The last Pump Station of CPC Expansion Project - PS-2 in Kalmykia - was put into permanent operation on April 18, 2018.
In the course of the ceremony, CPC General Director Nikolay Gorban answered a number of questions of Russian and foreign mass media journalists in the form of a video conference between PS-2 control room and CPC Moscow Office and some questions received during the press conference online streaming in social media.
2017 CPC PERFORMANCE RESULTS
CPC General Director Nikolay Gorban pointed out that 2017 had become not just a year of the completion of the Project to expand the Consortium’s capacities to 67 M tons of crude oil per annum, but the most successful year in terms of operation performance indicators.
So, the crude oil transportation and lifting volumes increased by almost 25 per cent. “As of the year end, CPC lifted 55.1 M tons of oil, exceeding the 2016 volumes by 10.8 M tons, when 44.3 M tons of oil had been lifted from CPC Marine Terminal”, - said Nikolay Gorban.
He also clarified that in 2017 49.6 M tons out of 55.1 M tons had come from Kazakhstan. That indicator was higher than the one of the previous year by 8.8 M tons, or 21.6%. Russian producers delivered 5.5 M tons, which was 2 M tons more than in 2016. 3.4 M tons from those volumes were from Lukoil’s Caspian fields, and 2.1 M tons were delivered by Rosneft.
It was also specified that the oil received from Kazakhstani fields in 2017 was distributed as follows: 28.8 M tons from Tengiz; 10.6 M tons from Karachaganak; 7.4 M tons from Kashagan and 2.8 M tons from other producers.
CPC Base Business’s indicators impressive growth became possible thanks to the Tengiz-Novorossiysk Pipeline Expansion Project completed by the Consortium and commencement of commercial operation of new fields - Kashagan in Kazakhstan and Filanovsky in Russia.
CPC General Director emphasized that in 2017 alone CPC had put into operation six new PSs: two in Astrakhan Oblast, one in Krasnodar Krai, one in Stavropol Krai, one in Kazakhstan and on April 18, PS-2 in Kalmykia had been commissioned.
As for CPC financial performance, Nikolay Gorban said that the increase of volumes transported by CPC crude pipeline had favorable impact on the Consortium’s financial metrics.
So, 2017 revenues before tax amounted to 93.2 B Rubles, which was 6.3 B Rubles higher than in 2016. The net profit amounted to 42.7 B Rubles.
In 2017, CPC paid significant Regional and Federal taxes - about 11.8 B Rubles.
The following taxes were the most significant ones:
• Profit tax - 6.7 B Rubles
• Property tax - 2.6 B Rubles
• Withholding tax - 1.13 B Rubles
• Social taxes - 766.1 B Rubles
In addition, 1.200 B USD were paid to the Shareholders as debt repayment in 2017. 1.039 B USD were paid by CPC-R and 161 M USD - by CPC-K.
2018 PLANNED INDICATORS
In respect of the Company’s 2018 development prospects, CPC General Director informed that as per the Oil Producers’ nominations, it was planned to pump 67 M tons of oil that year. It was assumed that 60 M tons of those would come from Kazakhstan as per the following breakdown: 29 M tons from Tengiz; 13 M tons from Kashagan; 12 M tons from Karachaganak, and 6 M tons from other producers.
“In 2018, we expect to receive 7 M tons of oil from the Companies producing oil in Russia. Over 4 M tons of those volumes are from Lukoil’s Caspian fields, the balance - from Rosneft”, Nikolay Gorban told the journalists.
As for the 2017 investment program, it was communicated that it would amount to about 3.9 B Rubles, with 3 B Rubles in the RF and 0.9 B Rubles in Kazakhstan.
The program included activities related to upgrade and scheduled replacement of equipment. The work would be carried out at PS sites, on the line sections, crude pipeline sub-water crossings and at the Marine Terminal facilities.
The 2018 forecast of revenue from the oil transportation services is over 108 B Rubles (Note: RAP). That is 7% higher than 2017 results. The forecast of net profit after tax amounts to over 50 B Rubles (note: RAP).
Nikolay Gorban also informed that as of April 18, CPC Marine Terminal had successfully handled 160 tankers, lifting 17.5 M tons of oil. The April planned indicator is 5.14 M tons. “We hope that the Shippers will fulfil their nominations”, - he commented.
SHAREHOLDER DEBT REPAYMENT
“On March 29, 2018, CPC paid 310 M USD to the Consortium’s Shareholders as debt repayment for the first quarter of 2018. As part of its share, CPC-R paid 268 M USD and CPC-K - 42 M USD”, - Nikolay Gorban told the journalists.
In total in 2018, CPC plans to repay up to 1.3 B USD and another 1.5 B USD in 2019. It is assumed that those debt repayment rates will allow CPC to pay off the debt by late 2020 and proceed to payment of dividends to the Shareholders.
IMPLEMENTATION OF SOCIAL PROGRAMS IN THE REGIONS
Caspian Pipeline Consortium is activity engaged in development of social infrastructure in the Regions where the Company operates. In 2017 alone, CPC implemented in Russia and Kazakhstan 84 charity projects for 930 M Rubles.
“In Kazakhstan, 692 M Tenge were spent, and in Russia - 806 M Rubles,” - informed CPC General Director.
In Russia’s regions where the Consortium operates, it built and reconstructed three schools (two in Krasnodar Krai and one in the Republic of Kalmykia), three kindergartens in Astrakhan Oblast and one clinic in Novorossiysk, and also provided all necessary equipment and furniture for those facilities.
In Kazakhstan, the Consortium allocated fund for major overhaul of two kindergartens, construction of a new kindergarten, construction of sports facilities in educational institutions, construction of a new school and for support to low-income families and environmental projects.
Municipalities and schools in the regions where CPC-R operates received 57 buses in total. 30 new ambulances were provided to the medical facilities of Kalmykia and Stavropol Krai. Considerable quantities of modern hi-tech diagnostics medical equipment were delivered to the regional hospitals and clinics. For many years, social responsibility has been one of the priorities to CPC.
The Consortium’s Head emphasized that in 2018 CPC would keep on working on development of social infrastructure in the regions where it operated. The budget for Russia is planned to amount to slightly over 800 M Rubles, for Kazakhstan - 736 M Tenge.