LONDON, Jan 24 (Reuters) - Chevron ( CVX ) said on

Friday it had started production at a $48 billion expansion of

the giant Tengiz oilfield which will bring its output to around

1% of global crude supply.

The expansion is expected to reach full capacity of 260,000

barrels per day by June, lifting overall production at Tengiz to

around 1 million barrels of oil equivalent per day, Chevron's ( CVX )

head of international exploration and production Clay Neff told

Reuters.

The Tengiz field accounts for a large part of land-locked

Kazakhstan's oil production, which reached 1.9 million bpd in

2023, the majority of which is exported via the CPC pipeline to

Russia's Black Sea port of Novorossiisk.

Kazakhstan is a member of the OPEC+ group of producers which

has curtailed supply in recent years. It was unclear how the

expansion would impact the country's quotas.

Tengiz is one of the world's deepest and most complex fields

due to high levels of sulphur and harsh weather conditions.

The expansion has suffered delays and huge cost overruns

since launching in 2012. Investment was "at the low end" of $48

billion to $49 billion, Neff said, making it one of the world's

most expensive developments.

Chevron ( CVX ) has a 50% stake in the Tengizchevroil joint venture

which it operates, with Exxon Mobil ( XOM ) holding 25%, Kazakh

oil firm KazMunayGas 20% and Russian oil producer Lukoil

the remaining 5%.

Tengizchevroil is expected to generate $4 billion of free

cash flow in 2025 and $5 billion next year at an average Brent

price of $60 a barrel, Neff said. Benchmark Brent crude oil

is currently trading at around $80 a barrel.

"What this project allows us to do is not only increase

production today but also extend the life of the field over

time," Neff told Reuters.

The expansion is part of Chevron's ( CVX ) plans to increase its own

production by around 3% per year over the next five years along

with strong growth in the U.S. Permian shale basin.