Kazakhstan Oil & Gas Minister Uzakbay Karabalin on November 28 held a working meeting attended by CPC Management, Transneft, KMG and Chevron.
The main focus of the meeting was the execution of the CPC Expansion project. The meeting attendees discussed the current Project status, including some problem issues related to schedule delays, particularly on sites in Kazakhstan. The CPC Shareholders presented their view on the situation, proposed mitigation steps and set challenges to CPC for 2014 and looking forward.
CPC General Director Nikolai Brunich presented an update on Project progress and described mitigation steps that will allow catch up on the schedule delay on the Kazakh section. Russian Expansion Phase 1 facilities will be fully ready by mid-December. Paperwork needed to commission the upgraded facilities for operation should be signed in January –early February. Phase 1 work in Kazakhstan is planned to be completed in October next year. At the same time, the CPC General Director noted that by May 2014 CPC will be ready to receive crude from the Kashagan field using its reserve capacities and also increase the crude injection quota at the Tengiz PS.
The business meeting resulted in the decision that all contractors involved in constructing facilities in Kazakhstan should develop and approve a revised integrated project execution and facilities commissioning schedule by mid-December this year.
CPC pipeline system is one of the largest investment projects in the energy industry with participation of foreign capital on the CIS territory. The length of the pipeline connecting the oil fields in Western Kazakhstan with the Marine Terminal near Novorossiysk is 1,511 km. CPC Marine Terminal is equipped with single point moorings which allow for safe tanker lifting at a considerable distance from the shore, also when the weather conditions are unfavorable.
The Expansion Project includes rehabilitation of 5 existing and construction of 10 additional pump stations (2 in the Republic of Kazakhstan and 8 in the Russian Federation), six new storage tanks (100,000 cu.m each) in addition to the existing four near Novorossiysk and a third SPM 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 the Project investments will be US$ 5.4 billion.
CPC Shareholders: Russian Federation (represented by Transneft – 24% and CPC Company – 7 %) – 31%; Republic of Kazakhstan (represented by KazMunayGaz – 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% и Oryx Caspian Pipeline LLC – 1.75%.