CPC guarantees efficient and environmentally safe movement of crude oil

The Project is designed to increase the trunk pipeline capacity

CPC: full speed ahead

The Consortium is nearing the completion of the pipeline expansion project

CPC is planning to finish the process of the pipeline capacity expansion to reach its rated annual capacity of 67m tons of oil transportation by the end of 2017. According to the information provided by Nickolay Gorban, the Consortium’s director, the company is going to spend $150m this year to meet this target. Even now the Consortium has the capacity to load up to 650 tankers with oil for export annually. The loading operations are carried out using single point moorings located 5 km offshore.

Now CPC is completing the second and the third stages of the expansion project. The journalists were briefed by Nickolay Gorban about the last year performance and the plans for the current year at the press conference held in Moscow on January 31. He noted that tremendous job has been done but 2017 will still be abundant with the events important for the project. As an example, CPC director pointed out the stage-by-stage commissioning of А-PS-4А and А-PS-5А in Astrakhan oblast, where the operation is scheduled to start in the first half of 2017. This will allow to boost the pipeline capacity up to 52,5m tons of oil per year. PS-8 in Krasnodar krai and PS-5 in Stavropol krai will be commissioned afterwards. The last to be commissioned in Russia will be PS-2. It is located in the Republic of Kalmykia and it is the remotest site from any populated areas.

Gorban has reminded that A-PS-4A started its operation in Kazakhstan in late October 2016. Commissioning of this station made it possible to boost CPC pipeline system capacity to transport oil from Kashagan field. One more pump station – A-PS-3A located in Kazakhstan is nearing its construction stage completion. Its commissioning is scheduled for the second half of 2017. CPC pipeline system capacity expansion is unique in that increasing the capacity of transportation over two-fold has been achieved without suspending the pipeline operation, as was pointed out by Gorban. The stage-by-stage increase in the operational pipeline production, as was stated by Gorban, has become possible owing to construction of the new sites and the new technologies applied. Following the expansion project completion the CPC will reach the annual oil transportation capacity of 67m tons.

CPC in figures

CPC’s profit in 2016 grew by 18%, to reach $237m. The company’s revenue was $1,6 billion rising by 7% as compared to 2015. The Company attributes these achievements to the increasing volume of oil transported. In Russia the company will spend 5.2 billion rubles in 2016 in taxes, as compared to 4,3 billion rubles in the previous year. The consortium’s planned investment program for 2017 is $70m. It includes fire prevention and upgrading activities.

In 2016 CPC pipeline system received and shipped 44 million 317,58 thousand tons of hydrocarbons. This is an absolute record of annual transportation for the entire operation time of the consortium. Out of this total volume 40 million 819,9 thousand tons was the oil of Kazakhstan shippers, including 803,4 thousand tons from Kashagan field. The Russian shippers oil amounted to 3,5 million tons, including 634,7 thousand tons from Filanovsky field and 110,33 thousand tons from Korchagin field located offshore in Caspian sea.

Underwater tankers loading

To transship such amount of raw material to CPC’s Marine Terminal around 650 tankers will be arriving annually to the waters off Novorossiysk port (as compared to 435 oil tankers in 2016).

The oil tankers will be moored for loading at one of the three single point moorings (SPM). This is a unique technology CALM (Catenary Anchor Leg Mooring) that has no analogue elsewhere in Russia which allows to carry out loading operations safely and 24 hours a day to load large capacity oil tankers without restrictions to a vessel displacement and not being constrained in maneuvering. The SPMs connected to undersea pipelines are located 5 km offshore. They have been specifically designed for offshore conditions and for that particular sea bottom relief. They are capable to withstand the heaviest gales that had ever occurred around Novorossiysk in the last 100 years.

CPC history

CPC pipeline system is one of the largest investment projects involving foreign investments in CIS countries. The length of the pipeline that connected oil fields in Western Kazakhstan with Marine Terminal in Novorossiysk is 1511 km. CPC’s Marine Terminal has three single point moorings (SPM) making it possible to load oil tankers safely at significant distance from the shore even in adverse weather conditions.

CPC shareholders — Russia with 31% (assets management by PАО «Transneft» — 24% and «CPC Company» — 7%).

