TENGIZ RESERVES REAPPRAISED DRAMATICALLY UPWARD.

Kazakhstan’s onshore oilfield Tengiz, ranked all along as giant, turns out to contain far more than the initially estimated reserves of oil. The Tengizchevroil consortium that develops the field has released new estimates, based on additional prospection and analysis conducted in the last three years. According to the revised estimates, the field contains between 2.4 and 2.9 million tons of oil, more than double the previous estimate of 1.2 to 1.3 million tons.

The consortium had issued the lower estimate in 1998 and used it until now as the basis for planning the field’s development. It was generally considered all along as a cautious estimate, the more optimistic ones ranging from 2.5 to 3 million tons on the basis of late Soviet-era geophysical prospection. The Soviet government and later the Russian oil companies proved unable, technologically and financially, to develop Tengiz. After the American company Chevron took over, the field’s output rose to 10.5 million tons in 2000 and is scheduled to reach 12 million tons in 2001. Those figures amount to approximately one third of the total oil output in Kazakhstan.

The consortium includes the project operator Chevron with 50 percent interest, ExxonMobil with 25 percent, Kazakhstan’s government with 20 percent and LukArco–a partnership of Russia’s Lukoil with Atlantic Richfield, the latter now a part of British Petroleum Amoco–with 5 percent. All four members are, at the same time, shareholders in the Caspian Pipeline Consortium and thus vitally interested in the success of both the field development and the CPC transport project.

Until now, Tengizchevroil has been sharing with other producers in Kazakhstan the limited capacities of four different export routes: (1) by the Atyrau (Kazakhstan)-Samara (Russia) pipeline, taking the oil to refineries on the middle Volga; (2) by Russian railroads to Central Europe and the Baltic coast; (3) on tankers across the Caspian Sea to Baku and by rail across Azerbaijan to Georgia’s Black Sea port of Batumi; and (4) on tankers to Russia’s Caspian port Makhachkala and by pipeline via Tikhoretsk to Novorossiisk. Those routes are not cost effective and entail complicated, periodically renewable commercial arrangements with many parties involved. The CPC pipeline should substantially accelerate development and production at Tengiz, provided that the Russian side meets the expectations of its Western and Kazakh business partners (Roundup based on recent reporting by Dow-Jones Newswires, the Oil & Gas Journal, the Caspian Business Report and the Habar News Agency; see the Monitor, March 29, Fortnight in Review, March 30).

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