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Press Release June 15, 2004 |  | |
For immediate release
June 15, 2004
Contacts:
Natalia Prutkovskaya
Vadim Bely
at (095) 775-00-77
June 15, 2004 -- Russia, Moscow --
The Caspian Pipeline Consortium has signed a contract with a team of contractors that will conduct front-end engineering and design for the expansion of the CPC pipeline system, that runs from the Tengiz oilfield in Kazakhstan to Yuzhnaya Ozereevka at the Russian coast of the Black Sea. This work, expected to be completed by December 2004, will provide CPC and its shareholders with the information required to determine the size, timing and design features of an Expansion.
The contracting group comprises Gulf Interstate Engineering (GIE) of Houston, the Kazakh Institute of Oil and Gas (KING) based in Astana, Kazakhstan, Giprovostokneft of Samara, Russia and John Brown E&C of UK. Thus it brings together teams specializing both in pipeline system design and in construction.
The contract, with its blend of Russian, Kazakhstan and Western involvement, continues CPC's policy of maximizing the involvement of high quality regional companies,” said CPC General Director Ian MacDonald. “The team has been selected by CPC for its specific expertise and experience in executing projects in Russia, Kazakhstan and internationally.”
The CPC pipeline system which started operation in 2001 currently has an export capacity of 28 million tons per year but was always intended to be expanded to a throughput of 67 million, equivalent to 1.4 million barrels per day. The pipeline has injection points along its length permitting flows from other oilfields in Russia and Kazakhstan.
“The signing of the contract is an encouraging step in CPC’s continuing efforts to expand the pipeline to meet the forecasted production demands of CPC shippers,” added Ian MacDonald. “By optimizing the system and using drag reducing agents (DRA), the consortium has been able to increase the initial design capacity of the pipeline by several million tons; however, this is only a temporary measure. Increased oil output by the shippers requires further phased expansion of the system by constructing new pump stations and storage tanks at the Marine Terminal near Novorossiysk.”
CPC was pumping more than 1.6 million tons of crude oil per month from seven shippers in Kazakhstan during the first 5 months of this year. With the recent arrival of Karachaganak oil into the pipeline, CPC is now exceeding its initial capacity for oil originating in Kazakhstan with a pumping rate of over 2 million tons per month (equivalent to over 500,000 bopd).
Additional capacity will progressively come on line over the next four to five years until the system is fully expanded, providing a valuable boost to Russia and Kazakhstan’s export capacity and affording world markets significant additional oil supplies,” said Ian MacDonald.
The multinational ownership interest in the CPC is as follows: Russian Federation – 24%, the Republic of Kazakhstan – 19%, the Sultanate of Oman – 7%, Chevron Caspian Pipeline Consortium Company – 15%, LUKARCO B.V. – 12.5%, Rosneft/Shell Caspian Ventures Limited – 7.5%, Mobil Caspian Pipeline Company – 7.5%, Agip International (N.A.) NV –2%, BG Overseas Holding Limited – 2%, Kazakhstan Pipeline Ventures LLC – 1.75%, and Oryx Caspian Pipeline LLC– 1.75%.
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