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Petroleum industry

Largest E&P Deal in Kazakhstan: Tengiz and Korolev Fields Development

Strategic Insights

— 1 min read

The development of the Tengiz and Korolev fields in western Kazakhstan is one of the most significant oil and gas projects in the region. The fields, discovered in 1979 by Soviet geologists, are estimated to contain 25 billion barrels of high-quality oil and 6-9 billion barrels of recoverable oil from both Tengiz and Korolev. The joint venture, TengizChevrOil (TCO), is majority-owned by Chevron Overseas, with a 45% stake, and is expected to produce 250,000 barrels per day (b/d) by 1999, with a plateau output of 700,000 b/d by 2010.

Key Takeaways:

  • The Tengiz and Korolev fields are a super-giant oil field, one of the five largest in the world, with an estimated 25 billion barrels of high-quality oil.
  • The joint venture, TengizChevrOil (TCO), is owned 45% by Chevron Overseas, 25% by Mobil, 25% by Tengizneftegaz, and 5% by LukArco.
  • Tengiz is expected to produce 250,000 b/d by 1999, with a plateau output of 700,000 b/d by 2010.
  • Chevron has the option to increase production to 1.4 million b/d before 2010, depending on crude oil prices.
  • Mobil acquired a 25% stake in TengizChevrOil in May 1996, paying $1 billion for the share.
  • Tengizneftegaz, now a unit of KazakhOil, sold half its equity in TengizChevrOil to Mobil to cover debts and pay for the Kazakh government's share in a pipeline consortium.
  • Chevron sold a 5% stake in TCO to LUKoil in January 1997 for about $200 million.
  • The Caspian Pipeline Consortium (CPC) will transport oil from the Tengiz/Korolev fields and Karachaganak condensates to a Russian terminal on the Black Sea.

Statistics:

  • Estimated oil reserves: 25 billion barrels
  • Recoverable oil: 6-9 billion barrels
  • Expected production by 1999: 250,000 b/d
  • Plateau output by 2010: 700,000 b/d
  • Potential increase in production: 1.4 million b/d
  • Value of TCO's assets in 1995: $4 billion
  • Price of Mobil's 25% stake in TengizChevrOil: $1 billion
  • Price of LUKoil's 5% stake in TCO: $200 million

Sources:

  • Chevron Overseas, Joint Venture Agreement with Kazakhstan, April 6, 1993
  • Mobil, Acquisition of 25% stake in TengizChevrOil, May 1996
  • Tengizneftegaz, Sale of 25% stake to Mobil, 1996
  • LUKoil, Acquisition of 5% stake in TengizChevrOil, January 1997
  • Caspian Pipeline Consortium, Pipeline Project, 1993.

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