Tengizchevroil to lower production in July, August

energy

Tengizchevroil to lower production in July, August

By SRI ⋅ July 15, 2008 ⋅

(SRI) - Tengizchevroil, the operator of the Tengiz field, will lower its average daily crude production in July and August, as it conducts annual maintenance of its facilities, Kazakh weekly Panorama reported citing a KazMunaiGas spokesperson.

Ilya Pustogachev, the director of the Information Policy department at KazMunaiGas (KMG) said that the company will conduct annual maintenance according to a predetermined schedule. “This routine work includes inspection and repair of columns, vessels, reactors, furnaces and other equipment,” he said.

As a result of the maintenance work on certain production facilities, the average daily output of crude will decline to 205 thousand barrels per day (bpd) in July and 250 thousand bpd in August from current 390 thousand bpd, Panorama reported.

Pustogachev denied that the dip in production could be the result of a lack of export agreements for Tengiz oil. Earlier this year, Tengizchevroil unveiled a new production facility that would enable it to double output by 2009. The company also announced that in 2008 it plans to produce 18.7 million tons of crude, roughly a third more than in 2007.

Currently, Tengizchevroil exports all of its crude via the CPC pipeline through Russia. Additionally, it plans to transport up to 4 million tons of crude via rail to Ukraine and then via tankers across the Black Sea. Prior to the construction of the CPC pipeline, Tengizchevroil exported up to 8 million tons of crude per year via rail to the Ukrainian Black Sea port of Odessa.

Kazakhstan has long been in talk with Azerbaijan to create the so-called Kazakhstan Caspian Transportation System (KCTS) which would link to the BP-run Baku-Tbilisi-Ceyhan pipeline and provide another outlet for Kazakh oil. However, a final agreement is yet to be signed. Furthermore, Azeri oil fields are expected to reach peak production in 2010 and save for a major capacity upgrade, Kazakh oil is unlikely to flow through the pipeline until 2012-14.

As production grows, Tengizchevroil will likely use the CPC pipeline, the rail option to Odessa, and, as a third option, the KazMunaiGas-owned Batumi oil terminal on the Georgian coast of the Black Sea.

Tengizchevroil is a joint venture between Chevron (50%), ExxonMobil (25%), KazMunaiGas (20%) and LukArco (5%). The project is developing the Tengiz and Korolev oil fields western Kazakhstan. Tengiz is one of the world’s largest oil fields and contains between 6 billion and 9 billion barrels of recoverable oil.