Poland and Ukraine to co-operate on Odessa-Brody-Gdansk pipeline project

Jul 04, 2000 02:00 AM

Oleksandr Martynenko, press secretary for Ukrainian President Leonid Kuchma, said last week that Poland and Ukraine were set to work together to build a pipeline for Caspian oil from Odessa to Gdansk by way of Brody.
Martynenko said Kuchma and Maciej Plazynski, the speaker of the Polish parliament, had stated their agreement as to the importance of the project during a meeting in Kyiv on July 4. He also noted, however, that Plazynski and Kuchma had stressed the need for a precise calculation of the economics of the project.
Indeed, Yevhen Marchuk, the head of Ukraine's National Security and Defence Council, was quoted as saying on July 5 that the pipeline would not be profitable unless it carried at least 20 mm tons of oil per year.

The pipeline project was launched several years ago, when Ukraine offered to make its territory available as a transit route for Caspian crude. Initially, the plan called for Caspian oil to be piped from Baku to Supsa and then loaded onto tankers for transportacross the Black Sea to Odessa. From Odessa, the oil was to be piped northwards along a 667-km route to Brody and then loaded into the Ukrainian leg of the Soviet-built Druzhba pipeline.
Work on the Odessa-Brody pipe was begun four years ago, and about 500 km of that line has already been completed. However, since 1996 the plan has been changed to provide for the construction of another stretch of pipe from Brody to the Polish port of Gdansk on the Baltic Sea. Work on that section of pipeline has yet to begin, but Marek Siwiec, an advisor to Polish President Aleksander Kwasniewski, said last week that the project was a high priority for Warsaw.
Construction of the Odessa-Brody-Gdansk pipeline is expected to require some $ 650 mm, with the Polish section costing about $ 300 mm and the Ukrainian section about $ 350 mm. The pipeline will carry 9 mm tons of oil in its first year of operation, and capacity will eventually rise to 40 mm tons.
Ukraine's Stkatesy 1 Foundation and the state-run operator ofthe Druzhba pipeline will manage the Ukrainian section of the pipe. The Polish section will be operated by Golden Gate, a consortium that includes the telecommunications company Netia and the US Kensington Group as well as several Polish companies.
Golden Gate's CEO Jacek Gutkowski said earlier this year that the World Bank and European Bank for Reconstruction and Development (EBRD) were willing to cover part of the costs if Kyiv allowed private companies to assume part of the responsibility for managing the Ukrainian section of the pipeline. Gutkowski said the pipeline operators would not seek a strategic investor for the project as a number of financial institutions had expressed willingness to provide financing.

Source: NewsBase
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