Georgia interested in pipeline cooperation with Poland

Nov 20, 2001 01:00 AM

Georgian President Eduard Shevardnadze told his visiting Polish counterpart Aleksander Kwasniewski that Georgia was interested in plans for the establishment of an oil export route connecting Ukraine and Poland. The Odessa-Brody-Gdansk pipeline project will provide opportunities for cooperation between Georgia and Ukraine, Shevardnadze said on November 12. He was speaking on the first day of Kwasniewski's two-day official visit to Tbilisi.
Ukraine began offering 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 Azerbaijan to the Georgian Black Sea coast via the Baku-Supsa pipeline 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 pipeline began five years ago within the framework of this plan and was completed in mid-August of 2001. 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. (Polish refineries are expected to use some of the crude passing through the pipeline, and oil will also be loaded into the local pipeline network at a point in central Poland for delivery to Polish and German customers.)
The Polish section of the Odessa-Brody-Gdansk line will be built and operated by a consortium called Golden Gate. Poland's state oil pipeline operator PERN plans to acquire a 5 % stake in the consortium, and its Ukrainian counterpart Ukrtransnafta announced several weeks ago that it also had arranged to acquire 5 % of Golden Gate.

The consortium hopes to finish the Brody-Gdansk pipe in 2005. The cost of construction is expected to reach $ 500 mm. When complete, the Ukrainian-Polish pipeline will be able to carry 20-25 mm tpy of crude oil. Ukraine's Prime Minister Anatoly Kinakh said in August of this year, though, that throughput capacity might eventually be raised to 40 mm tpy.
Kinakh also said 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 brief visit to Budapest.

Some analysts have responded cautiously to Ukraine's show of enthusiasm over the pipeline project, warning that transport of oil from Baku to Gdansk might be more expensive than other options as it would require multiple transhipments. (That is, oil would have to be loaded into a pipeline at Baku, then piped to Supsa for loading into a tanker, then transported across the Black Sea for unloading at the Odessa terminal, and then loaded into the Ukrainian section of the Odessa-Brody-Gdansk pipeline.)
This scepticism was little in evidence on August 19, when the Ukrainian government held a ceremony to mark the completion of work on the Odessa-Brody pipeline. 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.

Source: NewsBase
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