TOTAL (TOT) Expands Operation In Kazakhstan's Dunga Project
Zacks Investment Research | Jul 03, 2019 11:32PM ET
TOTAL S.A. (NYSE:TOT) and its partners have approved the Phase 3 development of the onshore Dunga field in the Mangystau Region of western Kazakhstan. Courtesy of the approval, new wells will be added to the existing infrastructure and the processing plant will be upgraded to enhance its capacity by 10% to 20,000 barrels of oil per day by 2022. This will add production of more than 70 million barrels of reserves.
Notably, this development work will need $300 million investment. The approval by the Government of the Republic of Kazakhstan of a 15-year extension of the Production Sharing Agreement (PSA) has made the development work possible. PSA for the field was originally signed in 1994 and due to expire in 2024. TOTAL operates the Dunga field with a 60% interest and its partners hold 20% interest each.
TOTAL’s Long-Term Goal
TOTAL continues to increase hydrocarbon production volumes, thanks to low-cost productive assets spread across the globe and the startup of projects at regular intervals. To produce affordable oil and gas, the company has carefully managed costs through a number of far-reaching initiatives, enabling it to constantly optimize its portfolio and invest in highly competitive projects.
At present, ten projects are lined up and are in different stages of completion. Contribution from these startups will help the company to achieve its target of 5% increase in production by 2022. Since natural gas is being utilized on a larger scale across the globe due to its clean burning nature, TOTAL plans to ramp up gas production over the long term. Gas production could account for 60% of its hydrocarbon production by 2035, in turn limiting harmful methane emissions generated by gas production.
Another oil and gas company, Devon Energy Corporation (NYSE:DVN) has undertaken an initiative to further lower methane emissions in U.S. oil and natural gas production operations. Methane gas has the potential to do greater damage to the environment, as it has the capacity to trap heat more than 80 times than carbon dioxide in the first 20 years after it escapes into the atmosphere from the drilling wells. (Read more:Zacks Investment Research
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