Russian oil pipeline monopoly Transneft (TRNFP.RS) said Monday the conditions demanded by U.K. energy giant BP PLC (BP) in exchange for its approval of the expansion of the Caspian Pipeline Consortium pipeline amount to "blackmail," the Prime-Tass news agency reports.
BP said last week that it would support the expansion of the CPC pipeline if it received unconditional and unrestricted rights sell its interest in the project.
"We consider this statement an attempt to blackmail shareholders (of CPC). (BP's) actions limit our freedom and do not allow the other shareholders, who own 94% in the CPC, to expand the pipeline and to earn profits," Igor Dyomin, spokesman for Transneft, said.
BP owns around 6.6% in the CPC through interests in two joint ventures: Kazakhstan Pipeline Ventures LLC and Lukarco BV.
BP has already completed negotiations to sell its stake in Kazakhstan Pipeline Ventures, which holds 1.75% in the CPC, to KazMunaiGaz. Russian oil major Lukoil Holdings (LKOH.RS) was offered the opportunity to buy BP's stake in Lukarco, which holds 12.5% in the CPC project, Vladimir Buyanov, BP's representative in Russia, said last week.
In May, the CPC's other shareholders agreed to expand the throughput capacity of the pipeline system to 67 million metric tons of oil by 2012 from 32 million tons currently. They plan to sign the relevant memorandum Dec. 17.
The CPC, which is owned by a multinational consortium, pumps Kazakh oil through Russia to a terminal at the Black Sea port of Novorossiisk.
Russia currently holds 31% in the CPC, while Kazakhstan holds 19%.