CPC not planning to increase Tengiz-Novorossiysk pipeline expansion budget
MOSCOW. July 12 (Interfax) - The Caspian Pipeline Consortium (CPC) has no plans to increase its estimated budget for the expansion of the Tengiz-Novorossiysk oil pipeline, the company said.
The CPC expansion project, as approved by consortium shareholders this past December, figures a budget of $5.4 billion and provides for unanticipated expenses calculated on the basis of potential risks, the CPC said in a statement.
"According to the CPC plan for project financing adopted by shareholders, the main source is the company's own funds received in profits from core business activity. In the event of a short-term insufficiency of these funds during the project's implementation, use may be made of limited outside borrowing within CPC's borrowing capacity," the statement says.
As reported, CPC began expanding the pipeline's throughput capacity in Kazakhstan on July 1. The consortium plans to increase capacity from 28.2 million to 67 million tonnes per year. The project will cost an estimated $5.4 billion, and the financing is fully backed by production by extraction companies holding share interests in the consortium under the 'pump or pay' scheme.
CPC operates the 1,511-kilometer Tengiz-Novorossiysk oil pipeline. Its sovereign shareholders are Russia with 31% (managed by Transneft - 24% and CPC Company - 7%) and Kazakhstan has 20.75% (KazMunayGas - 19% and Kazakhstan Pipeline Ventures LLC - 1.75%). The other shareholders are: Chevron Caspian Pipeline Consortium Company (15%), Lukarco B.V. (12.5%), Rosneft-Shell Caspian Ventures Limited (7.5%), Mobil Caspian Pipeline Company (7.5%), Eni International (N.A.) N.V. (2%), BG Overseas Holding Ltd (2%) and Oryx Caspian Pipeline LLC (1.75%).