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Kazakh producers to join Tengiz Future Growth Project

27 March 2014 12:08 (UTC+04:00)
Kazakh producers to join Tengiz Future Growth Project

By Aynur Jafarova

Kazakh producers will join the Future Growth Project at the Tengiz field as local partners.

The news was announced by the Trend Agency which quoted Deputy Oil and Gas Minister Magzum Mirzagaliyev as saying.

"The Future Growth Project at Tengiz offers a number of opportunities for domestic enterprises. This means it becomes possible to join large projects as a local partner of Tengizchevroil LLP," Mirzagaliyev said.

The deputy minister pointed out that a Memorandum of Understanding (MoU) was signed between the Kazakh government and Tengizchevroil LLP in 2013.

One of the key points of the document is the operator's recommendation to foreign contractors on the localization of production and creation of joint ventures with Kazakh partners.

Under the MoU, work will be conducted with foreign companies to establish joint ventures with Kazakh contractors for the production of modular structures for the Future Growth Project and the maintenance of equipment in the long term, Mirzagaliyev noted.

"Negotiations have already begun between Teniz Burgylau LLP and the U.S. Neighbors Drilling company. Two Design Institutes of Kazakhstan - KING and KGNT- have already been included in the KPJV joint enterprise, and are successfully cooperating with the Fluor and WorleyParsons companies," the deputy minister said.

Mirzagaliyev went on to say that at least one project will be implemented under the State Program of Forced Industrial-Innovative Development on the modernizing and increasing the capacity of domestic industrial suppliers.

The deputy minister also noted that the Oil and Gas Ministry is discussing the details of joint works within an expert group with Tengizchevroil.

"The whole project was divided into seven specific areas. These are the manufacturing of modules, construction, logistics, drilling, equipment and materials, design and management, and commissioning work," Mirzagaliyev said.

The cost of the Future Growth Project at Tengiz field is estimated at $24 billion. At least $7.7 billion to $10.5 billion of this amount is planned to be spent on the procurement of goods, work, and services from local producers.

The Tengiz oil field is one of the deepest and largest oil fields in the world. The reserves of the deposit are estimated at 750 million to 1.1 billion tons (6-9 billion barrels) of recoverable oil.

The expansion of the Tengiz field is expected to boost crude production to around 0.8 million bpd by 2019, compared to less than 0.55 million bpd last year.

Karachaganak field's Future Growth Project estimated at $15-20 bln

Touching on the Future Growth Project at the Karachaganak field, the deputy minister said the cost of the project is estimated at $15-20 billion.

"The cost of the first stage, the implementation of which is planned to start in 2017, is estimated at $5 billion," he said.

The project opens significant opportunities for Kazakh producers, Mirzagaliyev noted.

"The participation of the largest Kazakh companies and professional associations will be required during the implementation of this project. So, part of the work on design and construction volumes should be carried out by Kazakh organizations," the deputy minister said.

Mirzagaliyev also noted that the business opportunities of the Kazakh market are currently being studied for local businesses within this project.

"A forum of service and engineering companies, which will present detailed information about what work and services are required for Kazakh companies, will be held in April in Uralsk," he stressed.

Mirzagaliyev also said, work on the establishment of the Aksai industrial park, designed to provide Karachaganak Petroleum Operating Company with world-standard services and the products of local manufacturers and suppliers, is currently underway.

Karachaganak is one of the world's largest fields. Its oil reserves amount to 1.2 billion tons, while its natural gas reserves are 1.35 trillion cubic meters.

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