CPC is a major international oil transport project implemented by Russia, Kazakhstan and leading international oil producer companies. It was created to build and operate a mainline pipeline 1,511 km in length. Oil is directly delivered into the CPC system from the Tengiz, Karachaganak and Kashagan fields. The pipeline pumps more than three thirds of all of Kazakhstan’s export oil annually.
Nikolay Gorban, CPC General Director, is sharing information with readers of the KAZSERVICE magazine about an ongoing pipeline system capacity expansion project (Debottlenecking) and also answering some other questions related to CPC’s activities.
Mr. Gorban, the CPC oil pipeline upgrade program was planned to be completed by December 2023. Has the global pandemics impacted the CPC expansion project?
Let us first get the terms right. This is not an upgrade program and not a new expansion project as often erroneously written in the mass media. The expansion project to increase the capacity of the pipeline system up to 67 million tons per annum was successfully completed by CPC in 2017, and now we have started implementing a debottlenecking program (DBNP). In essence, DBNP is an optimization of current capacities of the oil pipeline system resulting from the implementation of the Expansion Project.
Based on evaluation of the COVID-19 pandemics’ impact on DBNP progress, I can say that, in general, the situation associated with the restrictions on the activities of enterprises did not decrease the rate of progress in the company’s efforts picked up at the start of the program. Although, of course, some adjustments were made.
Currently, the engineering and the preparation of full-scale DBNP implementation are being performed within the dates of the DBNP schedule approved by the shareholders as part of the Final Investment Decision (FID).
What caused the need for such a program?
Currently, projects are in progress to expand the capacities of the Tengiz and other major fields in Kazakhstan. Based on forecast nominations, starting from 2022, the oil producers’ demand may exceed the throughput capacity of the mainline pipeline that existed as of the beginning of 2019. That is why this program was considered and approved at a CPC Shareholder Meeting held in Baku on May 21, 2019.
After the program is implemented, the throughput capacity of the Tengiz-Novorossiysk system will allow to support the transportation of oil from Kazakhstan, at least, up to 72.5 million tons.
I’ll remind you that the Final Investment Decision package set DBNP execution dates indicated as by December 2023 and construction and installation completion in 2022. All these deadlines are still preserved.
What is the total amount of investment that is planned to be attracted into the project?
The amount of investment costs for the period 2019-2023 will total 599.9 mln US dollars, out of which 156.4 mln US dollars will fall on CPC-K and 443.5 mln US dollars on CPC-R.
Please, tell us the key scopes and work phases of the project.
DBNP can be divided into several key phases. The first phase is intended for engineering and selection of contractors for construction and installation work (CIW). The second phase is associated with design expert reviews and obtaining construction permits. The third phase includes mobilization and the execution of CIW simultaneously with delivery of necessary process equipment.
Let me highlight that work activities will be performed within one scope or another at all of the fifteen CPC oil pump stations and the marine terminal. Thus, at the Astrakhan pump station, DBNP will result in a new mainline pump house and a new indoor switchgear being commissioned.
The scope planned for the Atyrau pump station includes the construction of a new gas-turbine-driven mainline pump unit and the upgrade of a diesel fuel pump station.
Also, at the Tengiz pump station, it will be required to install two RVSPK-20,000 tanks, to upgrade an oil meter, to replace three mainline pumps, to install four booster pump units and to construct a substation. However, the work is not going to be so large scale at all sites, at some stations, it is sufficient to replace pump impellers.
These steps will allow to ensure the flexibility of oil injection modes from producers and the capability to pump additional volumes of crude oil from the Republic of Kazakhstan with optimal operating factors and efficient drag-reducing agent consumption.
What stage is the project at at the moment?
As part of the DBNP, a positive opinion has been received from an extradepartmental expert review board of the Republic of Kazakhstan for the dismantling of an old diesel fuel pump station at the Atyrau pump station. I’ll remind you that a new diesel pump station was built several years ago during the execution of the Expansion Project, and now the fifth gas-turbine-driven main oil pump is
planned to be installed at the site of the old one. Now that the dismantling design is approved, our colleagues from the CPC Eastern Region Construction Office are ready to start that work.
Approval has been completed of a design package for the construction of the new mainline pump house and support facilities at the Astrakhan pump station and construction permits have already been received from FAU “Glavgosexpertiza of Russia”.
