Chevron accelerates Kazakh oilfield ramp-up, sources say

(Reuters) - Chevron is speeding up its expansion of Kazakhstan's Tengiz oilfield, two sources familiar with the plans told Reuters, raising its output to around 1% of global crude supply.

Chevron said in January it had begun a $48 billion expansion of Tengiz, which is one of the world's deepest and most complex fields due to high sulphur levels and harsh weather conditions.

Enlargement of the Kazakh oilfield has suffered delays and huge cost overruns since it began in 2012.

Clay Neff, Chevron's head of international exploration and production, told Reuters last month that the Tengiz expansion was expected to reach full capacity of 260,000 barrels per day (bpd) by June, lifting its overall production to around 1 million barrels of oil equivalent per day.

A source familiar with the plans said on Friday that Chevron is likely to complete the ramp-up of the expansion by the end of February, four months earlier than expected.

Kazakhstan has persistently exceeded its output quota of 1.468 million bpd under the production-curbing deal struck by the Organization of the Petroleum Exporting Countries and allies such as Russia - together known as OPEC+.

The speedy expansion of the field will likely complicate efforts to restrain Kazakhstan's overall oil output in line with the quotas agreed by the OPEC+ group of leading producers.

The Central Asian country plans to boost its oil and gas condensate production this year to 96.2 million metric tons (around 2 million bpd) from 87.56 million tons in 2024.

Kazakhstan's energy ministry said on Tuesday that the country will do whatever is necessary this and next year to fulfil its obligations under the OPEC+ agreement and compensate for oil overproduction in 2024.

CPC

Oil from the field is shipped via the Caspian Pipeline Consortium (CPC) pipeline for export from a terminal near Russia's Black Sea's port of Novorossiisk.

Another source, familiar with the data, said oil production at Tengiz has already reached 900,000 bpd, up from 606,000 bpd on average in 2024.

"It is ahead of schedule it seems," a trader said.

Chevron has a 50% stake in the Tengizchevroil joint venture, which it operates. Exxon Mobil holds 25%, Kazakh oil firm KazMunayGas 20% and Russia's Lukoil 5%.

Tengizchevroil, which did not immediately respond to a request for comment, is expected to generate $4 billion of free cash flow in 2025 and $5 billion next year at an average Brent price of $60 a barrel.

The oil currently trades at around $75 per barrel.

(Reporting by Reuters; Editing by Alexander Smith)