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Chevron under pressure over Kazakh oilfield violence

Highlights

Chevron under pressure over clash between Kazakh, foreign workers

New president welcomes company executives

Chevron's dominant position still looks assured

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Senior Kazakh officials have had exchanges with a senior Chevron executive following unrest at the giant Tengiz oil field, operated by the company's Kazakh joint venture Tengizchevroil (TCO), although the company denied any snub by the country's leadership on Thursday.

More than 40 people were injured in a clash Saturday between Kazakh workers and foreign contract workers at Tengiz -- the country's largest producing oil field -- on the eastern shore of the Caspian Sea, causing a partial suspension of work on a $37 billion project intended to boost production to 900,000 b/d in 2022 from around 670,000 b/d at present.

The incident prompted Jordan and Lebanon's embassies to help injured nationals working for a subsidiary of Lebanese-owned Consolidated Contractors Company, according to media reports.

In production since 1993, Tengiz is thought to hold 7 billion-11 billion barrels of recoverable crude and is the mainstay provider of CPC Blend, delivered at Novorossiisk on the Black Sea.

Chevron is the biggest stakeholder in the joint venture that operates the highly complex project and as such has been Kazakhstan's pre-eminent corporate backer during its rise from one-time Soviet state to major commodity-producing country.

Saturday's violence, depicted in brutal footage on social media, appears to have been sparked by a foreign male contract worker distributing a photograph disrespectful to a Kazakh female colleague.

President Kassym-Jomart Tokayev, who took office in March, held individual talks in the course of Wednesday and Thursday with top executives gathered for a foreign investors' council meeting, including Shell CEO Ben van Beurden, ExxonMobil Vice President Neil Duffin, Total upstream president Arnaud Breuillac and Baker Hughes GE CEO Lorenzo Simonelli, according to the president's press service.

Chevron's regional president, Todd Levy was not among those he received, the company said, saying Levy had not requested a meeting. Chevron denied Kazakhstan had snubbed Levy, noting he had met with other senior ministers and officials for talks the company described as "very constructive" and that CEO Mike Wirth handled relations with heads of state.

GOVERNMENT REACTION

Levy, upstream president for Europe, Eurasia and the Middle East, held talks with Prime Minister Askar Mamin, who underlined the importance of "security and stability" for all workers, the prime minister's office said.

Levy also met with minister for Labor and Social Protection Berdibek Saparbayev, who said the situation at Tengiz was "under control," but "the most important issue is observance of the laws of Kazakhstan and the inadmissibility of discrimination and variance in pay and working conditions between Kazakh and foreign specialists, and any manifestation of conflict," according to his ministry's website.

Saparbayev also "noted the necessity of reducing the proportion of unqualified foreign workers among contractor companies" working on the expansion project, the ministry said.

Levy promised to raise with contractor companies a possible increase in the number of Kazakh specialists working on the expansion, and to strengthen educational activity intended to improve workforce relations, the ministry said.

Other figures met by Levy included energy minister Kanat Bozumbayev, the governor of Atyrau region, Nurlan Nogayev, and the head of state company KazMunaiGaz.

The weekend incident is not the first time tensions between foreign and Kazakh workers at the site have spilled into violence, with a similar incident occurring in 2006.

Chevron's dominant role in Kazakhstan's oil and gas industry looks relatively assured, however. It holds a 50% stake in TCO, an 18% stake in the Karachaganak field, which also feeds the CPC crude stream, and a 15% stake in the CPC pipeline.

The Tengiz field is regarded as highly complex due to the depth and high temperature of the reservoir and high levels of sulfur that are stripped from the crude stream at vast above-ground facilities similar to an oil refinery.

-- Nick Coleman, nick.coleman@spglobal.com

-- Edited by Jason Lindquist, newsdesk@spglobal.com