Established as a joint venture with the State Oil Company of the Azerbaijan Republic (SOCAR), Cross Caspian Oil and Gas Logistics LLC, coordinates and renders integrated hydrocarbons transportation services across the Caspian Sea towards the Black Sea and the Baku-Tbilisi-Ceyhan (BTC) pipeline entry point through marine, pipeline and railway shipments. The company is committed to operational excellence acting in a safe and environmentally responsible manner and adhering to all international standards. It provides guidance to the operating units, including risk-assessment and contingency planning, in order to better distribute and coordinate the transshipment capacity of the Azerbaijan-Georgia corridor between local production and transit volumes. Cross Caspian Oil and Gas Logistics LLC has repeatedly won the Caspian Energy Integration Award prize and been nominated for “the best company of the year in transportation of oil and oil products”. 

Caspian Energy (CE): Which strategic tasks does Cross Caspian set for 2013 and coming years?

Dmitry Solovyev, General Director, Cross Caspian Oil & Gas Logistics LLC: The main line of work through 2013 will be prolongation of existing contracts with big consignors of goods from Kazakhstan and attraction of new volumes of oil and oil products for further transportation along the Black Sea and Caspian oil transportation corridor. We also wait for the completion of the considerable part of reconstruction work on Azerbaijan’s and Georgia’s railroads as it will lead to creation of additional capacities, ensure more flexible approach to operative planning, and give an additional incentive for increa­sing cargo transportation by railroad. We try to provide companies favo­rable conditions from the standpoint of complexity and quality of offered services. The Taman terminal has been recently commissioned at the Black Sea shore of Russia. Certain part of cargoes has traditionally been transported through Ukrainian ports. Caspian Pipeline Consortium’s pipeline system, providing deliveries of crude oil from Kazakhstan fields to the Black Sea shore of Russia, is increasing capacities as well. We certainly apply all efforts for remaining attractive for our clients both from the technical and economic standpoints.

CE: How do you assess the past year for the company?

Dmitry Solovyev: The year was tense as we faced certain problems with the carrying capacity of railways. It was mainly caused by continued reconstruction work. Certain improvement in carrying capacities of railroads is already observed. The necessity for minimizing any negative consequences and ta­king possible delays and difficulties into account while planning operations is a part of our task. We enlarged the park of railroad tank cars by acquiring them jointly with our partners. It is a significant factor from the standpoint of qua­lity growth of services we provide. 

CE: What are the real volumes of cargo transportation that Cross Caspian may perform today in the Caspian-Black Sea corridor? 

Dmitry Solovyev: The carrying capacity totals from 1 up to 1.2 mln tons per month depending on the nomenclature of transported cargo. The park of tank-cars numbers about 4,000 units including state and private cisterns. The operation of Dubendi, Baku and Sangachal terminals is being coordinated. A new Garadagh terminal which is involved in transportation of certain volumes of condensate from Shah Deniz field is under construction. There are plans envisaging further development of the Garadagh terminal capacities for oil and oil products transportation. As far as Georgia is concerned, we operate actively with Kulevi and Batumi terminals located on the Black Sea shore. 

CE: Did the company manage to obtain favourable conditions in the transportation corridor compared to alternative routes? Which issues still have to be considered  to solve?

Dmitry Solovyev: First of all, we proceed from the existence of alternative for our corridor: different directions, types and regimes of oil transportation, including pipeline systems, terminals in Russia and Ukraine. Each transportation line has its own advantages. It is necessary to adhere to all international standards and at the same time ensure economic attraction of the route. We have gained working experience with big goods consignors. We are perfectly aware of their requirements and are ready for meeting them. The competition based on economic factors that consignors take into account will be also observed among alternative transportation directions, export of oil and oil products. 

Our corridor has obtained the image of a reliable route and is known to goods consignors. That is our advantage. So, we hope for further development of our cooperation. 

CE: Which technical aspects are there still planned to be solved?

Dmitry Solovyev: All operators and partners, engaged in the corridor, will have to work out a joint strategy on further development plans and provision of more beneficial conditions for goods consignors. Crude oil production is expected to grow in Kazakhstan. However, its distribution among export routes will depend on the real avai­lability of free alternative transportation capacities, on time frame for enlar­ging available assets and launching new ones. All this should be analyzed in order to offer commercial services that are favorable for shippers and meet economic interests of Azerbaijan, Georgia and companies providing transportation services. 

Making multimodal route competitive is a rather hard task because such logistics is a capital-intensive business requiring considerable investments for maintenance and development of available assets. Thus, it is only the balanced analysis of alternative opportunities and formulation of competitive conditions that may enable attracting necessary volumes for successful operation of the corridor and meeting customer’s requirements concerning quality and price of services. 

CE: What factors are of paramount importance for consignors and how well does the company manage to handle these issues? 

Dmitry Solovyev: Multimodal logistics of hydrocarbons is a complex and multi-component process both from the technical and economical points of view. Logistics means flexibility because we need to ensure more efficient use of assets, performance of plans, minimize all negative factors affecting cargo transportation plans, including weather condition and technical restrictions. In other words, the logistics implies flexible and balanced management system as well as the team’s readiness for fin­ding efficient solutions and maintaining regulation analysis of the situation. Now it is necessary to work on maintenance of our attraction for present and potential shippers. We find it to be a non-tri­vial task.  From the very beginning our company has been ready for seeking new solutions in cooperation with our partners and clients. There are certainly objective technical factors, certain economic elements that are considered constants. But there are always aspects which can be optimized and we will apply necessary efforts for doing it.