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Lukoil in Talks to Buy BP Stake in Caspian Pipeline



By Lyubov Pronina and Greg Walters

Nov. 27 (Bloomberg) — OAO Lukoil, Russia’s biggest independent oil company, is in talks to buy BP Plc’s stake in the Caspian Pipeline Consortium, which may clear the way for expanding the link.

The Chevron Corp.-led CPC operates Russia’s only foreign- owned oil-export pipeline, which carries Kazakh crude to a Black Sea port for shipment overseas. BP was “blocking” a decision to expand the CPC, Lukoil Chief Executive Officer Vagit Alekperov said.

“We have the first right to buy their share,” Alekperov told reporters in Caracas, Venezuela, late yesterday. The CPC “should be expanded,” he said, adding “compromise is being found.”

The venture plans to expand Kazakhstan’s main export link to world markets at a cost of at least $1.6 billion, almost doubling capacity to 1.3 million barrels of oil a day.

The proposed CPC expansion “favors oil producers at the expense of midstream investors,” Toby Odone, a London-based spokesman at BP, wrote today in an e-mail. BP is interested “in finding a balanced solution and has made proposals to try and resolve these issues. Selling our share is amongst the options.”

Ilya Pustogachev, spokesman for the Kazakh state-run energy producer KazMunaiGaz National Co., said Nov. 13 that Kazakh and Russian officials Russia have been exploring options after BP blocked the expansion.

Pipeline Owners

The U.K. energy company holds 46 percent of Lukarco BV, a joint venture with Lukoil, and 50 percent of Kazakhstan Pipeline Ventures LLC, a venture with KazMunaiGaz.

Lukarco holds 12.5 percent of the CPC and Kazakhstan Pipeline Ventures owns 1.75 percent of the venture.

Russia is the largest shareholder in the pipeline with a 31 percent stake after it bought out Oman. Kazakhstan holds 19 percent of CPC.

Chevron is the largest corporate owner with 15 percent, while Exxon Mobil Corp.and a joint venture between Russia’s OAO Rosneft and Royal Dutch Shell Plc each hold 7.5 percent.

An oil unit of Eni SpA, Italy’s largest oil company, and BG Group Plc, U.K.’s third largest oil and gas producer, each hold 2 percent of CPC.

A unit of Anadarko Petroleum Corp., the second-largest independent U.S. oil producer, holds the remaining 1.75 percent of the pipeline, according to the CPCWeb site.

To contact the reporter on this story: Greg Walters in Moscow[email protected]Lyubov Pronina in Caracas via the Moscow newsroom at [email protected];

Last Updated: November 27, 2008 05:49 EST


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