East European countries agree on alternative Caspian oil pipeline

Jan 15, 2010 01:00 AM

The participants of an international conference addressing energy security and development of the Southern Energy Corridor held in Batumi, Georgia, including representatives of Kazakhstan and Turkmenistan have signed an agreement concerning deliveries of Caspian oil to Europe across Georgia using the Odessa-Brody pipeline.
The pipeline (also known as the Sarmatia pipeline) is a crude oil pipeline linking the Ukrainian cities Odessa at the Black Sea and Brody near the Ukrainian-Polish border.

There are plans to extend the pipeline to the Plock refinery in central Poland, and on to the Baltic port city of Gdansk.
"The project is mentioned in official documents and the EU supports it financially," Minister Mariusz Handzlik of the Polish President's office told. The conference was attended by representatives of presidential offices, governments and energy companies from Poland, Lithuania, Ukraine, Georgia, Azerbaijan, Turkmenistan, Kazakhstan, Turkey, Bulgaria and Romania. A feasibility study on the extension of the Odessa-Brody pipeline was presented at the conference. It was the first time Belarus representatives participated in a meeting devoted to this subject.

At present the pipeline transports oil eastward towards the Ukrainian Black Sea port of Odessa. A pipeline extension across Georgia would allow crude to be shipped to Odessa from where the oil could be transported to Gdansk via the Polish refinery in Plock. Azerbaijan declared at the conference it is ready to provide crude oil for the project.
Asked about the stance of Kazakhstan and Turkmenistan which did not declared oil supplies to the extended Odessa-Brody pipeline, Handzlik said that "the fact that Kazakhstan and Turkmenistan representatives participated in the conference and signed the declaration speaks for itself; this is a significant step".

"The presentation of the feasibility study of the pipeline and a joint declaration which followed the conference concern the supplies of Kazakh oil to Europe via Georgia," Marcin Jastrzebski, New Sarmatia president, told. New Sarmatia, a company of five oil concerns from Poland, Georgia, Ukraine, Azerbaijan and Lithuania, is responsible for extending the pipeline.
"Initially, Sarmatia is to transport 5 mm tons of crude oil to the Czech refinery of Kralupy, which could be increased to 40 mm tons at a later date," Handzlik explained. "It is expected that this project, including its Polish section, should be completed by 2015," he informed. "Significantly, the project is included in official documents and is a priority for the Europe-Asia crude oil transport corridor," the Minister added.
"It is possible that the pipeline could transport 8-10 mm tons of crude oil to Polish refinery per year," Jastrzebski said. "Over 40 mm tons of oil could be transported from 2013-2014."
Jastrzebski estimates that Poland and Ukraine should invest a sum of PLN 1.5 bn in the project. According to Jastrzebski, the European Commission confirmed its support for the project at the conference.
"I hope that an agreement concerning EU funding will be signed by the end of this month," the Sarmatia president said. EU funds are to cover PLN 490 mm of the total cost.

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