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. Last Updated: 07/27/2016

FEC Turns Up Heat on Caspian Pipeline

Russia stepped up pressure Monday on a ChevronTexaco-led pipeline group shipping crude from Kazakhstan via Russia to world markets, urging it to increase transport fees to pay higher taxes.

Georgy Kutovoi, the head of the Federal Energy Commission, the country's energy prices watchdog, said Moscow would slap monopoly status on the Caspian link if the group agreed to accept crude from outsiders.

Giving the Caspian Pipeline Consortium monopoly status would allow Russia to set the link's shipping prices on its territory without the permission of other shareholders, which include Kazakhstan with 19 percent, Chevron with 15 percent and ExxonMobil with 7.5 percent.

Russia holds a 24 percent stake in the group.

The United States has said the move to give monopoly status to the link, running from the giant Kazakh Tengiz field -- also led by Chevron -- to Russia's Black Sea coast, would upset investors in Russia's booming oil sector.

"The pipeline does not generate profit. ... I think this is a way to avoid taxes," Kutovoi told a news conference.

Higher transport fees would speed up private investors recouping their money, paving the way for Russia to start levying taxes once the pipeline starts turning a profit.

"The moment they accept just one ton of [third-party] crude for shipment, they will become subject to anti-monopoly regulation," he added.

A spokesman for the consortium said the group was paying all taxes in full.

"Russia certainly has the right to ask the CPC to raise transportation tariffs, but such a decision should be approved by all CPC shareholders," the CPC spokesman said.

He also played down the threat to register the CPC as a monopoly, saying Russia initially granted the link the right to set its own tariffs and determine access rights.

The U.S.-backed CPC pipeline was built in 2001 and became the first private oil link on the territory of the former Soviet Union.

It is shipping some 250,000 barrels per day to world markets, but is due to be expanded to 1.3 million bpd to help Kazakhstan become a world-class oil player at the end of this decade, rivaling Mexico or Norway in terms of oil production.

The proposal to call the CPC link a monopoly has been submitted by the Energy Commission to the Russian government, which has not made a final decision so far.