The Issue’s Focus: Caspian
TCO 2015 Year in Review
Tengizchevroil (TCO) remains a leader in the oil and gas industry of Kazakhstan. In 2015, TCO successfully achieved production milestones and excelled in a number of key areas.
- No fatalities and overall safety performance was, once again, significantly better than the global oil and gas industry average
- Produced 27.16 million tonnes of oil setting a new record. TCO Plant facilities had high production efficiency
- SGI/SGP and KTL facilities demonstrated world class reliability of 97 percent
- Record sulfur sales with 2.7 million metric tonnes sold. In October 2015 TCO announced the elimination of a sulfur inventory backlog on open pads
- Total payments to Kazakhstan equaled $8.2 billion
- Expenditure of $2.4 billion on Kazakhstani Goods and Services
Tengizchevroil is an acknowledged leader in gas utilization and flaring reduction. Since 2000, flaring is down 93 percent and gas utilization is over 98 percent.
These records and achievements are made possible by TCO’s workforce – a highly skilled, dedicated and professional group. We will continue to invest in their training and provide them with development opportunities to increase their experience.
The creativity and capabilities of the company workforce will be used to advance the Future Growth Project (FGP) and Wellhead Pressure Management Project (WPMP). FGP will expand TCO production capacity by approximately 12 million tonnes a year and create up to 20,000 jobs at the peak of construction.
For 2016, TCO will strive to achieve zero incidents through attention to personal and process safety, especially during the execution of turnarounds and drilling programs. We strongly believe that TCO employees and contractors are capable of achieving “zero” in personal safety incidents although it will be challenging with the anticipated increase in major capital projects activities.
Safety & Health
TCO continues to have industry-leading safety results in standard industrial safety measurements such as Days Away from Work. In 2015, more than 30,000 people worked for Tengizchevroil for a total of over 72 million hours with eight injuries which required a day away from work. While this statistic is truly world-class performance, TCO strives for zero workplace injuries and is continuously working to improve in this area.
TCO’s Total Recordable Incident Rate (TRIR) is a measure of injury and illness cases without lost time, which have the potential to lead to lost time. In 2015, even with approximately 35 preventable incidents, TCO achieved world-class performance again. TRIR remains a continued area of focus for TCO.
Environmental Protection
TCO’s investments of more than $3 billion on projects to minimize environmental impact since 2000 have been essential to the continuous improvement in environmental protection that has been achieved at Tengiz. Suchinvestments have enabled TCO to reduce total gas flaring volumes by 85 percent since 2000 and increase gas utilization rates at Tengiz to over 98 percent. Gas utilization and other programs have helped reduce total emissions generated per tonne of oil by 73 percent in the same timeframe. In 2015, TCO averaged 2.24 kilograms per tonne of oil produced. Since 2000, TCO has increased annual crude oil production volume by 159 percent.
Investments in environmental protection and improvements in plant reliability have helped TCO reduce the number of technical malfunctions at the KTL plant by 40 percent, and the volume of sour and acid gas flaring during technical malfunctions by 93 percent between 2000 and 2015.
In late 2015, TCO’s tree planting project, started in 2014 in Zhana Karaton and Koschagil, was completed and the ownership handed-over to the Akimats of these two villages. In 2016, TCO will continue planting in new “Nursaya” park in Kulsary.
In 2016, TCO is planning to commission new water recycling facilities in an effort to significantly reduce water consumption for operational and household needs from existing sources.
Production & Product Sales
Crude productionin 2015 was 27.16 million metric tonnes (217 million barrels).
TCO sold 1.27 million metric tonnes of LPG and 6.85 billion cubic meters of dry gas. TCO sold 2.7 million metric tonnes of sulfur, which is 113 percent of the 2.4 million metric tonnes produced for the same period.
Financial Benefit to Kazakhstan
Since Tengizchevroil’s founding, the company has distributed $112 billion to the Republic of Kazakhstan including purchases of Kazakhstani goods and services, profit distributions to KazMunaiGas, taxes and royalties paid to the government, tariffs and fees paid to state-owned companies and employee’s salaries. In 2015, direct payments to the Republic of Kazakhstan totaled $8.2 billion.
Kazakhstani content
Tengizchevroil continues to increase its investment in KC goods and services year after year. TCO spent $415 million on goods and services of domestic producers back in 2002 compared to $2.4 billion in 2015. TCO has invested more than $20 billion on Kazakhstani goods and services since 1993. The company will continue to identify methods to increase its purchases of quality goods that meet the extremely challenging operating conditions in Tengiz. Primarily, TCO has been a purchaser of services. This is the area of the most impactful sustainable local content growth now and in the future.
A key aspect of TCO’s Kazakhstani content development strategy is working with current and potential suppliers so that they understand the international quality and safety standards they must meet in order to do business with oil and gas industry. The continued development of a Kazakhstani market of goods and services that meets high international standards is a cornerstone of the company’s sustainable development strategy – and creates significant benefit for Kazakhstan. TCO believes that if the company is to achieve its Kazakhstani Content objectives, it must generate long-term opportunities for the suppliers of goods and services. As such, TCO will continue to support the sustainable development of Kazakhstani suppliers, encouraging appropriate investments in infrastructure, Kazakhstani workforce training and the creation of jobs.
During 2015, TCO identified new Kazakhstani manufacturers and TCO management visited several regions in Kazakhstan and gained a better understanding of manufacturing capabilities of local companies.
Corporate Responsibility
Since 1993, TCO has invested more than $1.1 billion to fund social projects and programs in the Atyrau Oblast for the community and employees. TCO’s Egilik (benefit in Kazakh) budget for 2015 was $25 million and its Community Investment Program budget was just over $1 million. Through these two programs, and in partnership with local and international organizations, TCO funded a variety of projects to improve the education and health of over 7,000 citizens in the Atyrau Oblast.
In 2016, TCO has another $25 million budgeted for Egilik, the majority of which will be spent in Atyrau oblast.
Workforce Development
TCO’s strong training and development programs have a long tradition of helping advance our Kazakhstani employees to positions of increasing responsibility. Kazakhstani citizens now hold 86 percent of TCO positions and Kazakhstani managers and supervisors hold 74 percent of TCO supervisor and manager positions.
Because attracting and retaining a world-class workforce to manage Tengizchevroil’s large and complex business is critical to the company’s ongoing success, we strive to be one of the best places to work in Kazakhstan. Providing a competitive, pay-for-performance based compensation package remains a priority.
TCO will continue to identify and prepare successors for TCO senior management positions. Expatriate assignments for our Kazakhstani employees are an important method by which to support employees in gaining international experience that will enable them to achieve their goals. Currently, TCO has over 60 Kazakhstani employees working outside of Kazakhstan.
Outlook for 2016
TCO’s safety focus in 2015 will see us working to achieve a Day Away From Work Rate and Total Recordable Incident Rate of zero. We will progress our queue of large and complex projects, notably the Future Growth Project and Wellhead Pressure Management Project, in a safe and capital efficient manner. We also will focus on the execution of our production plan, completion of 2016 turnarounds and continuation of our drilling and workover programs.