Caspian pipeline shareholders object to Russia plan

MOSCOW, May 22 (Reuters) - Debt redemption schedules and interest remain the key stumbling block for Russia and Western majors to clear the expansion of the CPC oil pipeline from Kazakhstan to Russia, a consortium member said on Thursday.

"It is premature to say that the memorandum has been agreed. But there are no serious differences which can not be resolved and there is some progress," Mikhail Barkov, vice president of Russian pipeline monopoly Transneft told Reuters.

His comment follows yet another failure by the consortium to approve a memorandum to expand the link from some of Kazakhstan's biggest fields to the Black Sea despite being cleared by Kazakh and Russian oil ministers earlier this month.

Russia has a 24 percent stake in the consortium as a host state and has for years opposed doubling its capacity from the current 700,000 barrels per day. It criticises the project for low returns and argues that it would add pressure on the already congested Turkish Straits.

The ban has prevented private shareholders in the CPC, led by U.S. oil major Chevron (CVX.N: Quote, Profile, Research), to increase production in Kazakhstan.

Last year, they finally agreed to raise shipping fees to speed up credits repayment and start of profit distrubution.

Private shareholders, who were the main creditors of the pipeline, have also agreed to halve interest rates on the $5.5 billion loan to CPC to 6 percent.

Barkov said private shareholders were again insisting on raising the rate -- now to 7.9 percent -- and wanted to be prioritised in loan repayment because they provided real money while host states' initial investment consisted only of infrastructure.

A source present at the meeting told Reuters the shareholders were committed to resolve the outstanding issues in the next few weeks.