A meeting of the managing bodies of Caspian Pipeline Consortium was held on February 8 in Moscow. The meeting Agenda was dedicated to the matters related to the Expansion Project implementation.
The Shareholders listened to the Company Management's report on the Project work status and discussed various technical, financial, legal and logistic matters of Phase 1 implementation progress. In respect of all activities under way at the crude pipeline system facilities to be reconstructed as per the design documentation noticeable progress was achieved. Specifically, the reconstruction of the existing Pump Stations in Russia goes either in accordance with the schedule or ahead of it.
At the same time the Shareholder companies' representatives expressed their concern about potential delays in commissioning some of Phase 1 facilities due to delays with long-lead equipment items deliveries by some of CPC contractors. The Meeting attendees reviewed the risks associated with the delays and an action plan aimed at performing the construction in accordance with the schedule. It was pointed out that possible extension of the timeline to complete some of the facilities would not entail a growth of the Project costs in general versus the Expansion budget approved by CPC Shareholders in December 2010.
In addition, the Meeting attendees reviewed various aspects of the Consortium's current financial and base business operation.
CPC pipeline system is the largest investment project with foreign capital participation within the CIS. The length of the pipeline connecting the oil fields in Western Kazakhstan with the Marine Terminal in Novorossiysk amounts to 1,511 km.
Initially the CPC Project was developed with a prospect of increasing its throughput capacity 2.5 times - up to 67 MMT per year (76 MMT per year using the drag reducing agents).
The Expansion Project includes the reconstruction of existing and construction of 10 additional pump stations (2 in the Republic of Kazakhstan, 8 in the Russian Federation), six oil storage tanks (100K cu. m each) near Novorossiysk and a third single point mooring at CPC Marine Terminal, as well as the replacement of the 88 km pipeline section in Kazakhstan with a larger diameter pipe. The total investments in the Project will amount to $5.4B.
CPC Shareholders: Russian Federation (represented by Transneft - 24% and CPC Company - 7 %) - 31 %; Republic of Kazakhstan (KazMunaiGaz) - 19 %; 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%, Kazakhstan Pipeline Ventures LLC - 1,75% and Oryx Caspian Pipeline LLC - 1,75%.