BP exits Caspian Pipeline Consortium, Tengizchevroil

BP PLC has divested its interest in the Chevron Corp.-led Tengizchevroil (TCO) consortium and the Caspian Pipeline Consortium (CPC) pipeline, which carries oil between Kazakhstan and Russia, by selling its 46% stake in Lukarco to Russia’s OAO Lukoil.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Dec. 11 -- BP PLC has divested its interest in the Chevron Corp.-led Tengizchevroil (TCO) consortium and the Caspian Pipeline Consortium (CPC) pipeline, which carries oil between Kazakhstan and Russia, by selling its 46% stake in Lukarco to Russia’s OAO Lukoil.

Lukoil, which already owns 54% of Lukarco, will pay $1.6 billion in cash in three installments over the next 2 years and will repay a $43 million loan to BP, the company said. Lukarco owns a 5% share in TCO—which produces oil from Tengiz field—and a 12.5% interest in CPC.

The sale to Lukoil means that BP has no remaining share in CPC or Tengiz. In April BP sold its 49.9% stake in Kazakhstan Pipeline Ventures (KPV), which held a 1.75% share in CPC, to state-owned KazMunaiGaz for $250 million.

Following its merger with Amoco in 1998, BP gained a 1.75% indirect share in the pipeline consortium through KPV, a joint venture of a subsidiary of Kazakhstan’s state-owned Kazmunaigaz (50.1%) and Amoco-CPC (49.9%).

Following its 2000 acquisition of ARCO, BP became a larger indirect shareholder in CPC and an indirect partner in Tengiz. Lukarco, owned jointly by Lukoil (54%) and ARCO (46%), has held a 12.5% share in CPC since 1997. The Lukarco joint venture also owns a 5% stake in Tengiz through which BP had a 2.3% net interest.

In October, a senior Kazakh official said the TCO consortium by yearend will increase its planned oil production to 22.5 million tonnes from 21.5 million tonnes.

“Planning is expected to increase TCO's oil production by 1 million tonnes and there remains an unresolved issue of supplementary flaring of gas in the volume of 33 million cu m,” said Vice-Minister of Energy and Mineral Resources Duysenbay Turganov during a conference call (OGJ Online, Oct. 12, 2009).

Contact Eric Watkins at hippalus@yahoo.com.

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