On May 12, 2017, a formal ceremony of commissioning two new oil pump stations of Caspian Pipeline Consortium (A-PS-4A and A-PS-5A) took place in the Astrakhan region. At the end of the event CPC General Director Nikolay Gorban answered a few of questions from Russian and foreign journalists.
CPC EXPANSION PROJECT PROGRESS
The Expansion Project is being executed in accordance within approved plans and will be completed by the end of 2017. "Two pump stations (A-PS-4A and A-PS-5A) have been commissioned in the Astrakhan Region today. The commissioning of these stations will provide an additional capacity increase on the Caspian section of the CPC oil pipeline (from the Atyrau pump station to the Komsomolsk pump station) by up to 10 million tons per annum", CPC CEO told the journalists. "At the present time, a regulatory inspection is successfully completed at PS-8 in the Krasnodar Krai and the station is getting ready to be commissioned for operation", - Nikolay Gorban commented.
Furthermore, he stated that PS-5 in the Stavropol Region and PS-2 in the Republic of Kalmykia will also be put into operation in 2017. The latter is the most remote from populated areas, and is being constructed in difficult conditions.
In Kazakhstan, CPC’s forth pump station in that country, A-PS-3A, will be commissioned by the end of the year. After all these facilities have been put into service, the CPC pipeline system capacity will reach 67 million tons of oil per annum.
EXPANSION PROJECT COST
The Expansion Project will not exceed the amount of 5.4 billion dollars approved by the shareholders, Nikolay Gorban stated. "We see some savings but a specific saving figure can be given after all work is completed", he noted.
2016 OIL MOVEMENT RESULTS
Answering a question about oil movement achieved, Nikolay Gorban stated that in 2016 the Consortium sent 44,280,972 tons of oil to world markets, which is 1,538,197 tons more than in 2015.
Out of that volume, 40,819,897 tons is oil from Kazakhstan shippers, including 803,362 tons from the Kashagan oil field. At the same time, he also stated that 3,497,683 tons of oil belong to Russian shippers, including 634,711 tons from the Filanovsky field and 110,328 tons from the Korchagin field.
2017 OIL MOVEMENT PLANS
Based on nominations submitted by the Shippers, the oil movement plan for 2017 totals 65 million tons, N. Gorban told the journalists. In particular, the Kazakhstan shippers account for 54 million tons, including 11 million tons from Kashagan, and the Russian shippers for 11 million tons, including 5.4 million tons from Filanovsky and Korchagin. "The final results in terms of volumes pumped we will sum up at the end of the year", CPC General Director stated.
He also commented that about 18 million tons were shipped since the beginning of this year till the end of April. Over the 4 months, 1.9 million tons was received from Kashagan, and another 6.2 million tons of oil is planned to be received by the end of 2017.
2016 FINANCIAL RESULTS
In 2016, CPC’S revenue totaled 1.6 billion dollars, which is 7% higher in comparison with 2015 (1.5 billion dollars) and is due to increase in oil transportation volumes. "The profit totaled 204 million dollars in 2016 versus 200 million dollars in 2015", CPC CEO told the journalists.
CPC-R will pay 5.2 billion rubles in taxes for 2016 (in 2015, slightly less than 4.3 billion rubles). CPC-K will pay about 21 billion tenges for 2016. In 2015, this indicator was about 9.9 billion tenges, he stressed.
Nikolay Gorban also informed that CPC plans to start dividend payments in 2020, after CPC Shareholder debt repayment is completed. Currently, the priority is repaying the debt to the shareholders which was formed as a result of loan agreements signed by the government shareholders and producer companies as creditors and CPC-R and CPC-K as borrowers in 1997.
SHAREHOLDER DEBT REPAYMENT
CPC General Nikolay Gorban also stated that 1.5 billion dollars was directed towards Shareholder debt in 2015 and 1.27 billion dollars in 2016. As at the beginning of 2017, the outstanding balance payable was about 4.49 billion dollars. As of April 1, 2017, the total debt amount was 4.35 billion US dollars.
In the first quarter 2017, 210 million dollars was repaid, and about 925 million US dollars more is planned to be paid out during 2017, N. Gorban noted. A quarterly distribution of this amount and the total figure for the year will depend on the company’s financial capability, he emphasized.
POTENTIAL LOANS TO IMPLEMENT EXPANSION PROJECT
"At the present time CPC has no plans to revert to loans and has procured none earlier. I want to make it clear: the loan was received at the initial construction phase and is not connected with the current Expansion Project in any way", N. Gorban stated, answering a question about possible loans. The Expansion Project is being executed using the company’s own working capital. "It is a really unique case where such large-scale project is executed with no loans. There was an external financing agreement put in place just in case less income was received, but ultimately it remained unrequired", he stated.
2017 INVESTMENT PROGRAM VALUE
The 2017 CPC investment program for Base Business is 70 million dollars and 150 million dollars to complete the Expansion Project. "Final figures for the investment program for 2017 cannot be given until the second half of the year", CPC CEO stressed.
CPC ECOLOGICAL AND ENVIRONMENTAL PROTECITON TECHNOLOGIES
Its international status allows CPC to study and adopt best practices used by all Consortium partners worldwide. Especially for a pipeline system the CPC was developed a whole environmental protection action package was specially developed for the CPC pipeline system.
Nikolay Gorban told the journalists that the cost of deploying state-of-the-art environmental protection technologies amounted to about 12% of the oil pipeline system construction budget. Such design solutions include thicker wall pipes used to protect the Caspian and Black Sea coastlines, a special tunnel cut for the pipeline through mountains, 12 water body crossings built by horizontal directional drilling, including the Volga and Kuban River, additional engineered protective structures build on the linear part of the oil pipeline, etc.
The implementation of the Expansion Project made the CPC pipeline system even more reliable and ecologically and industrially robust. All of the pump stations were equipped with closed drainage systems, sewer treatment facilities for domestic and industrial waste water. One modern solution increasing industrial safety is the use of a surge relieve system and smooth motor start.
"Conversion to a new upgraded supervisory control and data acquisition system (SCADA) increased CPC pipeline system reliability significantly. Data transmission rate along the pipeline increased by 25 times", CPC General Director stressed.
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.
CPC Shareholders: Russian Federation (represented by Transneft – 24% of and CPC Company – 7%) – 31%; Republic of Kazakhstan (represented by KazMunayGaz – 19% of 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% of and Oryx Caspian Pipeline LLC – 1.75%.