A $36.8bn expansion of the Tengiz oilfield in Kazakhstan, the largest investment by private sector oil companies this decade, has been given the go-ahead by Chevron of the US, bucking the trend of delays and cancellations resulting from the slump in crude prices since mid-2014.
The green light for the plan is a rarity at a time when oil companies worldwide have been slashing capital spending and holding back on new commitments to large developments in particular. The decision to go ahead is a sign of the importance of Kazakhstan to Chevron’s long-term future.
The investment will add 260,000 barrels a day of crude to production at Tengiz. That would increase the output at TCO, the Chevron-led consortium that runs the field, by 44 per cent from its average of 595,000 b/d last year. The expansion is scheduled to deliver oil from 2022.
The industry’s expected spending between 2015 and 2020 has dropped by about $1tn, or 22 per cent, since 2014, according to Wood Mackenzie, the consultancy.
Chevron is cutting its planned capital spending from nearly $42bn in 2013 to a planned $25bn this year. It has several mega-projects coming on stream between 2014 and 2017, including the giant Australian liquefied natural gas plants Gorgon and Wheatstone, and it has set a strategy of shifting towards smaller, more flexible investments.
