The Quality Bank functions in the CPC system from 2002. Independent international consultants having significant experience in this area took part in development of the concept and its practical implementation. The Oil Quality Bank is a mechanism of penalty and compensatory payments by/to crude oil producers depending on quality of the crude they deliver into the oil pipeline system.
The trunk oil pipeline accepts crude oil blends from different oil fields and averaging of crude oil quality in the pipeline stream resulting from such mixture hinders adequate accounting of the raw material specific indicators (content of paraffin, highly potential fractions for producing oils and special fuels, etc.). The Quality Bank allows using in settlements two most common indicators, i.e. API gravity and sulfur content, which are determinative for refining economics and market pricing.
Actual data on crude oil batches accepted into the system and those lifted, as well as its quality indicators, are the basis for calculation of coefficients used in the shippers’ mutual settlements. For any change in the crude oil quality the participants receive/make payments from/to the bank during the crude acceptance into the pipeline system and its delivery at the final point of transportation. Thus, a change in the quality indicators values (improvement or worsening) receives its appreciation in monetary terms.
Crude oil transported in the common stream via the Caspian Pipeline Consortium pipeline system is called CPC Blend. The model for determining its quality is a basket of reference crude oils comprised of 11 crude oil grades. CPC assesses every two weeks the value of certain quality crude oil delivered by Shippers into the CPC System and that lifted off the system. Thus, the Oil Quality Bank enables the Shippers to receive fair value for crude delivered into the CPC System.