24 Aug 2010 13:09

CPC could raise up to $1 bln for pipeline expansion in 2012-2013

MOSCOW. Aug 24 (Interfax) - The Caspian Pipeline Consortium (CPC) could raise up to $1 billion to augment pipeline capacity in 2012-2013, the consortium's general director, Alexander Tarakanov, told reporters.

"We could theoretically need another $1 billion in external borrowing as per our current financial model by the end of 2012-2013," Tarakanov said.

Some certainty ought to be shed over the issue by the end of this year. The financial model will improve if revenue is based on 35 million-40 million tonnes of oil per year from 2012, and in that case additional funding won't be needed, Tarakanov said.

The paperwork should be signed by December 15. "The general understanding is that this is the target date," Tarakanov said. Construction could begin in March-April next year, he said.

The 1,580-km CPC pipeline runs from the Tengiz oil field in West Kazakhstan to the Russian Black Sea coast. Capacity is currently 28.2 million tonnes per year, but actual throughput can exceed 30 million tonnes if anti-friction additives are used. The CPC pumped 34.57 million tonnes of export crude in 2009, 9.9% more than in 2008. It has pumped more than 225 million tonnes since going into service in 2001.

The CPC's $4.6-billion phased expansion project, approved at the end of 2009, is aimed at boosting throughput capacity from 32 million to 67 million tonnes, and could be complete by 2014. The project foresees the construction of ten additional oil-pumping stations (two in Kazakhstan and eight in Russia), six reservoirs for oil storage near Novorossiisk and a third single buoy mooring at CPC's sea terminal. The consortium also plans to replace 88 kilometers of pipeline in Kazakhstan.

CPC's sovereign shareholders are Russia with 31% (managed by Transneft - 24% and CPC Company - 7%) and Kazakhstan has 20.75% (KazMunaiGas - 19% and Kazakhstan Pipeline Ventures LLC - 1.75%). The rest of the consortium belongs to private companies: 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%).

The overall expansion cost was estimated at $2 billion in 2005, $2.5 billion in 2007 and more than $3 billion in 2008 prices.