By OGJ editors
HOUSTON, Aug. 5 -- Kazakhstan and Ukraine are examining the possibility of using a recently built, but still idle oil pipeline through Ukraine as an export pipeline for Kazakh oil, reports Dow Jones Business News.
Built by the Ukraine government in 2001 to transport Caspian oil to European markets, the 9 million tonne/year pipeline line extends from Odessa on the Black Sea to Brody in Ukraine.
Kazakhstan's Energy and Mineral Resources Ministry said on July 30 that the two nations would form a working group to examine the feasibility of using the pipeline, which is not yet operable because of a lack of throughput contracts.
"The Kazakh government considers the Odessa-Brody link to be a viable alternative for Kazakhstan's oil," a ministry spokesman said.
Ukraine's oil transportation company, Ukrtransnafta, formed in June 2001 to operate Ukraine's three pipelines, is said to be currently negotiating with the Swiss Capital Group and Drake Group over forming a consortium to operate the pipeline, according to Ukrtransnafta director Oleksandr Todiychuk, who told a press conference July 19 that the company plans to involve some experienced foreign firms in this project as well.
The $450 million Odessa-Brody pipeline, originally was designed to be extend to Potsk, Poland, and later to the Gdansk refinery. Kazakhstan may finance the Potsk extension, a spokesman from the ministry said.
The share and terms of Kazakhstan's participation in the project will be finalized after the feasibility report is completed. The governments of Ukraine and Poland also have given political support to the project. Ukraine and Kazakhstan are expected to draft an intergovernmental agreement for Kazakh oil transit via Ukraine in the third quarter.
Oil production in Kazakhstan is forecast at 52 million tonnes this year, out of which 8.5 million tonnes will be used domestically and 44 million tonnes exported.
Kazakhstan's national oil and gas monopoly KazMunaiGas will be an operator for Kazakh gas transportations to Ukraine, and Neftegas Ukraine will represent the Ukrainian side.
Several Russian oil companies, however, want to reverse the idle 52 km pipeline. For example, Russia's TNK-BP, a joint venture of Tyumen Oil Co., BP PLC and others (OGJ Online, July 23, 2003), wants to export crude through the line by reversing the flow and loading oil tankers at Odessa.
Although this option would most quickly allow Ukraine to recover its construction costs, it also would strengthen Russia's existing monopoly on oil exports from the Caspian Sea basin.
Kazakhstan currently has only two crude export routes—one to Samara in Russia, and one to the Russian port city of Novorossisk on the Black Sea, via the Caspian Pipeline Consortium system.
Feasibility studies also are being carried out on a pipeline to Iran from Kazakhstan and another to China.
