The CPC has made spectacular progress on the project to build up its assets. It has coped with six out of the seven provisos Russia's government advanced in that connection-some have been implemented, and versions of implementation have been offered on others, said the CEO. He was addressing an international conference on capital investment in the oil-and-gas complex, underway in Paris. Organizing the conference was the UK-based Energy Exchange Co.
Among the issues by now coordinated, the Director General highlighted an understanding on petroleum pumping tariffs to rise by $2.5 a ton, the use of the pump-or-pay principle, and a resolution on consortium asset enlargement to be funded from without.
As for the corporate management structure, the sides agreed on the involved countries' governments to hold a half of managerial posts, with the other half for the founding companies, McDonald added.
The Russian government will have everything it needs to guarantee its interests in the CPC as soon as the arrangements are settled for seconding shareholders to the consortium managerial staff, he said.
Now, it is the Russian government's turn to demonstrate flexibility, remarked the CEO.
The prospective consortium enlargement promises Russia multibillion revenues. Meanwhile, settlement procrastination costs the CPC $25 million a month as missed profit, and the sums are expected to double in two years or so, he warned.
A draft final decision is expected to come up by next September or October, and respective works can start early in 2007 if the decision is passed.
Some people doubt that Russia is actually welcoming the appearance of overseas investors in its petroleum-and-gas complex. There is no better way to dispel those doubts than coordinate the Caspian Pipeline Consortium enlargement project, McDonald said by way of conclusion.
The consortium is proprietor of a petroleum mainline, 1,580 kilometers long, from Tengiz to Novorossiisk. It links oilfields in Kazakhstan's west with the Russian Black Sea coast. The CPC intends to enhance the pipeline's throughput capacity to 32 million tons even within the year, while the planned enlargement promises to make it an annual 67 million tons through construction of an additional ten pumping stations, several more reservoirs, and a seaport moorage extension to add to the two now available.
Russia accounts for a 24% consortium block, Kazakhstan 19%, and Oman 7%. Prominent among private petroleum companies on the CPC are Chevron Caspian Pipeline Consortium Co., with 15%, LUKARCO B.V., 12.5%, Rosneft-Shell Caspian Ventures Ltd., 7.5%, Mobil Caspian Pipeline Co., 7.5%, Agip International (N.A.) N.V., 2%, BG Overseas Holding Ltd., 2%, Kazakhstan Pipeline Ventures LLC, 1.75%, and Oryx Caspian Pipeline LLC, 1.75%.