of the life of Atyrau Oblast. TCO LLP uses the services and goods of enterprises in the region. With the objective to maximize the purchase of Kazakhstani services and goods, the management of materials, equipment and office supplies has been transferred to the Total Supply Management department.

Supporting the efforts of Kazakhstan to aggressively increase the use of the national resources, TCO has, at a steady pace from year to year, increased the share of local goods and services of the country, reaching in 2004 a spending of $689 million.

The company's contribution to the economy of Kazakhstan includes wages for local personnel, payment of goods and services of local companies, tariffs and payments for the services of government enterprises as well as taxes and royalties paid into the country's budget. In 2004 this contribution into the economy amounted to USD2.846 billion.

However the main emphasis in the program for the local development of the country was made in the social, culture, public health and education spheres. During the first five years of the activities of the company the social program "Atyrau Bonus Fund" was realized and in 1999, replaced by a program at the company's initiative, called Egilik, which in Kazakh stands for 'benefit'. It envisaged allocating funds for the realization of projects in the field of education, public health and social infrastructure. Its first step was the large-scale engineering and rehabilitation work on the bridge over the Ural River in the centre of Atyrau.

With the achieved results, the bridge took on a new appearance and has become a landmark for the city. "Egilik" is always coming up with urgent initiatives to set in place. Its program philosophy best sums it up: benefit significant number of community members, be visible and self sustainable.

In 2005 a total amount of USD8 million was allocated for the development of infrastructure in Atyrau and Zhylyoi districts, reaching almost USD100 million in social support since 1993.

This Egilik program is an example of fruitful cooperation between the authorities of Atyrau Oblast and Tengizchevroil Management. In February 2005 the Akim of Atyrau Oblast Aslan Musin and the General Director of TCO Alexander Cornelius signed a memorandum on this program and an agreement on a regional program for the modernization of the professional training system in Atyrau Oblast for the period 2005-2007.

The relocation of the residents of Sarykamys village is another major social project. Tengizchevroil is totally funding the project; relocating more than seven hundred families to new houses being built in the micro-districts of the city of Atyrau and New Karaton.

Tengizchevroil is proud of its contribution within the Region and believes that, in the near future, the people of Atyrau Oblast will become witnesses of new greater changes in the economic and social development of their land.

Tengizchevroil LLP is undertaking one of the largest technical projects in the company's history. In April 2003 at the Partnership Council Meeting, TCO plans for the construction of the Sour Gas Injection (SGI) and the Second Generation Projects were approved. The current year witnesses the defining moment for these projects which also enhance the strategic prospects of the company. Planned investments for the SGI/SGP are estimated at USD 4.5 billion dollars.

The Second Generation and Sour Gas Injection Projects will enable TCO attain production levels of 24 million tonnes of crude oil per annum. This new facilities combine all the advantages of the current plant with new qualities such as high technological effectiveness, exclusive production safety and maximal automation of processes.

A distinguishing feature of these new projects is the wide use of Kazakhstani goods and services. Several huge technical orders for future production have been placed at well-known Kazakhstani companies such as Belkamit, Imstalkon and others to name a few.

Today, the contours of these new huge construction sites at Tengiz, show that installations of unique equipment are in full progress on both projects.