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. Last Updated: 07/27/2016

Agency Suggests Making CPC a Monopoly

The Federal Energy Agency has proposed increasing state control over a Chevron-led oil pipeline from Kazakhstan to the Black Sea so that the state can get revenues from the project sooner, Kommersant reported Thursday.

The newspaper cited a letter by agency head Sergei Oganesyan to his boss, Industry and Energy Minister Viktor Khristenko, as saying the link, the Caspian Pipeline Consortium, should be given the status of natural monopoly.

That would mean the fees it charges oil firms using the pipeline would be set by the Federal Tariffs Service. Up to now the fees have been set by private shareholders, which also include BP, Royal Dutch Shell, LUKoil and Rosneft.

Kommersant said if Russia were to declare the pipeline a monopoly, long litigation would follow, as CPC believes its agreement with Russia precludes such a move. Officials argue the agreement was never ratified by the parliament.

Russia has long complained about the low profit it gets from CPC and has also blocked the link's expansion, which analysts say is part of a broader Kremlin strategy to limit foreign involvement in the strategic energy sector.

The consortium has Russia, Kazakhstan and Oman as state shareholders.