19 June 2007 - Transneft intends to propose an increase in the transit fee from $24.50 to $38 per ton at the shareholders meeting of the Caspian Pipeline Consortium in Moscow on July 3. That will be the first shareholders meeting since Rosimushchestvo, the federal property management agency, transferred its share in the consortium to the state transit monopoly Transneft. Transneft head Semen Vainshtok has the personal approval of Russian President Vladimir Putin for the move. The Caspian Pipeline is the only privately owned trunk line in Russia.

There will be four issues on the agenda of the consortium shareholders meeting. The first is the rate hike. The second will be Transneft's proposal to change the charter of the Russian legal entity representing the consortium, KTK-R (KTK is the Russian abbreviation for Caspian Pipeline Consortium), so that strategic issues would not be decided by a majority vote but by a 100-percent consensus. Also, it would create a board of directors for KTK-R. The third issue the approval of the board of directors of the consortium's Kazakh legal entity, ZAO KTK-K. The fourth issue is the approval of the new report of consortium general director Vladimir Razdukhov on negotiations over a memorandum to increase the capacity of the pipeline. The previous version of the report was rejected.

The private shareholders in the consortium, Chevron (with a 15-percent share) and ExxonMobil (with a 7.5-percent share) resisted earlier attempts to raise the transit fee on the pipeline. Transneft vice president Sergey Grigoryev said that his company's main concern is to bring the consortium's activities into line with Russian legislation, rather than British. Transneft will own a 24-percent share in the consortium. Sources say that Russians will be uncompromising at the shareholders meeting.

Transneft also wants the expansion of the pipeline to be synchronized with the construction of the Burgas-Alexandroupolis pipeline and the Caspian line to be made profitable by 2010, rather than 2012. That will require an eventual increase of the transit fee to $45-47 per ton and a decrease in the interest on credits taken out by the consortium from its private partners from 10-11 percent to 5-6 percent annually.