MOSCOW, 24 February (Reuters) – Caspian Pipeline Consortium (CPC) plans to increase export pumping of CPC Blend in 2016 up toо 51.2 million tons from 42.8 million tons in 2015 and it is ready to meet the rising Kazakhstan requirement in oil transportation capacities, including after the startup of Kashagan, said in its interview to Reuters General Director of the Company Nikolay Brunich.
As the OPEC countries and Russia are trying to freeze the oil production at the current levels to support the prices (Full Story), and the market greedily snaps the data on the reduction in the number of wells in the USA, Kazakhstan prepares to launch a gigantic Kashagan oilfield, with CPC pipeline being its main export route.
"From the very beginning it was assumed that all oil produced in the oilfields, including the Kashagan oilfield in Kazakhstan, would be pumped through the CPC system, thus ensuring its loading and movement of about 70 million tons", Brunich said.
He clarified that the design throughput of the oil pipeline would increase up to 67 million tons by the year end, and with DRA 76 million tons of oil per year could be moved.
CPC Expansion Project, having been implemented for the last five years, will be completed by the end of 2016, that coincides in time with the Kazakhstan plans to start commercial production of oil in the Kashagan offshore oilfield.
Kashagan, the biggest deposit in the world discovered in the dozens of years and the most expensive world oil project, stopped its production in October 2013 due to pipeline leaks. North Caspian Operating Company (NCOC), a consortium developing the deposit, promises to start commercial oil productiоn in the second half of 2016 and by the end of 2017 to reach the maximum production level of 370,000 barrels per day.
Meanwhile, National Economy Minister of Kazakhstan Erbolat Dosaev informed earlier this week that Kazakhstan had reduced the oil production forecast for this year to 74 million tons from 77 million due to the world raw material prices drop (Full Story).
International oil quotations crashed to the minimum values for the last twelve years, on Wednesday North Sea basket Brent traded at the London Exchange at the price below USD 33 per barrel LCOc1.
WAITING FOR CASPIAN OIL
Despite the world oil price collapse, the CPC General Director believes that the upgraded Kashagan infrastructure will make it possible to start crude supplies via CPC already in the current year. Additional volumes will be provided by Tengizchevroil and Lukoil.
"Kashagan, as far as I know, proceeds as scheduled, and by the end of 2016 we expect to get from them about 2.5 million tons", the CPC General Director shares his plans.
The main crude supplier in CPC remains Tengizchevroil controlled by US Chevron CVX.N.
"Production output is also increased by the CPC main supplier - Tengizchevroil. While last year it moved 26 million tons, this year its nomination is already 30 million tons", Brunich said.
Besides, the CPC Management expects to start receiving into its oil pipeline Lukoil crude from the Russian Filanovsky oilfield on the Caspian shelf.
"By now, all infrastructure facilities at Komsomolskaya PS have been prepared to receive Lukoil crude from the Filanovsky deposit. We expect that by the end of 2016 the CPC pipeline system will receive up to 1 million tons of oil", Brunich said.
The General Director specified that all in all CPC expects to receive about 45 million tons of Kazakhstan oil and about 6 million tons of Russian oil.
The head of Lukoil Vagit Alekperov informed that Lukoil would launch the Caspian Filanovsky oilfield in late August – early September 2016.
FULL READINESS
Brunich said that all construction/installation work under the project would be completed in September 2016 and startup/commissioning work – in December.
In the first half of the year, after commissioning of two oil pump stations, the CPC throughput will increase up to 57-58 million tons of oil per year, the General Director told Reuters.
At the Black Sea Terminal in Yuzhnaya Ozereevka, the end point of the route, all work on the offshore and onshore facilities is 100% complete, noted Brunich.
According to him, the CPC infrastructure is ready for oil transshipment volume growth.
"Even now, CPC can load two tankers concurrently at a speed of 24,000 tons per hour. This is even more than needed for transshipment of 70 million tons of oil per year", the General Director said.
By Autumn 2016, the tank farm capacity will reach 1.0 million tons versus 700,000 tons last year.
ECONOMICS DID NOT FAIL
The CPC Expansion expenditures remained within the budget – USD 5.4 billion, and dollar tariffs provided saving for the Consortium, said Brunich.
"As we develop our budget in dollars, the tariff is also determined in dollars and contracts are executed in ruble equivalents, we have an extra saving effect", the General Director said.
He informed that the Consortium intended to repay USD 1.050 billion to the Shareholders in 2015, but actually paid out more – USD 1.5 billion, including USD 530 million remitted to the RF budget.
The CPC trunk pipeline connects the Tengiz oilfield in West Kazakhstan and some others with the Yuzhnaya Ozereevka Marine Terminal near Novorossiysk.
The CPC Shareholders are Russia, owning 31%, Kazakhstan (20.75%), Chevron CVX.N (15%) and private companies.
Gleb Gorodyankin, Alla Afanasyeva
Reuters