What has TCO done in 30 years to support the Kazakhstani oil and gas industry?
Tengizchevroil (TCO), Kazakhstan's largest crude oil producer, celebrates its 30th anniversary on April 6
Over the years, TCO has transformed into a global producer in the oil and gas industry. This interview with Kevin Lyon, General Director of Tengizchevroil, covers such topics as TCO's current production developments, the advancement of local talent, nationalization, as well as environmental protection efforts while increasing production.
Mr. Lyon, what key milestones would you highlight, on the thirty-year path of the company's development?
– First and foremost, I would like to acknowledge that TCO’s achievements and success are possible thanks to the unwavering support from the Government of Kazakhstan, the trust of our shareholders, as well as the talent and dedication of our employees. We are grateful to each of them for their contribution to the development of Tengizchevroil.
Over 30 years we have invested in people and technology to continually improve TCO’s operational performance and significantly expand production capacity. TCO is now a different company from what it was 30 years ago, but our goals and priorities remain unchanged: safe and reliable operations and creating value for the Republic of Kazakhstan, our shareholders, and the Atyrau community, where we live and work.
I can highlight several significant achievements. In 1993, TCO employees, now industry veterans, encountered challenging and ambitious goals to develop the Tengiz field, most of which they have achieved with great success. During the first year of TCO’s operations, production at the two existing trains amounted to approximately 1 million tons per annum. At the end of 2022, we achieved a production record of 29.2 million tons per annum, which represents about 34% of the total crude oil production in Kazakhstan. Nevertheless, we also reduced air emissions intensity to the lowest level in our company’s history. Tremendous achievements indeed!
Looking to the future, we are currently executing the Future Growth Project – Wellhead Pressure Management Project (FGP-WPMP). Upon completion, the project will allow for an additional 12 million tons of crude oil production, taking our company to about 1 million barrels of oil-equivalent production per day.
How would you assess the contribution of TCO to Kazakhstan's economy?
- TCO is the largest taxpayer in Kazakhstan. Last year alone, TCO's direct financial payments to the Republic of Kazakhstan amounted to $14.5 billion. Of this amount, over $10 billion were taxes and royalties. Recently, the Ministry of Finance recently awarded TCO the “Best Taxpayer” in the Subsoil User category, at a formal award ceremony in Astana.
In general, over its 30-year existence, TCO has contributed over $176 billion in direct financial payments to Kazakhstan, including $43.6 billion spent on local goods and services. In 2022, our company reached its highest Kazakhstani content performance for the last 6 years of over 70%. This has had a multiplier effect, stimulated economic activity across Kazakhstan, and supported the country’s further development.
During the early years of TCO's existence, many expatriates were employed, and they introduced western standards to Kazakhstan’s post-Soviet oil and gas industry. Can you provide more information on the process for sharing knowledge, technology, and experience and the results achieved by TCO regarding workforce nationalization?
- Over the last 30 years, we have nurtured the development of successive generations of highly qualified world-class personnel. How have we done this?
One of the early practices that we have maintained, is to establish a personnel development strategy, which includes an onboarding program for young professionals. Also, experienced employees provide mentorship and guidance for both professional and personal growth. Additionally, we offer various in-house advanced training courses to our employees, investing in the development of complex skills for critical areas such as process safety, reservoir management, process design, and drilling, among others. We also leverage the capabilities of our shareholders, including Chevron, by sending our employees to international locations to learn best practices and apply them at Tengiz.
Since 2010, our people have taken over 86,000 training courses, which include technical and professional training for oil and gas industry professionals, leadership development, language courses, and other soft skills training. TCO also implemented the Digital Scholar Program, which allows local TCO employees to enroll at Rice University and the Massachusetts Institute of Technology in the U.S.A, for a one-year master's program in engineering, management, and digital technology. Our company has helped create hundreds of thousands of jobs across Kazakhstan, where people can gain unique international experience which can be applied to other projects in Kazakhstan and abroad.
And the results are evident! TCO has gradually reduced the number of expatriates, and currently, 95% of TCO employees are citizens of Kazakhstan, compared to 50% in 1993. This is an impressive achievement that we are proud to accomplish!
