Ukrtransnafta joins building of Odessa-Brody-Gdansk oil pipeline

Nov 07, 2001 01:00 AM

Ukrtransnafta, Ukraine's new state oil pipeline operator, has joined the group that will build and operate the Polish section of the Odessa-Brody-Gdansk oil export conduit. Ukrtransnafta has taken a 5 % interest in the Golden Gate consortium. However, Poland's state oil pipeline operator, known as PERN, is preparing to join the group.
PERN will carry out a new share issue to finance its acquisition of a 5 % stake in Golden Gate. The consortium hopes to finish the Polish section of the Odessa-Brody-Gdansk pipeline in 2005. The cost of construction is expected to reach $ 500 mm. When complete, the pipeline will be able to carry 20-25 mm tpy of crude oil.

The Ukrainian side marked the completion of work on the 667 km Odessa-Brody oil pipeline at a ceremony on August 19 of this year. Ukraine's President Leonid Kuchma said at the ceremony that the new pipeline would quickly win a reputation as the shortest, cheapest and most convenient export route for oil extracted in the Caspian Sea basin. He also said he hoped to see an international consortium set up soon to run the pipeline.
Ukraine's Premier Anatoly Kinakh had said earlier in August that he expected the Odessa-Brody oil pipeline to become an important component of the European energy system. The pipeline will make it possible for producers working in the Caspian Sea basin and even the Middle East to send oil to Europe, he said during a one-day visit to Budapest. It may eventually be able to carry up to 40 mm tpy of oil, he added.

Ukraine offered to make its territory available as a transit route for Caspian crude several years ago. Initially, Kyiv's plan called for Caspian oil to be piped from Baku to Supsa and then loaded onto tankers for transport across the Black Sea to Odessa. From Odessa, the oil was to be piped northwards along the 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 five years ago within the framework of this plan. However, since 1996 the plan has been revised 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 Polish officials said last year that the project was a high priority for Warsaw.

Not all Caspian oil passing through the Odessa-Brody-Gdansk pipeline will reach the Baltic Sea. Polish refineries will use some of the crude. Additionally, some will be loaded into PERN's pipeline network at a point in central Poland for delivery to customers in Poland and Germany.

Source: NewsBase
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