Kazakhstan is accelerating efforts to increase the utilization of associated gas from its major oilfields, leading to the rapid award of significant contracts for a new gas-to-polymer facility.

Contract Awards to Sinopec Subsidiaries

Subsidiaries of Sinopec have secured engineering, procurement, and construction (EPC) contracts for a proposed plant linked to the Chevron-operated Tengiz oilfield. Sinopec Guangzhou Engineering (GPEC) will build five processing units for the project's first phase. Sinopec Ningbo Engineering (SNEC) will handle front-end engineering and design (FEED) and EPC services for the second phase, which aims to add two more chemical process units. The total value of the FEED and EPC contracts is approximately $1.11 billion. Sinopec is also expected to provide bridge financing to the project operator to support contract payments.

Project Details and Strategic Context

The planned facility, located about 200 kilometres from the Tengiz field, is designed to process about 380,000 tonnes per annum of butane gas extracted from Tengiz's associated sour gas to produce butadiene. Butadiene is a raw material for synthetic rubbers and the fuel additive MTBE. This project aligns with pressure from Kazakh authorities on oil project operators to utilize more associated gas from oil extraction rather than reinjecting it.

Change in Project Leadership

The project was initially led by Russian producer Tatneft, which held a 75% controlling stake and managed the remaining 25% held by Kazakhstan's state-run Samruk-Kazyna Ondeu. Tatneft withdrew from the venture in February, with sources indicating that international sanctions on the company impacted its ability to secure financing for the EPC contract. Sanctions were imposed on Russia and its oil producers following the 2014 annexation of Crimea, with the UK directly sanctioning Tatneft in December 2025. Following Tatneft's exit, Samruk-Kazyna Ondeu regained an almost 100% shareholding in the project.