BG Exploration & Production has become a shareholder in the restructured Caspian Pipeline Consortium (CPC), following a signing ceremony in Moscow today.

CPC will build a pipeline system to transport oil from western Kazakstan to the Black Sea at Novorissiysk. The pipeline system will consist of new-build line and port facilities, plus upgraded line.

The first part of the system, known as the Initial Construction Project (ICP) will have a capacity of 28 million tonnes per year, all of which has been allocated to CPC shareholders. BG Exploration & Production will be entitled to three million tonnes per year of capacity which will be used to transport condensate from the Karachaganak field in north-western Kazakstan. First oil is scheduled to flow in late 1999. Planned incremental expansions will increase the total capacity of the pipeline to 67 million tonnes per year.

Frank Chapman, Managing Director of BG Exploration & Production said: "Agreement on the restructuring of the CPC is a significant step towards releasing the full potential of Karachaganak, as it will provide a route for liquids from the field to reach hard currency markets."

The government shareholders will contribute existing assets and producer companies will finance the ICP through loans to CPC. The producer company shareholders will have a funding obligation for the ICP of twice their shareholding. BG Exploration & Production, which has a two per cent equity stake in the Consortium through its subsidiary, BG Overseas Holdings Ltd., therefore has an obligation to fund four per cent of the estimated $2 billion costs of the ICP.

Notes for editors

The consortium comprises the following:

Producer Company shareholders			Government shareholders
Chevron	15.00 per cent		Russia	24.00 per cent
Mobil	7.50 per cent		Kazakstan	19.00 per cent
BG	2.00 per cent		Oman	7.00 per cent
AGIP	2.00 per cent
Oryx	1.75 per cent
Kazakoil/Amoco JV	1.75 per cent
Rosneft/Shell JV	7.50 per cent
LUKARCO	12.50 per cent
Sub total	50.00 per cent		Sub total	50.00 per cent

Background

The original Caspian Pipeline Consortium was formed by the Governments Of the Russian Federation, Kazakstan and Oman who planned to construct a pipeline route from the Tengiz field on the edge of the North East Caspian, to Novorissiysk on the Black Sea.

Following extensive inter-governmental discussions, it was agreed that CPC should be restructured to include producer companies. In April 1996, a Protocol was signed which granted an option to a number of western and CIS companies to acquire shares in CPC.

The Initial Construction Project (ICP), planned by the new Consortium, involves construction of a new line from Kropotkin (near Tikhoretsk) to Novorossiysk, together with a new tank farm and offshore loading facilities, plus a new line from Komsomolskaya to Kropotkin, together with the upgrading of the Russian and Kazak-contributed assets.

The pipeline system will provide export capacity for liquids from the Karachaganak field in Western Kazakstan, in which BG Exploration & Production is also involved.