Reuters

MOSCOW, Sept 19 – BP <BP.L> may sell its stake in the Caspian Pipeline
Consortium , which pumps crude from Kazakhstan to the Black Sea, if it
fails to agree with Russia on terms for expanding the line, BP said in
Russia on Friday.

The move would trigger a further shareholding reshuffle at the
consortium after another member, Gulf Arab state Oman, said it was
also looking to sell its stake.

Most of the shareholders of the Chevron-led <CVX.N> pipeline, which
runs to the major Russian Black Sea port of Novorossiisk, have agreed
on the expansion terms demanded by Russia, which owns 24 percent in
the consortium as a host state.

BP, the only shareholder that still opposes the terms, said it was
considering selling the stake if no compromise was found.

"This is one of the options to settle the current situation," Vladimir
Buyanov, a BP spokesman in Moscow, told Reuters.

He said BP may sell its stakes in LUKARCO and Kazakhstan Pipeline
Ventures, which are members of the consortium. BP’s stakes in the
ventures bring its share in CPC to 6.6 percent, Buyanov said.

Russian pipeline monopoly

Transneft <TRNF_p.RTS>, which holds the country’s stake in CPC, had
long opposed the plan to double the pipeline’s capacity from the
current 700,000 barrels per day, but it has now dropped its
objections.

Transneft previously argued that the pipeline yielded low returns and
that expansion would add pressure on the already congested Turkish
Straits shipping route.

In summer, most of the partners agreed to raise the shipping tariff to
$38 per tonne from $30.24 last year and private investors agreed to
halve interest rates on a $5 billion loan to CPC to 6 percent, easing
worries over funding.

Transneft, which owns all pipelines on the Russian territory except
CPC, has said BP was insisting on borrowing more to fund the
expansion.

A London-based source close to BP told Reuters on Thursday that BP
wanted to borrow more as its percentage interest in the pipeline was
bigger than its percentage interest in the Kazakh fields, which feed
the route.

This means BP has more incentive for the pipeline project to be
commercially attractive, the source said.

Russia and Kazakhstan, which is also a state shareholder of CPC, have
both expressed interest in buying Oman’s 7 percent stake.

Besides BP and Chevron, which holds 15 percent, its private
shareholders include Royal Dutch Shell <RDSa.L>, ExxonMobil <XOM.N>
and Russia’s two largest oil producers, Rosneft <ROSN.MM> and LUKOIL
<LKOH.MM>.

CPC has been shipping oil since 2001 and pumps up to 750,000 barrels
per day to Novorossiisk for re-export to the Mediterranean.

(Reporting by Tanya Mosolova in Moscow and Tom Bergin in London)