CPC Governance Bodies reviewed Expansion Project progress

​A CPC-R Board Meeting and a CPC-K General Shareholder Meeting were held in Moscow on November 29-30, 2011.

The meetings approved the company’s budget for 2012 and reviewed the progress of the Expansion Project. Project managers presented updates on construction progress, prospects and activities on construction sites both in Russia and Kazakhstan. CPC Shareholders confirmed that meeting the construction schedule was imperative and identified steps needed to ensure the schedule was met. Focus was made on aligning the timing of work activities on all CPC pipeline sections and sites, preventing any Expansion Project budget overruns and staying within the approved USD 5.4 bn budget.

It was acknowledged that one important aspect of the Expansion Project was its Incident & Injury Free program intended to improve safety culture both among CPC and contractor personnel. High safety standards are an immutable condition for achieving success. The objective of the program is to make sure every employee is guided by that approach in their daily practices.

Also a number of CPC operational and financial business issues were discussed and resolved at the meeting. 2012 CPC budget includes CPC-R Opex equal to USD 213 mln and CPC-K Opex equal to USD 50.6 mln. Additionally, USD 51 mln is allocated for recoating 106 km of pipe in Kazakhstan and just over USD 3 mln to build an H2S refuge for Tengiz pump station personnel.

CPC General Director Nikolay Planotov congratulated those present on two anniversaries celebrated by CPC in 2011: 15 years since the signing of the Shareholders agreement and 10 years since the pipeline commissioning and the first tanker lifting at the Marine Terminal. The year has been rich in significant events the most important of which is the start of the Expansion Project. The Shareholders in turn congratulated Nikolay Platonov on the first anniversary of his becoming CPC General Director.

The CPC pipeline system is one of the largest investment projects with foreign capital in the CIS. The pipeline connects oil fields in Western Kazakhstan with the Marine Terminal in Novorossiysk and is 1,511 km long.

The CPC project was originally developed with a view to future increase of its initial capacity by 2.5 times up to 67 MTA (76 MTA with DRA).

The Expansion Project includes upgrading the existing pump stations and building 10 new additional ones (2 in Kazakhstan and 8 in Russia), six oil storage tanks near Novorossiysk and a third single point mooring at the CPC Marine Terminal, and also the replacement of an 88 km pipeline section in Kazakhstan with a larger diameter pipe. The total amount of investment into the project will equal USD 5.4 bn. The expansion is planned to be completed in 2015.

CPC Shareholders: Russian Federation (represented by Transneft – 24% and CPC Company – 7 %) – 31%; Republic of Kazakhstan (represented by KMG – 19% 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% and Oryx Caspian Pipeline LLC – 1.75%.