Republic of Kalmykia

There has been a working meeting held today between Nikolai Platonov, General Director, Caspian Pipeline Consortium, and Alexei Orlov, the Leader of the Republic of Kalmykia. The participants discussed cooperation between Kalmykia and CPC in the course of the CPC Pipeline Expansion Project.

CPC General Director informed the Kalmykian leader about CPC’s plans for construction and upgrades of its facilities in the republic. Under the Expansion Project the existing Komsomolskaya Pump Station is going to be upgraded and 2 new stations to be constructed. Local human and material resources are planned to be engaged for the upgrade and construction project on a competitive basis.

Once the construction is completed, Kalymikia will receive incremental tax revenues from CPC’s business activities and new jobs both in CPC proper and CPC contractor organizations. The Expansion Project investments will give an impetus to the development of support production activities in the region.

The parties confirmed their commitment to partnership and respect for each other’s rights and legitimate interests, confirmed their previous agreements incorporated in the Cooperation Agreement between the Republic of Kalmykia and Caspian Pipeline Consortium-R in 2009 and discussed some new ways for cooperation under the CPC Expansion Project.

Specifically, the Expansion Project provides for some facilities to be built under Kalmykia’s community education and health program at CPC’s expense. CPC plans to allocated RUR 130 mln for these purposes. At the same time CPC will continue funding its traditional charity programs for war veterans, the elderly and orphan children and concert performance competitions for gifted children. The meeting participants agreed that core Kalmykian educational institutions could train specialists to supply human resources to the future CPC production facilities.

After the meeting Head of Kalmykia Alexei Orlov stated that “For Kalmykia, CPC is a reliable and responsible strategic partner providing hundreds of millions rubles in investments into the republic’s economy. The main focus areas in our work in on executing joint projects in the industry and community programs. This includes the upgrade of the existing pump station and the construction of new pump stations. As you are aware, these issues require continuous administrative involvement. We have discussed and agreed all that and I believe we’ve found a common language. We will work for the good of Russia and Kalmykia”.

CPC-R has already paid ca RUR 110 mln to the Kalmykian budget in statutory taxes and duties since the start of operations. CPC’s land lease payments have amounted to about RUR 170 mln. CPC regularly allocates significant funds for flora and fauna monitoring and preventive environmental protection in the pipeline area. In addition CPC has funded various community-program projects in those areas of Kalmykia that are crossed by the CPC pipeline and the republic’s capital city of Elista in the amount of over RUR 140 million.

The CPC Pipeline system is the largest oil movement route for crude oil from the Caspian Region to reach international markets. This mainline pipeline, 1,511 km in total length, connects Western Kazakhstan fields with the Russian Black Sea coast. Russian oil is injected into the pipeline system at the Kropotkin PS in the Krasnodar Krai. CPC’s Marine Terminal is equipped with Single Point Moorings that allow to load tankers safely at a significant distance offshore, including bad weather conditions.

The Expansion provides for the CPC pipeline system capacity increase to 67MMTA. The Expansion Project includes rehabilitation of the existing, and construction of 10 additional pump stations (2 in the Republic of Kazakhstan and 8 in the Russian Federation), six crude oil storage tanks near Novorossiysk, as well as third single point mooring at the CPC Marine Terminal and replacement of 88 km of pipelines in Kazakhstan with a larger diameter pipe.

Moscow, Russia