(EnergyAsia, July 7 2011, Thursday) — Chevron Neftegaz Inc, an affiliate of Chevron Corporation, said it and members of a consortium have officially begun construction of a US$5.4 billion expansion of the Caspian pipeline to deliver crude oil from western Kazakhstan to a dedicated terminal in the Black Sea. When completed in 2015, the pipeline will be able to carry 1.4 million b/d of crude oil, up from its current capacity of 730,000 b/d.

At the groundbreaking ceremony in Atyrau in Kazakhstan earlier this week, the Caspian Pipeline Consortium (CPC) said the construction of the 1,500-km pipeline will be implemented in three phases.

The consortium will refurbish the existing five pump stations and add 10 new stations, replace an 88-km line, build six new storage tanks and a third offshore mooring point at the Black Sea terminal located 10 km north of the Port of Novorossiysk. CPC awarded all the major construction contracts in May 2011.

Chevron, a key CPC shareholder, said it is providing project management services for the construction.

Andrew McGrahan, President of Neftegaz Inc, said:

“CPC is a model of cooperation between Russia and Kazakhstan and is an indication of the confidence we have in Russia and in oil transportation from the Caspian region. This groundbreaking event represents years of dedication and commitment to expanding the commercial links between the two countries and sends a powerful signal that Russia and Kazakhstan are countries where major, long-term capital investments can be made with confidence.

“Chevron greatly appreciates the efforts of all shareholders, especially the representatives of Transneft and KazMunaiGaz, in reaching this important landmark.”

The first CPC groundbreaking ceremony took place 12 years ago. In October 2011, CPC will celebrate 10 years of successful tanker loading. Since the start of operations, over two billion barrels of oil have been transported through the system.