CPC begins $5.4 billion pipeline expansion

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, July 6 -- Chevron Neftegaz reported that the Caspian Pipeline Consortium (CPC) has started the construction phase of the $5.4 billion expansion of the Caspian pipeline.

"CPC is a model of cooperation between Russia and Kazakhstan and is an indication of the confidence we have in Russia and in oil transportation from the Caspian region,” said Neftegaz Pres. Andrew McGrahan.

The capacity of the 1,500-km pipeline, which carries oil from western Kazakhstan to a dedicated terminal in the Black Sea, will increase to 1.4 million b/d from its current capacity of 730,000 b/d.

Chevron, which is providing project management services to the project, said the expansion will be comprised of the refurbishment of the existing 5 pump stations, and 10 new pumping stations.

The expansion will also see replacement of an 88-km section of the line, six new storage tanks and the addition of a third offshore mooring point at the Black Sea terminal, 10 km north of Russia’s Black Sea port of Novorossiysk.

The expansion, which is to be implemented in three phases with capacity increasing progressively from 2012-15, will help CPC take advantage of an expansion at Kazakhstan's Tengiz oil field, which has estimated recoverable reserves of 6-9 billion bbl.

Anuarbek Dzhakiyev, deputy general director of the Tengizchevroil joint venture operating the field, last month said the company will invest up to $20 billion over the next 5 years to ramp up production to 36 million tons a year of oil.

In addition to the CPC, which awarded all the major construction contracts in May, the expanded line will also transport oil from other Kazakh and Russian fields (OGJ Newsletter, Dec. 20, 2010).

Contact Eric Watkins at hippalus@yahoo.com.

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