ChevronTexaco Ends Dispute with Kazakhstan Government

The ChevronTexaco-led consortium, TengizChevroil, has reached an agreement with the Kazakhstan government in its dispute over the development of the Tengiz Field.

The disagreement had led Tengizchevroil to suspend work on a $3 billion expansion program. "We have found a mutually satisfactory scheme for financing the second generation project. We signed a document on it on Friday evening. We have persuaded our partners," Minister of Energy, Industry and Trade, Vladimir Shkolnik said. The disagreement turned serious in November when TCO said it wanted to fund the expansion by reinvesting profits from its exports. However, the government wanted it to pay tax as normal on its exports and instead borrow money abroad for the development. As a result TCO put the expansion plan on hold. Shkolnik gave few details on the deal, saying merely that the budget would receive $200 million per year in tax. He would not say where TCO would raise the money for expansion. "That's not a matter for the public, that's the business of the partners," he said.

TCO production averages just over 250,000 barrels per day. The expansion program will increase production to around 440,000 barrels per day. TengizChevroil is owned by ChevronTexaco with 50%; KazMunaiGaz with 20%; ExxonMobil with 25%; and LUKArco with the remaining 5%.