CPC to start building mid-1998
June 3, 1997 Work on building a $ 2 billion crude pipeline linking Kazakhstan's Tengiz oilfield to Russia's Black Sea port of Novorossiisk could be delayed by a few months until the middle of 1998, a pipeline official said. Ed Smith, general director of the Caspian Pipeline Consortium (CPC), told on an industry conference in Dubai that the construction start-up might shift back from the original early 1998. CPC and Russia signed the contract for the construction of the 1,500 km (940 mile) pipeline -- the biggest foreign investment deal in Russian history -- on May 16 pending the completion of feasibility studies, environmental reports and rights of way agreements.
Managers at Chevron, the largest single shareholder in the CPC consortium (15 %), said last month that they expected construction work to begin early next year with pipeline completion set for September 1999. A revised completion dates for the pipeline was now December 1999, Smith said, adding that CPC managers had met Fluor Daniel staff to
discuss technical aspects of the pipeline.
CPC, originally set up in 1992 and now comprising 8 companies and 3 governments, plans to transport about 560,000 bpd through the pipeline in early stages, building volumes gradually to 1.34 million bpd by 2014. The line will mainly supply oil from Tengiz and also other Kazakh fields and from deposits in Russian Siberia. Russia will earn as much as $ 900 million a year from taxes and dividends.
Chevron and Mobil, with their $ 20 bn Tengiz project, will be CPC's main customers but other producers will be granted access. Russia's LUKoil has a 12.5 % stake in the CPC consortium and state oil company Rosneft 7.5 %. Russia also owns 24 % of the consortium and may divide its share equally between LUKoil, Rosneft and the country's oil pipeline monopoly Transneft. Kazakhstan has 19 % and Gulf Arab Oman 7 %. CPC shareholders also include Mobil with 7.5 %, Britain's BG Plc (formerly British Gas) and Italy's Agip SpA with 2 % each and Oryx Energy Co and Munaigaz of
Kazakhstan with 1.75 % each. US Atlantic Richfield and Shell will also have a stake in the line through partnerships with LUKoil and Rosneft respectively. Amoco Corp will also use the line.
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