Publication: Monitor Volume: 4 Issue: 69

On April 7, Tengizchevroil, the joint venture to develop Kazakhstan’s giant Tengiz oilfield, marked five years since the beginning of its operations in Kazakhstan. The venture’s shareholders are the U.S. companies Chevron and Mobil, with stakes of 45 and 25 percent respectively; Kazakhstan, with 25 percent; and LukArco — an alliance of Russia’s LUKoil and the U.S. Atlantic Richfield — with five percent. The USSR, which opened the oilfield in 1979, proved unable to develop it, even after it had mobilized inputs from several countries of the Comecon. Chevron and its partners embarked in 1993 on a forty-year project and raised output from one million tons that first year to seven million tons in 1997. Output for 1998 seems set to reach ten million tons, still well below the field’s potential.

Development has been constrained by the absence of efficient and reliable export routes. Russia has been allocating only meager transit quotas through its pipeline system. Some Tengiz oil is shipped by various combinations of pipe, barge and rail routes via Russia and across the Caspian Sea via Azerbaijan and Georgia, to destinations ranging from Ukraine to Estonia and Finland. The small size of the consignments and the cost of transshipment underscore the need for a large-capacity pipeline route.

The project of a line, at an annual capacity of up to 50 million tons, from Tengiz to Russia’s Black Sea port of Novorossiisk has been under discussion since 1993. It has been delayed both by multiple complications in Russia and by question marks over financing. The start of construction was recently postponed again, this time until the year 2000. This project had a head start over others that are now at last under consideration, preeminently a trans-Caspian undersea pipeline, which would plug into the planned Baku-Ceyhan line to Turkey, avoiding the drawbacks of the Russian route. (Western agencies, April 7) — VS

World Bank Loan to Support Kazakhstan’s Farms.