On August 8, 2017, in Krymsky District of Krasnodar Krai, PS-8 was commissioned. It was the last pump station to be built in Kuban as per CPC Expansion Project. Closing the event, Nikolay Gorban, CPC General Director, answered the questions of Russian and international reporters.
RE CONSTRUCTION OF PS-8
Commissioning of PS-8 allowed to increase the pipeline throughput by 20 MMTPA in the western segment of the Tengiz - Novorossiysk Pipeline: from PS “Kropotkin” to CPC Marine Terminal – said CPC CEO Nikolay Gorban.
Nikolay Gorban also stressed that PS-8 commissioning had already resulted in the RUR 12.1 mln increase of tax payments to the Krasnodar Krai budget. Total tax payments to the regional budget over the 7 months of 2017 amounted to RUR 3.46 bln, which was 174% more than for the entire 2016.
CPC General Director also advised that at the new facility the company installed the latest process equipment to ensure reliable, safe and efficient operation of the pipeline system.
RE THROUGHPUT AND CPC BLEND QUALITY
In answer to the question on the expected lifted volume, Nikolay Gorban advised that the 2017 CPC transportation plan is 56.50 MMT. Meanwhile, during the period through to July, more than 31.7 MMT had already been lifted, which is 6.1 MMT more Y-o-Y.
He also noted that a certain adjustment of the liftings plan was related to fulfillment by the shippers with their nominations. Thus, the 2017 crude injections planned figure had been reduced because of Litasco shipping oil from the Filanovsky and Korchagin fields, as well as shipper from Kashagan.
Total volumes expected in 2017 from Filanovsky and Korchagin fields are 3.44 MTT and from Kashagan – 8.07 MMT. (During the 7 months of the current year 3.83 MMT were injected in the CPC system from Kashagan and from Filanovsky and Korchagin fields 1.80 MMT and 0.006 MMT respectively.)
Total volume lifted at the Marine Terminal from January to the end of July 2017 was more than 28.7 MMT from Kazakhstan shippers and more than 3.0 MMT from Russian shippers.
As for the transportation plan for 2018, current estimate is 67 MMT, including 58.77 MMT from Kazakhstan and approximately 8.03 MMT from Russia.
Commenting on the CPC Blend quality, Mr. Gorban said that there had been no significant change in the CPC Blend quality when the system commenced accepting the Kashagan and Filanovsky crude.
Average specifications of the product lifted at the Marine Terminal in 2017: density 46.2 oAPI, mass sulfur content 0.54% (for reference: in 2016 - 46.5 oAPI and 0.52% respectively).
“We will continue monitoring further changes in the CPC Blend quality. No measures to improve the blend quality are envisaged by the Consortium at the moment”, said CPC General Director to the reporters.
RE COMPLETION OF CPC EXPANSION PROJECT
“Completion of the CPC Expansion Project is expected in the 4Q2017, to be followed by a seamless transfer to operation of the system”, N. Gorban advised. “In Russia we are yet to commission PS-5 in Stavropol Krai and PS-2 in Kalmykia; in Kazakhstan, prior to the year end, A-PS-3A in Kazakhstan, the fourth CPC pump station in this country, will be commissioned”
CPC General Director noted: “Preparations for startup and commissioning, comprehensive testing of the equipment, as well as certain seasonal work have to be completed at PS-2 in Kalmykia and A-PS-3A in Kazakhstan.”
In response to the question on further expansion prospects, CPC General Director noted: “By the end of 2017 we will have implemented the design solutions that will ensure coverage of all shareholder and shipper nomination in the near future. As for the new capacity, our shareholders – shippers will decide on it depending on their long-term development plans.”
RE IMPACT OF THE US SANCTIONS
“We are monitoring the situation and analyzing the potential risks. Our shareholders participate in the risk analysis. No immediate risk of the sanctions being applied to the Consortium or their automatic application is perceived”, Mr. Gorban said to the reporters.
“There is still no clarity with regard to interpretation of certain provisions of the law. Thus, we believe that the final conclusion on whether the law applies to CPC operations is premature”, he stressed.
RE CPC FINANCIAL RESULTS
“CPC 2017 investment program was USD 220 mln, including USD 70 mln for Base Business and USD 150 mln for completion of the Expansion Project. Final 2017 investment figures will become available in the middle of the 4Q when practically all Expansion Project facilities are completed”, said Mr. Gorban.
Preliminary IFRS net profit forecast for 2017 is USD 792 mln, including USD 654 mln in CPC-R and USD 138 mln in CPC-K.
Meanwhile, IFRS profit for the 6M2017 is USD 298 mln in CPC-R and USD 70.3 mln in CPC-K.
Commenting on the shareholders loans repayment, N. Gorban stressed that financial operation of the Consortium are driven by the repayments schedule set by CPC shareholders. In the 3Q2017 CPC will repay USD 305 mln of its debt. According to the economic model updated in the 1Q2017, debt servicing plan envisages the following payments: in 2017 – USD 1,170 mln; in 2018 – USD 1,366 mln, in 2019 – USD 1,435 mln and in 2020 - USD 1,107 mln.
About CPC:
CPC pipeline system is one of the largest investment projects in the energy industry with participation of foreign capital in the CIS. The length of the pipeline connecting oil fields in Western Kazakhstan with the Marine Terminal near Novorossiysk is 1,511 km. CPC Marine Terminal is equipped with single point moorings which allow for safe tanker loading at a considerable distance from the shore, also when the weather conditions are unfavorable.
CPC Shareholders: Russian Federation (represented by Transneft – 24% of and CPC Company – 7%) – 31%; Republic of Kazakhstan (represented by KazMunayGaz – 19% of 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% of and Oryx Caspian Pipeline LLC – 1.75%.