Mobil Buys 25 % Stake in Tengiz Field

ALMATY, Kazakhstan -- U.S. Mobil Corp. announced Wednesday it had agreed with Kazakhstan to purchase a 25 percent share in Tengizchevroil, one of the world's largest oil production ventures with estimated reserves of 6 billion to 9 billion barrels.


Mobil said it would purchase half of the Kazakh government's share in the venture for an undisclosed sum; Chevron owns the other half of the venture at the Tengiz field in western Kazakhstan.


"This agreement is a very significant opportunity for Mobil," Lucio Noto, Mobil's chairman, said in a press statement. "It's a major step in building our long-term exploration and producing business in Kazakhstan."


Vagit Alekperov, president of LUKoil, said Tuesday he also wanted to buy a stake in Tengizchevroil, either from the government or from Chevron.


Mobil and LUKoil's interest in Tengizchevroil is a sign of faith in ongoing negotiations for construction of a pipeline to link the oil field with the Russian port of Novorossiisk.


Oil executives say a pipeline agreement, key to the future of Tengiz and numerous other oil and gas projects in the region, is possible as early as next week.


Central Asian countries, though rich in natural resources, have seen their economies slump due to a lack of reliable export routes for oil and gas, leaving them dependent on Russia long after the collapse of the Soviet Union.


An agreement on the Tengiz pipeline is likely to boost trust and investment in a range of other projects, including the Karachaganak oil and gas field developed by British Gas and Agip in Kazakhstan and the Azerbaijani offshore fields, developed by a consortium of Western companies.


Chevron, Mobil and a number of other Western and Russian oil companies are negotiating in Moscow with Russian, Kazakh and Omani officials for an agreement on joint construction of an export pipeline from Tengiz.


Until recently, the consortium had included only the governments of Russia, Kazakhstan and Oman and had failed to obtain financing because the pipeline's main potential supplier, Chevron, refused to join in.


Oman in March gave in to Chevron's demand that it cut its share, enabling the consortium to solicit investors for a 50 percent stake.


Negotiators have been tight-lipped, but most agree that Chevron, Mobil, British Gas, Agip and Oryx, the major oil producers in Kazakhstan, are sure of a share in the consortium.


LUKoil and one or two other Russian oil companies are expected to join as well, in a trade-off aimed at increasing Russia's incentive for cooperation.


"We are happy to see our success recognized by another major oil company," Richard Metzke, president of Chevron Overseas Petroleum, said in a statement.


Unable to export significant amounts of oil through the existing Russian pipelines, Chevron has kept investment down to about $1 billion, increasing expenditures only after Russia widened access to its pipelines late last year.


Mobil has two exploration ventures in Kazakhstan, including a potentially large field under the Caspian Sea.