Chevron Key Player in $5.4 Billion Caspian Pipeline Expansion

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Construction has begun on the Caspian Pipeline Consortium's (CPC) 1,500-kilometer expansion project. Led by Chevron Neftegaz, the $5.4 billion project will increase the capacity of the Caspian pipeline to 1.4 million barrels per day (BBL/d) from the current 730,000 BBL/d.

The pipeline runs from Atyrau, Kazakhstan, to the terminal north of the Black Sea port of Novorossiysk, Russia. The expansion project will be implemented in three phases, with the capacity increasing in progressive stages from 2012 to 2015.

During the course of the project, five existing pump stations will be refurbished and 10 more installed. An 88-kilometer section of the pipeline will be replaced, and six new storage tanks will be constructed. A third offshore mooring point will be added at the Black Sea terminal mooring point 10 kilometers north of the port.

Since tanker loading started 10 years ago, more than 2 billion barrels of oil have been transported through the original pipeline.

The three largest equity holders in CPC are Russia (24%), Kazakhstan (19%) and Chevron (NYSE:CVX) (San Ramon, California) (15%), which is providing project management services. "CPC is a key strategic asset for Chevron and adds to our strong position in the region," said Andrew McGrahan, president of Neftegaz. "It 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."

State-owned Kazmunaigaz (Astana, Kazakhstan) said that the upgrade of the pipeline would boost exports from Kazakhstan's Tengiz oil field, which has estimated recoverable reserves of 6 billion to 9 billion barrels. Chevron has a 50% stake in the Tengiz oil operation.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.