Chevron Corp. will go ahead with a $36.8 billion expansion of the Tengiz oil project in Kazakhstan as crude’s recovery to near $50 a barrel and a steep drop in costs allows explorers to ramp up.
The company and its partners including Exxon Mobil Corp. will spend $27.1 billion on facilities, $3.5 billion on wells and $6.2 billion for contingency and escalation, Chevron said it a statement on Tuesday. First oil from the expanded project is planned for 2022.
The Tengiz expansion, the largest oil investment to get approval this year, highlights the willingness of oil explorers to proceed with some of their more promising prospects after service and equipment costs came down by some 40 percent. Drillers in the U.S. are increasing the number of rigs exploring in the most productive parts of the best shale plays, analysts at Morgan Stanley said in a report. The increased activity may help to cap further rallies in oil prices.