Russia has agreed to become a founding partner in a joint venture pipeline project formed by Kazakhstan and Oman.
The agreement, signed in Bermuda July 24, is related to Chevron Corp.'s further development of supergiant Tengiz and Korolev fields along the Caspian Sea coast in Kazakhstan.
Azerbaijan last month signed an agreement to become a founding member of the group, accepting terms agreed to by original joint venturers Kazakhstan and Oman (OGJ, July 13, p. 24). Azerbaijan's new government still must formally ratify its agreement.
In addition, Chevron in June signed a memorandum of understanding to join the group at a future date (OGJ, June 29, Newsletter).
Each of the founding members holds an equal interest in Caspian Pipeline Consortium Ltd., which will operate as a limited liability company incorporated in Bermuda.
RUSSIA'S MOVE
Russia's decision to become the fourth founding member was disclosed by Russian Deputy Chairman Victor S. Chernomyrdin.
Omani Minister of Petroleum and Minerals Said Bin Ahmed Al Shanfari said, "Russia is a nation of major importance, so its membership in the Caspian pipeline consortium is especially significant. Russia provides a vital link to the Black Sea, from which oil can be shipped economically to European markets.
"Of the eight possible routes identified by the consortium, the route through Russia via Grozny to the port of Novorosiisk on the Black Sea is the most economically attractive and politically stable option.
"Russia will also be contributing its extensive experience in constructing and operating oil pipelines and crude oil loading facilities."
BACKGROUND
The venture was established June 17 with signing of a pipeline venture agreement by Oman and Kazakhstan in Muscat, Oman.
At that time, it was disclosed that possible routes could serve present and future deepwater terminal facilities in the Persian Gulf, the Mediterranean Sea, and the Black Sea.
The countries those routes could cross include Russia, Kazakhstan, Azerbaijan, Georgia, Turkmenistan, Iran, and Turkey. Final route selection will depend upon favorable political and economic factors, including the market value of oil at each terminal.
The projected cost of constructing the pipeline system ranges is estimated at $700 million-$1.5 billion, depending upon the route chosen and extent to which existing facilities can be used.
Oman's role in bringing about the pipeline venture is one of a series of recent initiatives by the country to invest in foreign oil petroleum ventures, including a recent agreement to explore and develop oil fields in western Kazakhstan (OGJ, June 29, p. 30).
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