Expansion Work Started on All CPC Construction Sites in Kazakhstan

The total by year-end expected volumes are estimated to reach about 32 MTA.
As reported earlier, there has been some reduction in shipment volumes this year compared with the year before. That is due to a number of reasons: the need for pressure reduction in the system to do pipe recoating work on the Kazakh section, a slow-down in Marine Terminal operations due to poor weather conditions, and one shipper having redirected its volumes that used to be injected into the CPC system at Kropotkin to other routes. It should be noted that these developments are making little impact on CPC’s tariff revenues and therefore its ability to accumulate funds to proceed with the Expansion Project because the tariff for the section from that pump stations to the Marine Terminal is significantly lower than that for any crude oil moved to the Marine Terminal from Kazakhstan.

In general, shipment volumes through the CPC system have invariably stayed above its design capacity since 2005. That indicates that the CPC Expansion Project is needed and that it will allow to sustain movement of Caspian crude oil into the Black Sea basin as the best and safest route.
The future expanded CPC system will continue receiving crude oil both from brownfields including such majors as Tengiz and Karachaganak and from Kashagan where commercial production is expected to be commenced in December 2012-June 2013. The Tengiz Field is expected to increase production from the current 26 MTA up to 36 MTA. In 2015 (Expansion project completion date) the export volume of Kazakh crude through the CPC System may amount to 52 MTA.

Russian crude volumes shipped through the CPC System will be significantly increased owing to the commissioning of the Filanovsky Field in the Northern Caspian. The field is expected to start producing in 2015.

The CPC pipeline system is the largest investment project with foreign capital in the former Soviet Union. The length of the pipeline connecting oil fields in Western Kazakhstan with the Marine Terminal in Novorossiysk is 1,511 km.

The CPC project was originally developed with a view to future increase of its initial capacity by 2,5 times up to 67 MTA (76 MTA with DRA).
The Expansion Project includes upgrading the existing pump stations and building 10 new additional ones (2 in Kazakhstan and 8 in Russia), six oil storage tanks near Novorossiysk and a third single point mooring at the CPC Marine Terminal, and also the replacement of an 88 km pipeline section in Kazakhstan with a larger diameter pipe. The total amount of investment into the project will equal USD 5.4 bn.

CPC Shareholders: Russian Federation (represented by Transneft – 24% and CPC Company – 7 %) – 31%; Republic of Kazakhstan (represented by KMG – 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%.