18 Dec 2009 15:21

CPC capacity may rise to 76 mln tonnes of oil annually

MOSCOW. Dec 18 (Interfax) - The throughput capacity of the Caspian Pipeline Consortium system may be increased to 76 million tonnes with the use of anti-friction additives, a statement from Russian oil pipeline company Transneft says.

The board of directors of CPC-R held a meeting in Moscow December 15-16. An extraordinary meeting of shareholders in CPC-K was held at the same time. They examined the capacity upgrade issue. "The shareholders unanimously approved the decision to increase capacity on the CPC system to 67 million tonnes a year (and to 76 million tonnes a year using anti-friction additives)," Transneft said.

They agreed the schedule for project implementation and capital investment in 2010, the principle scheme for managing project implementation, the organizational structure of the consortium, the financial model and the project financing plan, and amendments to the 1996 shareholders' agreement.

The main parameters and terms for project implementation include: an increase in the tariff to $38, a reduction in the interest rate on existing loans to 6% and a halt to loan repayment until the capacity upgrade has been completed, which will make it possible to finance the upgrade chiefly from internal sources. The ship-or-pay provisions guarantee receipt of sufficient funds for financing and for ensuring a return on the investment.

Once construction is completed, debt will be repaid "on equal terms and simultaneously." The candidate for general director of CPC will be nominated by the Russian government shareholder.

The expansion project calls for installing 10 additional pump stations (two in Kazakhstan and eight in Russia), six oil storage tanks near Novorossiisk and a third offshore loading system, and replacement of 88 kilometers of pipe in Kazakhstan. The work could be completed in 2014, according to current projections.

CPC's 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 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%).