Tengizchevroil optimistic on potential tax changes

energy

Tengizchevroil optimistic on potential tax changes

By SRI ⋅ February 4, 2010 ⋅

(SRI) - Tengizchevroil (TCO), the Chevron-led joint venture developing the giant Tengiz oil field, expects to reach a favorable deal with Kazakhstan, should the government decide to revise the current contract, Dow Jones reported on Wednesday citing a senior executive.

“We can sort something out” in the event the stable tax regime, guaranteed under the current contract, is changed, Carl Brannen, portfolio manager at TCO told Dow Jones, praising the consortium’s relationship with the Kazakh government. Brannen said that TCO hasn’t been contacted by the Kazakh authorities over the potential contract revisions.

Kazakh President Nursultan Nazarbayev warned last month that foreign ventures enjoying special protective status may lose their immunity from changes in tax legislation. Some of the country’s largest projects, including Tengizchevroil, operate under production-sharing agreements (PSAs) negotiated in the 1990’s. The agreements, signed when Kazakhstan struggled to lure foreign investors into the country, have provided the companies with stable tax regimes for the duration of the contracts, running as long as 40 years.

Tengizchevroil, currently Kazakhstan’s largest upstream venture, produced 22.5 million tons of crude oil in 2009 and plans to raise production to 37-38 tons by 2016.