/REUTERS, Almaty, February 27, 06/ - Fitch Ratings has today affirmed the BBB-' (BBB minus) rating for the Series A senior secured notes issued by Tengizchevroil Finance Company SARL and guaranteed by Tengizchevroil LLP ("TCO").

TCO is a partnership between Chevron Corporation (50%) and other foreign and Kazakh partners, which holds a production licence expiring in 2033 for the giant Tengiz field in western Kazakhstan. The company is building a USD5 billion expansion facility aimed at doubling its production by 2007. The project is expected to be completed about three months behind the original schedule. Its cost has increased by about 25% since financial close as a result of adverse currency movements, labour action and administrative delays. This is more than compensated for, however, by the significant increase in the realised price for oil sales, which led to a 47% EBITDA growth in HY05 to USD2bn against USD1.3bn in the first half of 2004.

The company is also saving costs on its drilling programme as a result of better than expected well productivity. According to the terms of the notes, TCO must retain enough cash on balance sheet to fund the remainder of the project, and therefore cash balances stood at USD1.7bn in June 05 after payment of USD1bn dividend in that period.

Access to export routes for the increased production remains a key concern. Negotiations are continuing regarding the CPC pipeline expansion, which is currently the main export route for Tengiz crude. The original expectation of a full expansion of the pipeline by end 2007 is unlikely to be met. Recent reports suggest that the Russian government, which is a partner in CPC and must approve any expansion, has linked its approval to the construction of a new pipeline to by-pass the Bosphorus Strait.

As a result of uncertainties on CPC expansion, TCO is planning to export up to 14MTA of crude by rail, partly to Odessa and partly to the Caspian harbour of Aktau for shipping to Baku. The company has secured medium term contracts to transport the oil, and is expanding its on-site loading facilities. Rail export is not seen by Fitch as a permanent solution, and reduces the net back for the company. Nevertheless, Fitch views positively the fact that alternative export routes are now being secured that should, according to TCO, be fully available when the project comes on stream in 2007.

For more information on TCO, please refer to our pre-sale report, dated 4 November 2004, and our credit update that will shortly be available on the website at www.fitchratings.com.

Contact: Laurence Monnier, London, Tel: +44 (0)207 417 3546; Isaac Xenitides, +44 (0)207 417 4300.

Media Relations: Alex Clelland, London, Tel: +44 20 7862 4084.

[2006-02-27]