Pipeline with no oil
It's not easy to find oil for CPC pipeline

Irina Reznik

Caspian Pipeline Consortium said yesterday that it had completed its oil pipeline. However, it turned out that filling this $2,5 bln pipeline with oil would pose a problem.

In June next year, the pipeline is to connect the Tengiz oil fields in Kazakhstan to a Russian Black Sea port of Novorossiisk. Russian and Kazakh oil is planned to be transported through the pipeline and then by tankers across the Black Sea.

At first, the pipeline will transport 28 m tons, and in a year or two its capacity is expected to grow up to 67 m tons. Unfortunately this volume, it turned out, is hardly available. Most consortium member companies are not ready to ship their oil yet and are urgently looking for a company to temporarily offer their quotas. For the moment, just two companies have confirmed their readiness to fulfill their CPC obligations next year.

These companies include Tengizshevroil (a joint venture headed by Shevron) and Lukoil that develops the Tengiz oil fields. According to Tengizshevroil, the corporation is going to ship 8,5 m tons a year. Another 1 m tons will be shipped via CPC pipeline by Lukoil, the company's president Vagit Alekperov said. It's still unclear who will provide the remaining 18,5 m tons, to say nothing of the future plans to increase the pipeline capacity up to 67 m tons.

Project participants hope to fill the pipeline with Siberian oil by lending their quotas to Siberian oil producing companies. But this is not an easy task. Transneft's pipelines capacity by far exceed current Russian export. The situation will become especially gloomy next year when a Baltic pipeline system is expected to be put into operation.

CPC is the first Russian project involving not the Transneft company as the operator but a consortium of oil companies. Fifty percent of the consortium is controlled by the governments of Russia (24%), Kazakhstan (19%) and Oman (7%). The rest is controlled by oil companies: Chevron (15%), LUCARCO B.V. (12,5%), Rosneft-Shell (7,5%), Mobil (7,5%), Agip (2%), BG Overseas (2%), Kazakhoil together with BP (Kazakhstan Pipeline Ventures) (1,75%), and Oryx (1,75%).

Kommersant, 23 November 2000