Tengizchevroil: Ten Years of Success
This year TengizChevroil (TCO) is celebrating its tenth anniversary of business. During this period, the company exploring Tengiz and Korolevskoye fields has not only gained a leading role in the oil sector of Kazakhstan, but has also become a petroleum exporter of international class.
At present, the shareholders of Tengizchevroil are Chevron Texaco Overseas (50% share), KazMunaiGas (20%), Exxon Mobil Kazakhstan Ventures Inc. (25%) and LukArco (5%).
TCO is proud of its contribution to the social and economic development of Kazakhstan. The results of an economic survey carried out by the Kazakh Institute for Economic Research on capital investment in the Kazakh economy indicate that each dollar of TCO direct investment earns an additional return of $0.52 to GDP. That is why the success of TCO is a testimony to the success of Kazakhstan as a world-class oil producer.
These are the milestones in TCO’s activities over the past decade.
1993
April 6. The President of Kazakhstan Nursultan Nazarbayev and the President of American Chevron Corporation Kenneth Derr signed a Joint Venture Agreement to set up Tengizchevroil for 40 years. This marked the beginning of work on an unparalleled scale to reform the production process of the company in order to operate under the principles of market economy.
August 10. President Nazarbayev visited TCO to acquaint himself with the company’s strategies and activities directed at modernizing the company and bringing it up to international standards. At the same time, work started on implementing the Bonus Fund—Atyrau Programme aimed at solving social problems in the Atyrau oblast. Work began on constructing 20 cottages for local people living in flooded areas, and an emergency hospital in Kulsary settlement. In the town of Atyrau, construction of an automatic boiler-house and a gas main started.
TCO produced 940,000 tonnes of crude oil in 1993.
1994
The construction of two sweetening units with a capacity of 8 m tonnes had been initiated at a gas treatment plant, with a view to increasing oil transportation via the Atyrau - Samara pipeline.
The personnel training programme was completed. A Study Centre and English Language and Computer courses were organized for the staff. Advanced training programmes began for workers and specialists.
The construction of a 29-kilometre gas main and the boiler-house plant were completed as part of the Bonus Fund Atyrau programme. This ensured regular heat supply to the part of Atyrau situated on the right bank of the Ural river and full-scale gas supply to residential districts. The total output that year was 1.8 m tonnes of oil.
1995
March. Two sweetening units costing more than $100m were put to operation. The Processing Train-1 was completely renovated. Despite low export quotas and thanks to intensified railway transportation of oil, the 2.7 m tonnes total volume of oil export was achieved. Computer modeling techniques for manifold were applied to optimize oil production methods.
At the regional hospital for tuberculosis patients, new and effective methods recommended by the World Health Organization for treating the disease were introduced as part of the Bonus Fund—Atyrau programme.
1996
Exxon Mobil and Lukarco companies bought 25% and 5% respectively of the shares in Tengizchevroil.
In order to stimulate oil production, a programme for technological renovation of the oil production line was developed and implemented. New automatic control systems were installed, and modernization of the power supply system began.
In November, a tank car loading rack was brought into operation and the oil transportation by rail increased. A new bakery was in the process of being built as part of the Bonus Fund—Atyrau programme. In Kulsary settlement, an emergency hospital was built and the district hospital was renovated and re-equipped.
1997
A ‘Debottlenecking’ programme was implemented to enhance production efficiency, and annual oil production reached 7 m tonnes. For the first time in the history of the international oil industry, a comprehensive and complex modernization on this scale was undertaken without suspending the production process. Realization of the new Train-5 technological programme for further enhancement of production facilities began.
In Atyrau, the construction of a new bakery was completed and building work on a diagnostic center at the regional hospital had begun. The Kulsary hospital was renovated.
1998
On April 6, TCO celebrated its 5th anniversary. The drilling of the first well on Tengiz field started on January 15 and finished on September 5, reaching a drilling depth of 5,700 meters. Thanks to the use of state-of-the-art drilling bits, the drilling rate was increased eightfold.
A three dimensional seismological survey of the Tengiz and Korolevskoye reservoirs was completed; this was one of the largest geophysical exploration programmes in the world. The work was carried out without any damage to the ecology or landscape of the Tengiz region.
The company commemorated the achievement of 5 m man-hours of continuous accident-free operation. This gave TCO the leading position in the world for accident prevention. The number of the Kazakhstani specialists among the TCO personnel increased to 70% (in 1993 the figure was only 50%).
In Atyrau, a new diagnostic center equipped with modern medical devices was opened, which improved the quality of medical service in the region significantly. The five-year Bonus Fund Atyrau programme, worth $50m, came to an end. By that time, the company had produced a total of 8.4 m tonnes of stock-tank oil.
1999
Implementation of the programme for expanding production facilities was under way.
