press release

Chevron Press Release - Tengizchevroil Completes Five Years Of Operations At The Tengiz Oil Field


TENGIZ, KAZAKHSTAN, April 6, 1998 -- Tengizchevroil (TCO), the joint venture established to produce and sell oil from the giant Tengiz field in western Kazakhstan, completed its fifth year of operations today with steadily increasing production and crude oil sales.

One of the largest and best known joint ventures in the former Soviet Union, TCO is a multi-billion dollar, 40-year project designed to produce and export several billion barrels of oil from the Tengiz field. Joint venture shareholders are the Republic of Kazakhstan, 25 percent; Chevron, 45 percent; Mobil, 25 percent; and LukArco, 5 percent.

The fifth anniversary was marked by a ceremony in Atyrau, capital of the Oblast in which the Tengiz field is located, attended by 450 Kazakhstan government and community leaders, shareholder company executives and employees.

TCO General Director Ken Godard told the guests, "Kazakhstan offers a good investment climate for the oil and gas industry. We appreciate the environment fostered by President Nazarbayev and Prime Minister Balgimbayev to support TCO and encourage further investment by western companies."

Crude oil production has risen every year, from approximately 1 million metric tons (20,000 barrels per day) in 1993 to 7 million metric tons (140,000 barrels per day) in 1997. Current peak production is 24,000 metric tons per day (190,000 barrels per day). An investment of more than $1 billion is planned over the next three years to increase production capacity to 11 million metric tons per year (240,000 barrels per day) by mid-2000.

Lacking sufficient export pipeline quota from its earliest days of operation, TCO has continued its creative and successful use of alternative transportation routes by expanding its efforts to market crude oil by rail. In 1997, 3.3 million metric tons of crude oil (71,900 barrels per day) were sold by pipeline and almost 4 million metric tons (87,000 barrels per day) by rail (compared with first-year rail shipments of 50,000 metric tons in 1995). Using a combination of rail and barge, crude oil is shipped to Azerbaijan, Georgia, Finland, Estonia and the Ukraine. A test cargo shipped to China in February is currently being evaluated by the Chinese for use in their refineries.

"TCOs rail export marketing success notwithstanding, our plans to put our operations on a world-class scale depend on a dedicated export pipeline," Godard said. "We need the Caspian Pipeline Consortiums planned pipeline from Tengiz to Novorossiysk, Russia, which will unlock the full potential of the Tengiz field."

Godard noted that the Republic of Kazakhstan received more than $200 million in direct financial benefits (including royalties, taxes, cash distributions, pipeline/rail fees, national payroll) from TCO in 1997.

"Financial benefits to the local and national economies of Kazakhstan have increased each year," Godard said. "These financial benefits will continue to grow as TCOs successful operation grows."

Achievements in other areas include:

  • Safety and environment. TCOs 3,500 employees recently worked 2 million man-hours without a lost-time injury for the second time in a year. The company is committed to protecting people and the environment in Kazakhstan, and work processes meet or exceed industry environmental standards.
  • Employee development. Kazakhstan citizens now hold 72 percent of TCO staff positions, compared with 55 percent in 1993 when the joint venture was formed. Training programs are helping many employees advance to positions of increasing responsibility.
  • Social infrastructure. Construction of a bakery and new clinic in Atyrau completed the five-year $50 million social improvement program for communities near the Tengiz field. Other projects included were a boiler plant, refurbishment of a water treatment plant, construction of housing for flood victims and another clinic.

Godard congratulated Kazakhstan on its own anniversary, the 100th year of oil production in the country. He saluted the geological pioneers who discovered the huge Tengiz field in 1979, saying the field was appropriately named because "Tengiz" means "sea" in the Kazakh language.

"TCO has made a long-term commitment to be the best company in this country," he said. "We are proud to be a part of progress -- and history -- in Kazakhstan."

Updated: April 1998