Caspian Pipeline Consortium (CPC) is a major international crude oil transportation project with the participation of Russia, Kazakhstan and leading international oil and gas companies (such as Chevron, Shell, ExxonMobil, Eni, British Gas, Rosneft, Lukoil), created for construction and operation of a trunk pipeline more than1.5 thousand kilometers long. The primary source of crude oil is from prolific fields in Western Kazakhstan with additional crude oil from Russian producers. This crude oil is transported through the CPC pipeline to the Company’s Marine Terminal in Yuzhnaya Ozereevka (Novorossiysk) where the crude oil is loaded on ocean going tankers for further delivery to the world markets.

Construction of the crude pipeline system commenced on May 12, 1999. On October 13, 2001 CPC loaded its first tanker at the Marine Terminal near Novorossiysk. Deliveries via the CPC system increased annually and by 2004 CPC had achieved its initial phase full throughput capacity of 28.2 MTA. Since 2005, CPC, with the use of flow improvers, has increased its transportation volumes to capacity of 35 MTA.

But the CPC System has not reached it full maturity. Since its inception the CPC Project was developed with an expectation for increasing its initial throughput capacity by almost 2.5 times. Caspian Pipeline Consortium is currently proceeding with the Expansion of its transportation capacity up to 67 MTA of crude oil with its shareholders’ approval of a $5.4 billion project to add 10 pump stations and additional terminal facilities. CPC expects to be transporting this volume in 2015. Implementation of the Expansion Project will bring CPC to a new economic level. The revenue is expected to more than double, amounting to as much as $ 2.3 billion on an annual basis.

CPC is one of the most economic and reliable routes for crude oil transportation from the Caspian and Black Sea Region to world markets. CPC annually transports more than one third of all export crude oil from Kazakhstan, a state with a growing significance in terms of oil product deliveries to the world markets.

CPC’s role in the development of major oil fields in the Caspian Region is self-evident. The increase of oil production gives assurance of the continued long term viability of the CPC pipeline system. Likewise, the significant investment being made by CPC in its expansion provides mutual assurance to Caspian region oil producers of the continued availability of efficient transportation compatible with their long term plans. The CPC pipeline provides oil shippers with the most reliable and cost effective solution for the transportation of their crude oil as compared to all alternative transportation options.

Unique to oil transportation in the region, CPC operates a Quality Bank which enables the users of the CPC pipeline system to receive the full value of their crude oil.

CPC has always had a positive impact on the communities in the vicinity of pipeline through tax payments to federal and local budgets, jobs and local contracts for works carried out in the performance of its business. Implementation of the Expansion Project will give an additional momentum to CPC positive impact on the communities, with approximately 30% of the total cost of the new construction to be spent to pay for labor, with much of it provided locally. Over 3,000 temporary and 350 permanent jobs will be created.

In addition to the direct impact that CPC business has on the local communities, CPC maintains strong social support programs in these communities, with primary attention paid to the disabled, orphans and veterans, assisting with health care, education, housing and utilities infrastructure, culture and sports.

CPC can clearly be seen as an advanced technological company by using the latest technology and proven engineering solutions common to its shareholding companies. And obviously, all technological applications receive all necessary approvals by regulatory supervising authorities. More details of information on engineering solutions used by CPC can be found in the Section Engineering Solutions.Additionally, CPC’s management practices are quite progressive due to the international nature of its management team, comprising of managers with extensive leadership experience in Russia, Kazakhstan and numerous international operations.

CPC conducts all aspects of its business with the greatest respect for safety of its people and those impacted by the pipeline’s operation as well as the performance to the highest environmental standards. Expenditures for environmental safety and environmental protection during the initial construction of the pipeline amounted to more than 12% of the total initial construction cost value. During the implementation of the Expansion project expenditures for environmental safety will also amount to a significant portion of the project budget. In its operation CPC follows all requirements of Russia’s and Kazakhstan’s legislation and, in addition, the Consortium follows international standards with more rigid requirements for industrial safety, labor and environmental protection. CPC has attained certification of its HSE management system to the international standards ISO 14001:2004 and OHSAS 18001:2007.

In short, at the international level, the Caspian Pipeline Consortium Project is an important component of the system for transportation of hydrocarbons from the Caspian Region that plays a prominent part in stable supply of world consumers with energy resources, while at the local level CPC is a respected and valued neighbor in all of the regions where it operates.