In June, the construction of Dostyk village for TCO personnel began in Atyrau. Annual production reached 9.6 m tonnes.
TCO adopted the Igilik social programme to replace the Bonus fund-Atyrau programme. The Central Bridge across the Ural River was renovated, and houses in the central part of the town underwent restoration of their facades.
2000
June. The three-year production expansion programme was implemented successfully. TCO achieved an annual production rate of 12 m tonnes.
October. The first train carrying liquefied propane and butane was dispatched. Commissioning of new facilities at Processing Train-1 and Train-5 made possible the production of household gas meeting European standards.
In Atyrau, construction of the nine-storey TCO headquarters started.
The resources of the Igilik programme amounted to $5m. This money was spent on the construction of a new building for the Atyrau University campus, reinforcement of the banks of the Ural River and municipal improvements in Atyrau.
By the end of the year the company had produced and had sold 10.5 m tonnes of oil.
2001
Development of the Second Generation-Plant (SGP) and Sour Gas Injection (SGI) projects got under way.
Work started on installing two sulphur granulation units at the oil production facilities.
March. The TCO staff were presented with an award by the President of Chevron Texaco, as the company had achieved the world’s best results in accident prevention.
April. More than 260 companies and institutions took part in the National Import Substitution Conference hosted by TCO. At the conference, a programme was adopted for increasing the participation of the Kazakhstani business in TCO projects.
Work on implementing Programme-12 finished, which enabled the entire volume of unstripped gas to be processed into export quality propane and butane. A section of the Tengiz—Kulsary gas main was repaired.
In October a record production rate of 37,746 tonnes per day was achieved.
On October 14, the first tanker was loaded with Tengiz oil at the CPC terminal in Novorossiysk.
November. Exploitation of the Korolevskoye field began.
December. A 550-kilometre long test section of motor road was built using sulfur-concrete paving. A record 17m man-hours (over 1,040 days) of continuous accident-free operation was achieved. Six million dollars were allocated to the Igilik programme. A school for 1,200 students was under construction in Atyrau.
That year the TCO contribution to the Kazakhstani economy exceeded $1bn.
The annual production of hydrocarbons was 12.48 m tonnes.
2002
The construction of Dostyk village, with 45 comfortable cottages and first-rate cultural and sports facilities, was completed in Atyrau. The production of liquefied propane and butane for export reached its highest monthly rate of 65,000 tonnes.
April. A new medical service station was built in the camp.
June. A new hard-surface runway came into operation in Tengiz.
July. The ceremony of laying the first stone of the future industrial facilities for sour gas injection took place in Tengiz.
A large contract worth over $100m was signed with a consortium of Kazakhstani construction companies for building the Shanyrak camp for 8,000 people in Tengiz.
October. The construction of a school for 1,200 students in Atyrau was completed as part of the Igilik programme.
December. An industrial unit, with 600 tonnes per day capacity, producing flakes of granulated sulfur became operational. TCO began exporting sulfur to China.
December 17. President Nazarbayev arrived at TCO during a working visit to the Atyrau oblast. By the end of the year TCO had produced and sold 13.1 m tonnes of oil.
The future is being created today
Above all, the great potential and dedication of the highly qualified TengizChevroil personnel has made the company’s success possible. Kazakhstani specialists account for 78% (3,400 persons) of the TCO staff.
The company’s contribution to social development is growing. Last year, $8m of the Igilik programme resources were spent on social programmes such as development of social infrastructure in Atyrau ($3m) and the Zhylyoi district ($5m), where Tengiz field is located. In 2003, $8m of the company budget was allocated to social development programmes.
At present, work is continuing on developing projects for expanding production facilities and the SGP and SGI projects. Completion of these, which is planned for 2003, will allow a 20-23 m tonne increase in the annual stock-tank oil production, and will make TCO’s contribution to the Kazakhstani economy even more significant.
Table of contents
ChevronTexaco: Turning Partnership into Energy Guy Hollingsworth
Kazakhstan’s Membership of the WTO: Problems, Consequences and Prospects Kenzhegali Sagadiyev
The Use of Subsoil Resources in Kazakhstan. Results for the Year 2002 Elvira Dzhantureyeva
Imstalcon: Domestic Producers Need State Support! Vladimir Khoroshilov
Activities of the Committee for International Affairs, Defence and Security of the Majilis of Parliament, 2002 Sharip Omarov
Germany and Kazakhstan: Problems and Prospects for Economic Co-operation Galiya Dzhunusaliyeva
Investing in Kazakhstan – Opportunities and Threads for German Investors Michael F. Krause
Legal Regulation of Investment Activities in Kazakhstan Askar Batalov
A Summary Review of the Kazakhstan Law On Investments Andrew Griffin, Karen Ostrander-Krug
Tax burden in Kazakhstan Janat Berdalina, Aigul Mustapaeva
