The international company Tengizchevroil (TCO) postponed the term of implementation and reduced investments into the future expansion project and the wellhead pressure management project on the Tengiz field. The project is expected to be finished in 2021 against earlier planned 2017.
Tengiz together with the nearby Korolevskoye field is the biggest hydrocarbon field onshore of Kazakhstan, which possesses 26% of all extractible oil resources. TCO ensures over 31% of annual oil production in Kazakhstan. The leading role of Tengizchevroil in the oil production of Kazakhstan must grow even higher after implementation of the above-mentioned projects, when oil extraction will reach 39 million tons of oil against 26.7 million tons in 2014. According to the latest estimates, the project cost is $38 billion and high cost of the projects hold TCO back from the investment risks.
Aidar Dosbayev, Deputy Director of the TCO expansion project, explained the decision at the OilTech Atyrau conference on April 15, 2015. “The world oil prices have dropped significantly. In response to this situation, we have slowed down the pace of works in the project and reduced the costs in 2015,” said representative of TCO.
The company has been currently looking for the ways to further minimize the costs. A source from the Kazakhstan Ministry of Energy said that TCO considers the option of injection of water instead of gas to increase bed pressure, what the current technological scheme envisages. Replacement of water by gas must increase the volume of tank methane (from the planned 5 to 6.8 billion cub.m. a year) and bring extra profit from its sale. In addition, the costs for the compressor equipment and the technological difficulties, which TCO has been experiencing by injecting gas into the beds, will go down.
The scale of replacement of gas by water has not been determined yet, because the revision of the projects has not been completed yet. But a source from the Ministry said that probability of replacement is very high. TCO did promise to the Kazakh authorities that it will supply 2 billion cub.m. of gas a year to load the Atyrau gas chemical complex, which belongs to KazMunaiGas (KMG) company, the companies affiliated to it and the influential Kazakh officials.
Cost price of oil extraction on the Tengiz field is the lowest one in Kazakhstan – about $25.00 per barrel (average price in the country – $50.00). If Tengizchevroil revises the investment program, because of low world oil prices, then it is even more difficult for the other companies to implement their plans. Therefore, development of a giant Kashagan field is profitable only with the world oil price of about $100 per barrel. This means that according to the most optimistic scenario, in the near future Kazakhstan will be able only to maintain the current oil extraction level – 80.8 million tons in 2014.
The projects are waiting for the better times, reported http://www.oilcapital.ru.
