CPC Signs Agreement on Expansion Project

January 17, 2013

On January 15, the Facility Agreement approved by the Caspian Pipeline Consortium shareholders was signed in London between a group of banks and the Company.

The documents signed are intended for obtaining third-party finance for the CPC Expansion Project. Such borrowings were provided for by the Expansion Project FID made in 2010. In November 2012, Extraordinary Shareholders Meetings of Caspian Pipeline Consortium-R and Caspian Pipeline Consortium-K resolved to approve third-party borrowings in the amount not exceeding USD 500 mln.

Having signed the Facility Agreement Nikolay Platonov, General Director, noted: “These borrowings are part of the Expansion Project budget of USD 5.4 bln secured by the Company’s own funds. We view the loan as a standby source of finance in the event of a deficit”.

The Facility Agreement was concluded on the following terms: NTE loan amount – USD 500,000,000; annual interest rate – 6-months USD LIBOR + 2.65%; loan maturity – up to 5 years. The loan was financed by an international banks’ syndicate.

CPC pipeline system is one of the largest investment projects in the energy industry with participation of foreign capital on the CIS territory. The length of the pipeline connecting the oil fields in Western Kazakhstan with the Marine Terminal near Novorossiysk is 1,511 km. CPC Marine Terminal is equipped with single point moorings which allow for safe tanker lifting at a considerable distance from the shore, also when the weather conditions are unfavorable.
 
The Expansion Project envisages rehabilitation of 5 existing and construction of 10 additional pump stations (2 in the Republic of Kazakhstan and 8 in the Russian Federation), six near Novorossiysk and an SPM at the CPC Marine Terminal to supplement 4 existing crude oil storage tanks. It also includes replacement of a 88 km pipeline section in Kazakhstan with a larger diameter pipe. Total investment in the Project will be US$ 5.4 billion.

CPC Shareholders: Russian Federation (represented by Transneft - 24% and CPC Company - 7%) - 31%; Republic of Kazakhstan (represented by KazMunayGaz  - 19% and Kazakhstan Pipeline Ventures LLC - 1.75%) - 20.75%; Chevron Caspian Pipeline Consortium Company - 15%, LUKARCO B.V. - 12.5%, Mobil Caspian Pipeline Company - 7.5%, Rosneft-Shell Caspian Ventures Limited - 7.5%, BG Overseas Holding Limited - 2%, Eni International N.A. N.V. - 2% и Oryx Caspian Pipeline LLC - 1.75%.