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. Last Updated: 07/27/2016

Chevron and Transneft are at Loggerheads Over CPC

Shareholders of a Chevron-led pipeline project have failed to resolve a strategy dispute with Russia over the country's only private oil link, a source close to the shareholders said Wednesday.

Most shareholders of the Caspian Pipeline Consortium turned down suggestions by state pipeline monopoly Transneft , which represents Russia in the group that pumps oil from Kazakhstan to the Black Sea across Russian territory.

"They failed to agree on Transneft's suggestions to raise fees, cut interest on credits and make changes in the groups charter," the source said during a two-day shareholders meeting in Moscow.

Russia, Kazakhstan and Oman own stakes in CPC, while private shareholders include BP, Shell, ExxonMobil, LUKoil, Rosneft as well as Chevron, which holds 15 percent.

Only LUKoil has agreed with Transneft's suggestions, while Kazakhstan abstained, the source said. Transneft declined to comment.

Russia, which has a 24 percent stake in the consortium as a host stake, has long opposed the group's plans to double capacity from the current 700,000 barrels per day as it says the project brings little benefit to Russia.

CPC has to pay back $5.5 billion in loans from its private shareholders before sharing profits with its state owners.

To refinance the loan, Transneft wants the consortium to cut interest to 6 percent from the current 12.5 percent and raise fees to $38 per a ton from $24.60, which experts say could drive oil flows towards competing routes.

Russia has also slapped CPC with a 4.7 billion ruble ($183 million) back tax claim for 2002-03 and is checking its accounts for 2004-05.

CPC has been shipping oil since 2001 and pumps up to 730,000 barrels per day from Kazakh oilfields to the Black Sea port of Novorossiisk for re-export to world markets.