Oil pipeline expansion to boost Kazakh exports

July  01. AP. ALMATY

Oil pipeline expansion to boost Kazakh exportsOil pipeline expansion lays ground for export boost from major Chevron-led Kazakhstan field

Building work began Friday on expanding an oil pipeline starting in Kazakhstan that will enable a massive boost in exports from a major Chevron Corp.-led field in the Central Asian nation.

State energy company Kazmunaigaz says Friday’s symbolic pipe-welding ceremony marked the start of work upgrading the Caspian Pipeline Consortium route in western Kazakhstan.

The improved pipeline will help the consortium take advantage of an expansion at Kazakhstan’s Tengiz oil field, which has estimated recoverable reserves of 6 billion to 9 billion barrels. Russia-based producers will also have access to the pipeline.

The pipeline’s expansion, set to be completed in 2015, will boost its annual capacity from 27 million tons of oil to 67 million tons. The project costs $5.4 billion.

The beginning of work on the CPC pipeline marks a major breakthrough for partners at Tengiz – which also include Exxon Mobile, Kazmunaigaz and Russia’s Lukoil – who have been lobbying for more than a decade for the route to be expanded. Limited pipeline capacity has forced Tengiz to operate a lower rate than originally planned.

U.S. energy giant Chevron Corp. controls a 15 percent stake in the pipeline consortium and a 50 percent share in the Tengiz operation.

Other shareholders include the governments of Russia and Kazakhstan, which hold 31 percent and 20.8 percent, respectively, through state-owned entities.

Kazmunaigaz said work on the Kazakh section of the pipeline will include the refurbishing of two existing pump stations and the replacement of an 55-mile (88-kilometer) section. Two more pump stations are also to be added in Kazakhstan, the company said.

Russian news agencies last month cited Anuarbek Dzhakiyev, deputy general director of the Tengizchevroil joint venture operating the field, as saying the company will invest up to $20 billion over the next five years to ramp annual production up to 36 million tons.