Tengiz expansion cost overrun reflects hidden capacity increase, analyst says
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The cost of the Tengiz expansion project has risen from $36.8 billion to nearly $49 billion over nine years, making it Kazakhstan's largest investment project. Veteran oil engineer Sultan Tkenbaev argues the budget overrun stems from a de facto increase in design capacity to 17-18 million tonnes per year, well above the stated 12 million tonnes. The revelation raises questions about oversight by KazMunayGas and the project's long-term efficiency.
Hidden Capacity Increase
Sultan Tkenbaev, a mining engineer with over 40 years of experience who participated in the original Tengiz development, says the project's design capacity was quietly raised. He notes that equipment for dampening pressure surges nearly doubled, and gas injection volumes suggest a throughput of 17-18 million tonnes per year, not the official 12 million. Tkenbaev draws on his experience with the second-generation plant at Tengiz, which was officially built for 10 million tonnes but had a real capacity of about 12 million tonnes.
Decision-Making and Oversight
Tkenbaev states that capacity changes are approved by Tengizchevroil shareholders, including KazMunayGas. He questions why the national company did not object to the scope creep. The project's cost rose from $36.8 billion to nearly $49 billion, with no clear explanation from management at the time. Tkenbaev joined the project in late 2018, when basic design decisions were already locked in.
Technical Design Flaws
The expansion is described as a 'plant without a tail' — it only separates oil from gas, with all gas reinjected into the reservoir. Two injection facilities are already in place. Tkenbaev argues the entire scheme appears designed for a much higher capacity than officially stated, raising concerns about investment efficiency and infrastructure reliability.
What's Next
KazMunayGas and Tengizchevroil are expected to release updated cost and capacity figures in their next quarterly reports. It remains unclear whether shareholders will conduct an independent audit of the project's design specifications.
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Tengiz expansion cost overrun reflects hidden capacity increase, analyst says
