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. Last Updated: 07/27/2016

Chevron Project Raises Output, Needs Pipeline

ALMATY, Kazakhstan -- U.S. Chevron Corp., partner in the $20 billion Tengiz oil venture in Kazakhstan, said output is up and capacity will be expanded this year but that there is still no new deal to build a crucial export pipeline to the Black Sea.

Tengizchevroil, which marks its third birthday next month, is "making extremely significant progress," Chevron Overseas Almaty representative Bruce Kososki said in an interview.

Output is planned at 4 million tons (80,000 barrels per day) in 1996 and capacity will increase to 6 million tons by year end, Kososki said Wednesday.

Developing the Tengiz field, on the northeastern Caspian shore with recoverable reserves of 6 billion to 9 billion barrels, depends for now on access to the Russian pipeline system to pump oil to Western markets.

But bringing the field to its scheduled peak capacity of 700,000 barrels per day by 2010 can only be achieved if a way is found to breathe new life into a consortium to build a new oil pipeline to the Russian Black Sea port of Novorossiisk.

Industry sources say warmer relations between Russia and Kazakhstan may help unblock talks on remodelling the Caspian Pipeline Consortium, or CPC, founded with the sultanate of Oman.

Kazakh Oil Minister Nurlan Balgimbayev flew to Moscow this week for more pipeline negotiations with Russian and Omani officials, but there was no word yet on any progress.

Foreign Minister Kasymzhomart Tokayev said after talks with Russian counterpart Yevgeny Primakov that Russia had agreed it would be mutually beneficial to form a new consortium with both Western and Russian partners.

"We have ... reached agreement to expedite the process of reaching concrete results in terms of CPC project number two," Tokayev said.

Industry sources said that the Russo-Kazakh understanding could pave the way for Chevron, AGIP, British Gas Plc and Mobil Corp. -- who all signed pipeline protocols with Kazakhstan last November -- to press ahead with putting together a new project.

"That would be a very encouraging development," an industry source said. "Kazakhstan and Russia have to resolve the CPC before it can go beyond where it is now. The rest is easy."