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. Last Updated: 07/27/2016

Transneft Gets Russian CPC Stake

Itar-TassThe CPC terminal at the Black Sea port of Novorossiisk, from where oil is sent by tanker through the Bosporus straits.
Russia has transferred its 24 percent stake in the Chevron-led CPC pipeline group to state-controlled pipeline monopoly Transneft, the Kremlin said Saturday.

The stake was previously managed by the government and the Kremlin said in a statement that President Vladimir Putin's order to transfer it aimed to "increase management efficiency."

Transneft also said Saturday that it had built one-third of its planned pipeline to China and was on track to extend the route to the Pacific coast next decade to reach other Asian markets.

Transneft's head, Semyon Vainshtok, has been one of the main foes of CPC, which takes crude from Kazakhstan to Russia's Black Sea coast, as he says the group pays very low fees to Russia despite pumping over 700,000 barrels per day of crude.

He opposes the expansion of CPC capacity to over 1.35 million bpd amid rising production in Kazakhstan and says the group should first help Russia build a bypass around the Bosporus to reduce pressure on the congested Turkish straits.

CPC has said it would participate in the project only if it was simultaneously allowed to expand capacity.

CPC is 15 percent controlled by U.S. energy company Chevron, while 12.5 percent belongs to a venture of LUKoil and BP.

ExxonMobil and a joint venture of Rosneft and Shell control 7.5 percent each, while Agip and BG have 2 percent each. The governments of Kazakhstan and Oman control 19 and 7 percent respectively.

In its statement on the planned pipeline to China, Transneft said it had built over 900 kilometers of the 2,700-kilometer pipeline and would finish the project on time, by the end of 2008.

The pipeline, Russia's first oil route to Asia, will eventually pump 30 million tons of crude per year to China.

Transneft has said the pipeline will allow Russia to make its exports more flexible and reroute volumes to Asian markets when prices are more attractive than on its current core European market.

Russia plans to build the second stage of the 4,130-kilometer pipeline to the Pacific coast if additional crude resources are found in east Siberia.

The second branch, scheduled for completion in 2015, would increase deliveries to 1.6 million bpd available to oil buyers in South Korea and Japan.

Vainshtok dismissed downbeat remarks, made by some officials, that slow growth in oil production in east Siberia might undermine the second stage construction plan.

"This is absolutely wrong," Vainshtok said in an interview with Rossia television. "I think, the second stage will definitely be built, but in six or seven years after the launch of the first stage, which has already prompted production development in east Siberia."

The Natural Resources Ministry has said oil producers in east Siberia were all behind the pledged production schedule, including state-controlled Rosneft, and private TNK-BP, half owned by BP.