Other CPC shareholders are: The Republic of Kazakhstan (represented by «KazMunaiGas» — 19% and Kazakhstan Pipeline Ventures LLC — 1,75%) — 20,75%, Chevron Caspian Pipeline Consortium Company — 15%, LUKARCO B.V. — 12,5%, Mobil Caspian Pipeline Company — 7,5%, Rosneft-Shell Caspian Ventures Limited — 7,5%, BG Overseas Holding Limited — 2%, Eni International N.A. N.V. — 2% и Oryx Caspian Pipeline LLC — 1,75%.

CPC started its operation on October 13, 2001 when the first oil tanker was loaded at Marine Terminal near the village of Yuzhnaya Ozereyevka. By mid 2004 CPC has reached the first stage capacity — 28,2 million tons. Since 2005 CPC has been using the drag reducing additives, gradually boosting oil transportation which in 2010 reached 35 million tons.

In 2011 CPC started the expansion project. In April 2014 the first stage of the project in Russia was completed. The upgraded equipment installed at Astrakhanskaya PS, Komsomolskaya PS and Kropotkinskaya PS was commissioned. In September 2015 all facilities of the first stage of the expansion project in Kazakhstan were commissioned – at Atyrau PS and at Tengiz PS. Totally 20 facilities had been commissioned by the end of 2016 of those 16 - in Russia and 4 - in Kazakhstan.

According to some experts there are very few terminals in the world that could emulate CPC’s marine terminal in terms of its equipment and management. This is confirmed by the fact that the company received prestigious awards at the international contests. In 2015 CPC marine terminal was awarded with Grand-prix at the contest “Oil Terminal 2015”.

The utilization of all three single point moorings has allowed to reduce time for the tankers berthing by six hours, which is critical in complicated autumn-winter weather conditions. The procedure of inspecting the tankers has been significantly optimized. Previously the maritime & coastguard inspectors were allowed to board the tankers only when the waves were up to 1.5m high, although a tanker is capable of being loaded when waves are up to 3m high. Now the loaded oil tanker can stay off the port waiting for better weather conditions to allow inspections to be carried out and this has significantly expedited the whole process.

The road to success

Yeryomin Nickolay Alexandrovich, Ph.D in technical sciences, professor, head of the Analytical center for scientific and technical forecasting in oil and gas industry, IPNG RAN

CPC is very important for RF. From a geopolitical point of view CPC is an obvious example of successful international cooperation in exploring new regions for oil extraction both on land and in the sea, in Russia and in the Republic of Kazakhstan. From economic point of view CPC is the most reliable, highly profitable and economically feasible route to transport oil from the oil fields developed by CPC shareholders. CPC shareholders total investment is over $5 billion in the construction of the first and the second stages of the trunk oil pipeline of which over 65% had been spend on infrastructure facilities in Russia. CPC’s dynamic development provides an opportunity for oil and gas companies to develop the fields in the North Caspian region locked inside the mainland.

It seems to be relevant that in the foreseeable future the additional expansion of CPC pipeline capacities will be required for Russian oil and gas companies including those which are CPC shareholders as the prospects of oil production expansion on the Russian and Kazakhstan’s fields of the Caspian Sea and on land are very favorable. In deep waters of the Russian part of the Caspian Sea “Lukoil” has discovered 6 fields: Khvalynskoye, 170 km, Korchagin field, Rakushechnoye, Sarmatskoye and Filanovsky fields with the confirmed oil reserves of about 300 million tons with maximum annual oil production target of 8 up to 10 million tons. The reserves of about 200 million tons of oil have been entered into books of account by other users of mineral resources. Their development will provide additional annual extraction of 6-8 million tons. The prospective oil resources extraction in Caspian Sea is estimated at 3.5 billion tons. Their transfer to the reserves will allow to ensure that the extraction will reach 10-15 million tons in the short term. Ultimately we may expect that in the years to come the maximum oil extraction target in the Russian sector will be around 24-33 million tons.

