By Christopher Pala

23-10-01 Slabs of yellow sulphur, 4.5 mm tons of it, eventually will be processed and sold from the Tengiz field in Kazakhstan. The sulphur is a by-product of crude oil processed at Tengiz plants.
When the line is up to full production, which is expected to be sometime next year, it will allow regular tanker shipments from the loading buoy two miles offshore. For Chevron this will be a cause for celebration because it has had to ship most of its crude via rail. While extracting a barrel of Tengiz oil costs about $ 3, the cost of transporting it by rail cars is $ 6 per barrel. The new pipeline will bring that cost down to $ 3 per barrel.
"Chevron deserves a pat on the back for bringing the project where it is today," said Robert Ebel, director of energy and national security studies at the Centre for International and Strategic Studies in Washington. "When they went in, there was clearly a lot of risk involved -- political, technical and mostly how they were going to get that pipeline built." Chevron has increased production tenfold, but there's plenty left to do. "Their real success will come only when they reach peak production," Ebel said.
"Tengiz is still in its infancy," Winterton said. "We believe that 700,000 bpd at the end of this decade is not unrealistic." With $ 2 bn already spent, Tengiz already represents the biggest foreign investment in the former Soviet Union.

This is a showcase project in a region that is one of the few places on Earth with the potential reserves to offer a viable alternative to the Middle East. By 2015 the Caspian region is expected to produce 4 mm to 5 mm bpd, putting it on a par with some of the leading producers in OPEC.