Chevron, Exxon Commit to $36.8 Billion Expansion Project in Tengiz
July 05 2016 - 6:52AM
Dow Jones News
By Selina Williams
LONDON -- Chevron Corp., Exxon Mobil Corp. and their partners on
Tuesday committed to a $36.8 billion oil expansion project in
Kazakhstan -- the biggest investment in new barrels since oil
prices collapsed two years ago.
The investment in the expansion of the field known as Tengiz --
one of the world's largest -- comes on top of around $37 billion
already spent by Chevron, the operator, and its partners:
state-owned energy firm KazMunaiGas, Exxon and Russia's Lukoil.
"This project builds on the successes of prior expansions at
Tengiz and is ready to move forward," said Jay Johnson, Chevron's
executive vice president in charge of upstream.
"It has undergone extensive engineering and construction
planning reviews and is well-timed to take advantage of lower costs
of oil industry goods and services," he said in a statement.
The $36.8 billion includes $27.1 billion for facilities, $3.5
billion for wells and $6.2 billion for contingencies. It will take
Tengiz production up to 1 million barrels of oil equivalent a day
from around 800,000 barrels of oil equivalent a day currently.
First production from the expansion is due in 2022.
Tengiz is one of the most profitable fields in the history of
the modern oil era. Some analysts estimate that it has brought
Chevron more than $70 billion in revenue, and $40 billion in
profits, since 1993, when the U.S. company became the first foreign
oil company to strike a deal with the former Soviet republic.
The decision, which has been on hold since last year, is a
signal of the industry's growing confidence that oil prices have
stabilized and are set to move higher. Oil prices collapsed from
around $115 a barrel in mid-2014 to a low of $27 in January, but
have hovered near $50 a barrel in recent weeks.
Write to Selina Williams at selina.williams@wsj.com
(END) Dow Jones Newswires
July 05, 2016 06:37 ET (10:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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