On 25 February 2021, Nikolay Gorban, CPC General Director, speaking in the Company’s Moscow office, answered questions from Russian and international media correspondents. The conversation with the journalists covered CPC’s performance results in 2020 and prospects for 2021, as well as of other issues related to the Company's current activities.
Opening the press conference, the Consortium’s General Director highlighted that the current year, 2021, is an anniversary for CPC. 25 years ago, on 6 December 1996, a Shareholder Agreement was signed that formed the Consortium in its present form. Also this year, it will be 20 years since the CPC pipeline system started to be filled with crude oil from the Tengiz field and 20 years since the first tanker was loaded at the CPC Marine Terminal in Novorossiysk.
ABOUT 2020 CPC PERFORMANCE RESULTS
CPC finished 2021 with a base revenue of 2.1 billion in equivalent US dollars. The company’s profit before tax totaled USD 871,200,000, net profit after tax - USD 630,100,000. CPC paid USD 154,900,000 in tax payments into Russia’ s budget and USD 86,200,000 into Kazakhstan's budget.
The Consortium’s General Director stated that owing to its stable financial performance CPC had fully repaid the shareholder loan last year by paying out its last portion equal to USD 990 million. In May 2021, CPC is going to start paying dividends on shares as planned - they will start to be calculated back since the forth quarter 2020.
In 2020, CPC pipeline system oil throughput amounted to 59,027,273 tons of crude oil. That is approximately 4,000,200 tons less than in 2019. The reductions in throughput and loading are directly connected with a number of objective interrelated factors: COVID 19 pandemics, OPEC+ crude oil production restrictions, significant business recession in the world and, as a consequence, reduction in world market demand for energy resources.
The CPC Marine Terminal loaded 572 tankers in 2020 (597 in 2019). All received shipper nominations were met and CPC steadily held the first place of cargo terminals in Russia throughout 2020, according to the TASS rating.
ABOUT 2020 PERFORMANCE RESULTS - HSE
Based on last year’s performance results, CPC and contractor personnel achieved over 27 million hours without recordable injuries and incidents and about 80 kilometers run by vehicles without recordable MVAs. These significant results come as a result of CPC’s introducing a “zero injury” concept and gradually deploying a Safety Culture.
CPC BLEND QUALITY
The composition of crude oils included in the CPC Blend remains constant. API density trends for actual export deliveries of the CPC Blend CPC has made at the terminal in Yuzhnaya Ozereevka over the past five years on average have values within the 46.2-46.7 degrees API range.
In 2020, the CPC Blend had the following average values: gravity - 46.7oAPI, sulfur content - 0.54% mass.
ABOUT 2020 CPC CHARITY ACTIVITIES
In addition to addressing its business tasks, CPC successfully and fully implemented annual charity programs and projects in its host regions in 2020. The total amount allocated by the Consortium for social needs in the Astrakhan Region, the Republic of Kalmykia, the Stavropol and Krasnodar Krais (including Novorossiysk) totaled RUR 494.7 mln.
With due regard for the pandemic situation, the main focus in 2020 was healthcare support, including purchase of modern diagnostic and laboratory equipment for regional medical institutions. This included stationary and mobile ALV units, tomographs, fluorographs, bedside monitors, and other medical equipment which is much in demand. Also, ambulance vehicles were supplied for district hospital vehicle fleets. In total, in 2020, the Consortium allocated RUR 286 mln to support healthcare institutions in districts crossed by the Consortium’s oil pipeline.
Other charity activity areas also were pursued. School and tourist buses, cargo and passenger vehicles, and other transport needed locally, multi-media teaching equipment were donated to the regions. Children received New Year gifts and first-graders received school bags complete with school accessories as part of some traditional programs. The annual competition festival “CPC for talented children” was not canceled in spite of the pandemic and was successfully held in a remote format, gathering twice as many participants as a year earlier.
ABOUT 2021 PROSPECTS
In 2021, based on available shipper nominations, the CPC system is planned to transport 67.5 mln tons of crude oil. However, the Consortium is ready to meet all of the shippers’ needs, given its growing technical capabilities.
ABOUT THE CPC OIL (DBN) PIPELINE SYSTEM DEBOTTLENECKING PROGRAM
The CPC General Director highlighted that DBN execution was on schedule. The construction of new facilities is starting under the program at the Consortium's pump stations and Marine Terminal in March 2021.
In 2021, under the DBN program, it is planned to complete designing the main scope in Russia and Kazakhstan, to complete deliveries of all main long-lead equipment items, and to mobilize contractors to DBN sites in Russia and Kazakhstan. Also, after the contractors complete all permitting steps, the 2020 plan is to complete the full “zero cycle” (groundwork) scope.
Nikolay Gorban reminded that the budget for the Debottlenecking Program had been approved on 19 May 2019 at USD 599.9 million. With the completion of the DBN in 2023, the Tengiz-Novorossiysk pipeline system will reach a throughput capacity of at least 72.5 mln tons of crude oil per annum out of the Republic of Kazakhstan and about 80 mln tons in total for the oil pipeline.
In total, in 2021, CPC is going to spend USD 232.7 mln on the DBN Program, including USD 159.4 mln in Russia and USD 73.3 mln in Kazakhstan.
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The CPC pipeline system is one of the largest investment projects with foreign capital in the energy sector in the CIS. The length of Tengiz-Novorossiysk pipeline is 1,511 km; more than two thirds of all export crude oil from Kazakhstan and crude oil from the Russian fields, including those in the Caspian Region, are transported by this route. CPC Marine Terminal is equipped with three Single Point Moorings (SPM) that allow to load tankers safely at a significant distance offshore, also in poor weather conditions.
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% and Oryx Caspian Pipeline LLC – 1.75%.