In addition to investing in our people, over $360 million has been invested since TCO’s inception, in more than 100 social infrastructure projects to construct and improve social facilities such as schools, hospitals, recreational areas, kindergartens, and other common facilities in the Atyrau region. TCO also supported more than 120 social projects within its community investment program, focused on improving the well-being of communities in the areas of health, education, and economic development.
What advanced work methods and modern technologies have you introduced in Kazakhstan over the last 30 years? Are there any unique ones used exclusively in Kazakhstan?
– Technology, digitalization, innovation, and human ingenuity are crucial for the further development of the Tengiz field. There are only a few fields in the world that have Tengiz-type reservoirs in which gas injection has been used as a method to recover oil. High-pressure injection of sour gas is rare in our industry and unique to Tengiz. TCO’s outstanding reservoir modeling capabilities allow us to better understand the field, optimize development and maximize recovery.
Also, one of our latest innovations is the Electronic Permit-To-Work System (e-permit). I want to note that TCO became the first company in Kazakhstan's oil and gas sector to switch to e-permits. This technology has allowed us to optimize the time required for employees to safely plan work activities which helps improve the safety and increase the productivity of our people.
Another example worth mentioning is our pipeline integrity monitoring program, where we are able to inspect equipment in advance to anticipate and manage process safety and maintenance needs. Furthermore, the technologies we use to maintain and repair plant equipment are very important for safe and reliable operations, although not unique to Kazakhstan.
Oil production at Tengiz has increased, but does this mean that TCO has simultaneously increased its environmental impact?
– TCO strives to operate in a safe and environmentally responsible manner. We continue to focus on protecting the air, reducing greenhouse gas emissions, minimizing water use, protecting the soil and land, handling waste carefully, and raising environmental awareness.
Even before the high focus globally on the “green economy,” TCO has already taken prudent and practical, actions over the years, to reduce its environmental footprint. Since 2000 to date, the company has invested over $3.15 billion in projects to reduce emissions. Over the same period, TCO’s air emissions per metric ton of crude oil produced have been reduced by 75%, – the lowest in our company’s history. Additionally, last year, we reduced our flaring volumes by 57% when compared to 5 years ago. We also recognize water as a precious resource in Western Kazakhstan, and our water reuse rates are close to 50%. In addition, we continue to focus on effective waste management and nature conversation activities. All these actions and investments demonstrate our company’s commitment to running TCO operations safely and responsibly.
In the context of the global energy transition, the importance of natural gas as a "greener" fuel and valuable feedstock for the gas chemical industry is growing. What role does gas play in your marketing basket?
– TCO plays a leading role in meeting the growing gas demand of Kazakhstan's petrochemical industry and its domestic market. We actively support the Ministry of Energy's plans to develop Kazakhstan's petrochemical industry and collaborate with the government to advance petrochemical projects to ensure further industrial and economic growth for the country.
Currently, TCO supplies propane to the Kazakhstan Gas Chemical Complex in Atyrau, covering 100% of the plant's feedstock needs. In November 2022, we also signed an agreement with Butadiene LLP to support butane supplies to the petrochemical plant for the production of butadiene in Atyrau. Moreover, TCO provides most of the gas used in Kazakhstan's residential and industrial sectors. We strive to ensure uninterrupted and reliable gas supply to the community and enterprises in the Atyrau region.
Mr. Lyon, what words would you like to address to the people of Kazakhstan on the eve of the 30th anniversary of the Tengizchevroil? What would you like to wish the company employees and its partners?
– Chevron’s 30-year partnership with Kazakhstan is a shining example of the tremendous results that can be achieved together. As we celebrate this significant milestone, I would like to acknowledge and pay tribute to the tens of thousands of current and former employees, particularly the Tengiz pioneers, who discovered and developed Tengiz into the success that it is today. Once again, our success would not be possible without the unwavering support from all four of TCO’s shareholders, the Government of Kazakhstan, from the communities where we work, and from our talented and dedicated workforce.
We look forward to continuing to play a role in advancing Kazakhstan’s economic progress, in supporting the development of this noble industry, and in creating opportunities for future generations of Kazakhstanis.