Tengiz expansion a milestone in ‘strategic’ Kazakhstan relationship: Chevron

Kazakhstan is a “strategic partner” for Chevron and the US major will continue working to maximize oil recovery from the Tengiz field following a $49 billion expansion now ramping up, with more opportunities sure to emerge, international upstream president Clay Neff said in an interview.

Speaking as Chevron began a ramp-up expected to lift Tengiz crude output to nearly 1 million b/d in the second quarter of 2025, Neff brushed aside suggestions the expansion — which suffered significant delays and cost overruns — had been a burden. He said it was too early to say what Chevron’s goals would be in discussions expected as the contract comes up for renewal in 2033.

He added that the Caspian Pipeline Consortium export route through Russia to the Black Sea was likely to remain the main route for Tengiz exports, despite concerns in some quarters about over-dependence on the pipeline since Russia’s full-scale invasion of Ukraine in 2022, and a push by Kazakhstan to develop additional routes.

Tengiz, which produces light sweet crude, is by far the highest contributor to Kazakhstan’s CPC Blend exports, which averaged 1.4 million b/d in 2024 and are expected to rise as a result of the expansion.

The field on the Caspian seashore “is the largest single-trap producing reservoir that we’re aware of on Earth — it’s an amazing reservoir,” Neff said, emphasizing the challenges associated with the extremely high and hazardous levels of hydrogen sulfide in the production stream, and the steps taken to protect the 90,000-strong project workforce during the pandemic.

The expansion follows previous multibillion-dollar projects that included creating the world’s largest sour crude processing train at Tengiz, commissioned in 2008. The latest expansion, approved in 2016, had two parts: the first to reduce wellhead pressures to enable faster production, and the second to increase capacity to reinject sour gas to maintain reservoir pressures.

Crude output is expected to rise by 260,000 b/d. Output fluctuated ahead of the ramp-up due to maintenance in November-December, but there were also some days of record-high production. The field was already producing nearly 700,000 b/d of crude as the ramp-up began, Neff said.

Such increases could complicate Kazakhstan’s previously patchy compliance with OPEC+ production quotas; John Webb, director of the Eurasian Energy Service at S&P Global Commodity Insights, said Kazakh authorities had shown only “minimal” ability to influence operations at the major foreign-led oil projects. However, OPEC+ is expected to ease its cuts in April and has given Kazakhstan and others time to compensate for past over-production. Kazakhstan’s energy ministry reaffirmed its commitment to complying with OPEC+ obligations on Feb. 4, saying it “will negotiate with partners within the framework of international law.”
Long-term plans

On what happens about the contract expiry, Neff said Kazakhstan, “is a strategic partner for Chevron and our primary focus with Tengizchevroil is just safely and reliably producing this asset, getting this incredible project ramped up.”

“I’d imagine there’ll be discussions at the appropriate time around concession extension, but our focus has really been on making sure we complete this project safely and get it online, and operate it reliably.”

“With any concession extension you always want to make sure – and we do this all over the world – that it’s a win-win: there’s value we create in the country, there’s value for the Chevron shareholders as well. But that [discussion] will probably happen in due course. We’re a little ways away from that,” he said.

On the 1,500 km CPC export route, for which a US sanctions exemption is in place, Neff said the pipeline was “still a really important capacity of offtake,” echoing the view of Kazakh officials.

“It’s been operating very reliably — we’ve debottlenecked the pipeline system. It’ll continue to be a main export route for Tengiz,” he said.

He outlined a string of projects – from Israel to the Gulf of Mexico — intended to lift Chevron’s oil and gas output by 3% annually over the next five years, while stressing the major contribution from the 50% stake in the Kazakh joint venture, Tengizchevroil.

Highlighting the increased sour gas injection capacity, he dismissed the idea gas sales might be detrimental to oil production from Tengiz. In December, Tengizchevroil signed an agreement with a subsidiary of KazMunaiGaz to supply up to 9 Bcm/year of dry gas for a new polyethylene plant.

As well as increasing near-term oil output, the expansion “is going to enable us to extend the life of the field as well — it also expands our sour gas injection,” Neff said. “We’re always trying to make sure that we’re maximizing the recovery from the reservoir.”

He declined to say whether there was scope for new investments and even higher output, but said, “We will — I’m sure — find other opportunities to debottleneck facilities, and there will be other sub-surface opportunities that will come about.”

“With any reservoir — and this is a world-class, amazing reservoir — you’re always collecting data and optimizing the reservoir, again to maximize the ultimate recovery, but do it at the optimum rate as well.”

Neff stressed Tengiz is a “milestone” among a number of projects designed to boost Chevron’s production, notably in the US, where it bought shale producer PDC Energy in 2023 and recently started up the Gulf of Mexico Anchor field.

Highlighting opportunities from Argentine shale to exploration off South America and West Africa, he said, “We’ve got a good portfolio. I think you’ll just see us continue to be capital-disciplined. We’ve got more opportunities than we’re going to spe
Source: Platts