Kazakhstan steps up Tengiz gas plant schedule to help keep thousands employed

Kazakhstan state-controlled oil and gas holding company KazMunayGaz is stepping up plans to build a major gas processing plant at the onshore Tengiz oilfield — the country’s largest producing oilfield.

The project comes as the Chevron-led field operator Tengizchevroil is planning to free thousands of workers next year following the completion of a major production upgrade project.

The plant will process associated gas produced at Tengiz, separating it into three marketable products: methane, or natural gas; ethane; and a mixture of propane and butane usually sold as liquefied petroleum gas, a popular motor fuel in the country.

KazMunayGaz said the front-end engineering and design study for the facility is ongoing and is set to be completed in the first quarter of 2024, with a final investment decision due in the second quarter of 2025.

The Kazakh company said that its wholly owned subsidiary, KMG PetroChem, will open an international tender for the engineering, procurement and construction of the plant as soon as the final investment decision is approved.

The $2.2 billion facility will enable Kazakhstan to receive about 9.1 billion cubic metres (4.23 tonnes) per annum of methane to meet its growing domestic gas demand, besides churning out 1.6 million tonnes of ethane as a feedstock for the production of polyethylene.

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Oleg Chervinsky, publisher of Kazakh oil industry magazine Petroleum, said the project is likely to receive all necessary financing from the Kazakh National Welfare Fund, which collects and invests state oil and gas revenues.

KazMunayGaz said that KMG PetroChem and Tengizchevroil signed agreements earlier this month covering the delivery of associated gas to the proposed facility and the provision of technical service and advice by the Tengiz operator to the gas separation project.

KazMunayGaz said that the construction of the gas separation plant, covering some 111 hectares of land at the Tengiz field under long-term rent from Tengizchevroil, will take about two years and employ more than 8000 workers.

The project is expected to employ Kazakh workers who have been building facilities and infrastructure for the Tengiz production expansion project over the past six years.

Officials in Astana have urged KazMunayGaz to help ease social tensions among oil industry workers in the country’s oil regions of Atyrau — home to the Tengiz development — and Mangistau following recent unrest.

The Tengiz expansion includes construction of facilities under the wellhead pressure management project (WPMP) and future growth project (FGP).

The WPMP will enable the existing facilities to continue production at their full capacity by lowering flowing wellhead pressures.

The FGP involves the deployment of powerful sour gas injection compressors and injection wells to pump excess associated gas into the Tengiz reservoir and support its pressure.

The Chevron-led project is planning the start-up of new facilities in the first half of 2024, with the full effect of the two projects to show in 2025.