In a rare major investment in an industry hit by low prices and a boost to the local economy, a $36.8 billion plan to boost production at the Kazakhstan’s Tengiz field has been agreed upon by a group of oil companies led by Chevron and Central Asian country.

Kazakhstan, which is the biggest former Soviet oil producer after Russia, already gets more than one thirds of its total crude output from the field which is also one of the world’s biggest oil fields.

Kazakhstan’s Energy Ministry and its foreign partners said in a joint statement earlier this week that the output from the field would be increased from 27 million tonnes at present to 39 million tonnes a year (850,000 barrels per day) by 2022 under the plan to be executed at Under the plan, Tengiz, in which Exxon Mobil and Lukoil also have stakes.

While being one of just three major projects in recent years, the Tengiz expansion is the biggest final investment decision in the oil industry this year amidst a market environment of tremendous uncertainty in international crude market and a glut that is expected to be augmented by injection’s of Iran’s oil on the market soon.

In recent years the only two other notable investments in the oil sector were Statoil’s Johan Sverdrup and Shell’s Appomatox.

While Tengiz output will be roughly the same as the current oil production of Britain at its peak, the move comes at a time when energy companies are tightening their belts due to low oil prices.

“Today we are witnessing a historic event not just for the oil and gas sector but for the whole country,” Kazakh Energy Minister Kanat Bozumbayev said in Astana. He was seated in a press conference while making the announcement next to executives of Tengizchevroil, the joint venture operating Tengiz, and partner companies.

By 2033 when the Tengiz contract expires, the expansion would generate about $120 billion in extra tax payments, Bozumbayev said.

$27.1 billion for facilities, $3.5 billion for wells and $6.2 billion for contingency and escalation were included in the total project budget, Chevron said in a separate statement.

A combination of own funds, contributions from partners and borrowings would finance the expansion project, said Tengizchevroil General Director Ted Etchison. He did not provide any details.

Documents for a $3 billion five- to seven-year loan agreement was sent to banks last week by Tengizchevroil.

Chevron owns 50 percent, Exxon Mobil has 25 percent and Lukarco, controlled by Russia’s LUKOIL, the remaining 5 percent wile Kazakhstan holds a 20 percent stake in the venture via state oil and gas firm KazMunayGaz

Although production has edged down in the last few years due to a natural decline at some mature fields even as the Kazakhstan, with a population of 18 million, has tripled oil output since gaining independence in 1991. Oil is Kazakhstan’s main export.

(Adapted from Reuters)