KENKIYAK-ATYRAU OIL PIPELINE

Location:

Kazakhstan

Project number:

28462

Business sector:

Natural resources

Notice type:

Private

Environmental category:

A

Target board date:

22 Jun 2004

Status:

Completed

PSD disclosed:

23 Apr 2005

Project Description

The proposed EBRD loan will refinance part of the costs of commissioning the Kenkiyak-Atyrau oil pipeline connecting the Aktobe region in Central Kazakhstan with the city of Atyrau in Western Kazakhstan. From Atyrau onwards crude oil can either be exported via KazTransOil’s Atyrau-Samara pipeline and then via Transneft pipelines in Russia or via CPC pipeline directly to the Russian port of Novorossiysk on the Black Sea. The new oil pipeline can unlock the production potential of the oilfields in Central Kazakhstan (including that being developed by CNPC Kazakhstan subsidiary) by creating currently unavailable and attractively priced export pipeline capacity.

Transition Impact

The transition impact from the Project would be two fold: (1) setting higher standards for corporate governance and business conduct; and (2) promoting the development of institutions, laws and policies that directly promote the functioning and efficiency of the market.
(1) standards for corporate governance and business conduct 
As part of this transaction the Bank will require both the Borrower and the Guarantor to comply with superior standards of corporate governance and business conduct.  
(2) Promotion of institutions, laws and policies that directly promote the functioning and efficiency of the market. 
There is potential for transition impact in relation to tariffs and the allocation of transportation capacity.  The transaction will tackle these two areas from two different angles by:
(a) Committing the Borrower to promoting transparency and better disclosure of its policy for capacity allocation and the implementation thereof.
(b) Requiring the Borrower and Guarantor to co-operate with a separate high-level multi-sector Technical Co-operation programme which aims,  over a time span of 24 months, to enhance the capacity of the Kazakh Agency for Regulation of Natural Monopolies.

The Client

JV MunaiTas (the Borrower) is a new project company established to build and own the proposed pipeline. The sponsors of the Project are the Kazakhstan national oil pipeline monopoly KazTransOil (KTO), a subsidiary of the Kazakhstan national oil & gas company KazMunaiGas, with 51% and the CNPC IK, a subsidiary of China National Petroleum Corporation with 49%. KTO is an operator of the Project.

EBRD Finance

A US$ 81.6 million term loan to the Borrower.

Project Cost

Total projects costs are US$ 228.6 million excluding financing costs.

Environmental Impact

As part of due diligence for this project, an independent environmental consultant was retained to complete an environmental audit of the project.  In addition to the environmental audit, the consultant reviewed the status of environmental management of the company and reviewed the Russian version of the environmental impact assessment (EIA) that was prepared for national project permitting/approval.
There were no significant environmental liabilities identified in the environmental audit.  Operation of the pipeline does not cause significant harm to the environment.  Further, there are engineering controls in place to minimize any potential leakage from the pipeline, and to provide early response in the unlikely event of a leak.  This includes 23 solar powered monitoring stations and computerized shut off valves.  While the majority of these valves are located at regular intervals along the pipeline, there are also valves on each side of major river crossings.
It was noticed during the audit that there is a lack of due coordination of activities between the Company and KTO (the operator) in the process of obtaining permits for the use of natural resources issued by governmental environmental supervisory agencies.  The existing communications between the MunaiTas Company and KTO do not ensure at present adequate exchange of information required for effective joint environmental management in the process of the oil pipeline operation.  Recommendations to address these issues are presented in the audit report.
In addition, there is lack of a clear structure for environmental management and division of responsibilities between the Client, the contractor and the pipeline operator. The Client, MunaiTas” NWPC” CJSC, the owner of the pipeline, is legally responsible for environmental regulatory compliance of any activities related to its facilities as a whole, regardless of its contractors’ obligations. At the same time, the contract signed between MunaiTas and Stroytransgas, main construction contractor, makes the latter responsible for environmental regulation compliance of activities related to MunaiTas facilities for the period of construction and, partly, two years after the state acceptance of the pipeline (warranty period). While, the contract signed between MunaiTas and KTO, the pipeline operator, makes the latter responsible for environmental regulation compliance of the operations related to MunaiTas facilities.  These issues are addressed in the Environmental Action Plan for the project.
While this project is screened C/1, the EIA completed for national permitting purposes was also reviewed.  A summary of this EIA is attached to this PSD.  As outlined in the summary document, the scope of work completed for the EIA for this project is adequate and the EIA was completed to a high standard.  The EIA confirmed that the project is not located in a highly sensitive or unique environment.  There were no rare or endangered species identified in the site area, and there were no unique habitats identified in the pipeline corridor.
There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

Please refer to above transition impact section.

Company Contact

Nurzhan Abdymomunov
CJSC “MunaiTas” NWPC”
29d Satpaev Street, Almaty,
480008, Kazakhstan
tel: +7 (3272) 588439
fax: +7 (3272) 588442
email: munaitas@munaitas.kz
email: N.Abdymomunov@munaitas.kz
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.