A design package for the construction of new oil quantity and quality measurement systems at the marine terminal shore facility has already been sent to the portal of the State Expert Review Department of Russia. Once it is confirmed to be complete, its review will start.
CPC has also obtained approval of upgrade design packages to equip the mainline pump units with variable speed drives and to dismantle the pressure control stations (PCS). The industrial safety expert review of these designs is in the closing stage.
Just recently, our management team traveled along the Russian section of the oil pipeline, visiting sites where sub-facilities to be constructed or refurbished under DBNP will be located at pump stations. Also, we reviewed matters related to new utility lines to be laid and tied in to existing ones.
We also paid a visit to the Astrakhan pump station, where they are preparing to construct a new mainline pump house, to install VFDs, an indoor switchgear, new mainline mud strainers, a foam generator unit and cable racks, they have defined locations of dividing fences that will allow to isolate construction sites from operating process areas.
Then we visited APS-4A and Komsomolsk PS, where it is planned to install one additional gas-turbine-driven pump unit at each site. There we defined additional points of access to the station for a construction contractor and segregation zones between operating equipment and utilities and those planned to be installed.
We also inspected APS-5A, PS-2, PS-3, PS-4 and PS-5 where VFDs are planned to be installed. There we discussed matters associated with moving existing utilities and equipment from new sub-facility location sites. By the way, I can tell you that we already have all major deliveries contracted, the first of which will start in November 2020.
Is any specialist training or retraining envisaged under DBNP?
At the end of 2019, an induction training course was developed for project specialists. The course gives an insight into the DBN scope of work and objectives. In addition to induction information, new hires receive an overview of CPC, its
objectives and corporate culture. The training program includes requirements for CPC employees, behavior standards, safety rules and technical standard documentation. In addition, a wide range of communicative tools deployed in CPC is used.
Would you please name some specific figures in terms of the number of people who will be mobilized at the work peak. And what will the mobilization sequence be?
The CPC Board and Shareholders approved the maximum headcount of 330 new hires. The actual headcount of the project team directly depends on the quality performance of construction contractors at site.
You publish all tenders and small purchases on your website. We would like to learn some details from participation rules in such tenders for Kazakhstani companies.
In tendering, CPC keeps abreast of the times. This is done for the purpose of ensuring maximum openness and a competitive environment. Absolutely all purchases are posted in free access on the company’s web-site http://www.cpc.ru
in the section “Tenders”.
The tendering rules are made as close to federal law requirements as possible. Any legal entity, including ones from the countries of the Customs Union, can take part in a tender process or a “small purchase” so-called.
Also, any participant of the process can download the whole package of technical and tendering documentation, as well as a draft contract, directly from the section “Purchases” on the CPC website. The Company is mindful of the possibility of non-residents taking part in tenders, for whom contracts are posted that take into account all customs specifics.
The key requirements are, first of all, the timely submittal of a bid by a deadline specified in a Notification. The second requirement is the completeness and quality of documents submitted. Thirdly, bidders are required to follow the principles and provisions of the CPC-R and CPC-K Code of Business Conduct. All bids are reviewed on equal bases but bidders should familiarize themselves carefully with requirements applied to bidder companies at the start of the process. They may include requirements for a bidder to have necessary licenses, permitting documents or earlier experience in specific work. Taking into account “due diligence” requirements by state authorities, CPC, same as any other organizations, has a security check system for counterparties, which includes checks that are usual in this case.
I also want to highlight that it is possible to get feedback. A bidder can always ask for clarifications from company specialists using contact details specified in documentation.
At the moment, taking into account the quarantine measures related to COVID-19, the tendering procedures are adapted to receive bids from bidders electronically. Undoubtedly, this makes it easier to participate in the procedure and reduces counterparties’ costs, especially those of non-residents. In addition, a lot of purchases are being made in the Republic of Kazakhstan under DBNP.
In 2019, significant contamination of crude oil transported from Russia via the Druzhba pipeline led to a shutdown in the transportation of produced hydrocarbons. Are systems to prevent similar incidents related to contamination with chloroorganic compounds envisaged in the CPC pipeline?
We check the chlorooganic concentration as per set standards once every ten days.
Mr. Gorban, we thank you for the time you found for the interview and readiness for cooperation with Kazakhstani contractors.