As for the prospects of Kazakhstan’s fields development in the Caspian region and in the neighboring areas, the accumulated extraction volume during a short period of development on Kashagan field has reached 1 million tons by January 8, 2017. The annual expected oil extraction in 2017 is 8-9 million tons, after the completion of the first stage the extraction volume will grow to reach 19 million tons and by 2024 it will reach 23 million tons. The oil fields Kalamkas-sea and Khazar field will start to be developed as part of the northern Caspian project which will allow to boost annual offshore extraction by 3 million tons. In the land fields: by 2022 the annual oil extraction on Tengiz field will grow to 39 million tons after the work on the integrated project is completed. TSO’s development of the Royal field will allow in addition to increase extraction up to 5-6 million tons. On Karachaganak field the third technological line to produce liquid hydrocarbons is scheduled to be commissioned by 2022 which will allow to reach the annual production target of 14-15 million tons. Summarizing the above said, we may expect that the annual oil extraction in the Caspian region and in the neighboring areas will grow by 2022-2024 up to 104-119 million tons owing to significant investments including from CPC shareholders.

CPC has no other viable economic alternative as it is a constituent part of the integrated businesses of extraction, transportation and processing of the raw materials of CPC shareholders, international, Russian and Kazakh oil & gas companies. CPC team is a rare symbiosis of not just political, economic, but also of everyday technical cooperation of specialists from various countries who make sure that the pipeline system is running by applying the best world practices.

It should be noted that with the growth of CPC’s transportation capacity the labor safety figures are also improving. For example, in January 2017 two CPC’s subdivisions (in Central and Western regions) showed 15 million hours of work injury free (in each subdivision). The safety requirements become more stringent. The revenues paid to the federal and local budgets in RF and Kazakhstan: over 5 billion rubles and over 20 tenge respectively according to 2016 data.

Preparing for the increase of oil transportation and loading the oil tankers the consortium has built six additional oil storage tanks RVS-100000 as part of the expansion project. The commissioning of these tanks at Marine Terminal allowed to get the reserve storage facilities to accumulate oil in case weather conditions are bad and it also made the CPC’s tank farm one of the largest in Russia: total capacity of the consortium’s tank farm near Novorossiysk is now 1 million tons of oil.

Marine Terminal – the control center

CPC’s Marine Terminal is not just a large oil transportation hub, but also the primary control center (PCC) of the entire Tengiz-Novorossiysk pipeline system. Pumps, shutoff valves and other process equipment can be controlled from PCC throughout the whole CPC pipeline both in Russia and in Kazakhstan.

There are three control consoles in PCC operated by three dispatchers – two of them control the mainline operation from Tengiz to Novorossiysk and the third one is in charge of the tank farm operation and oil tankers loading operations.

The data on the dispatchers screens is updated every second regardless of the distance between the facility and the control center. The refurbished PCC room has the new equipment installed, including SCADA. Owing to the upgrading project carried out the speed of the information transmission along the route has increased 25 times. The updated system incorporates 200 000 transmitters (as compared to 80 000 in 2010). The number of the PLCs has doubled. Now there are 500 PLCs.

Increasing the capacity – revenue growth

Now the consortium has the capacity for the transportation of 52 million tons per year. The transportation plan for 2017 according to the company’s information is 65 million tons – to meet the consumers orders. In particular, Kazakhstan’s producers will provide 54 million tons, including 11 million tons from Kashagan field. Russian producers will provide 11 million tons, including 5.4 million tons of oil from Filanovsky and Korchagin fields.

The significant growth of transportation volume has been favorably reflected in the consortium’s revenues and the rate of repayments to the shareholders. «We’ve got a loan from the shareholders but it is not about the expansion project. After we completely repay it we are going to pay dividends», – said Gorban.

In 2015 CPC had paid $1,5 billion to the shareholders. In 2016 $1,2 billion had been paid as dividends, though initially $1billion was intended for this purpose. This year the consortium is planning to repay $1,25 billion. However, according to the company director, if extra profit is received, the consortium may increase the amount of the repayments to the shareholders planned for 2017.

Based on the adopted financial pattern a complete repayment of CPC’s debt to the shareholders, which was $4,49 billion as of December 31, 2016, is expected to be completely paid off in 2020.

CPC highlights that participation of the key global oil and gas companies in CPC project not only ensured that the project has got financing, but also enabled to apply the up-to-date technologies and equipment, international standards of control, engineering, construction and operation of oil transportation facilities.

Elena Zabello

Oil & Gas Journal, March, 2017