U.S. to finance pipeline feasibility study (08/30/98)

U.S. to finance pipeline feasibility study

Eastern Economist

KYIV - The U.S. Trade and Development Agency (TDA) has announced a $750,000 grant to the government of Ukraine for a feasibility study on the proposed Pivdennyi-Brody Oil Pipeline Project.

The grant agreement was signed in Kyiv by U.S. Ambassador Steven K. Pifer and Valerii Shuliko, deputy chairman of the State Oil and Gas Committee. The $1.5 million study will evaluate the construction of the pipeline, which would serve as a connector between a new oil terminal at the port of Pivdennyi, near Odesa, and the existing Druzhba pipeline system.

In addition to the TDA funding, the U.S. contractor for the feasibility study, Gulf Interstate Engineering of Houston, will contribute $750,000. While improving Ukraine's energy self-sufficiency, the Pivdennyi-Brody Oil Pipeline also would reduce Bosporus tanker traffic, provide another outlet for Caspian crude oil and provide alternate oil supplies of higher quality crude to the refineries of Central and Eastern Europe.

The pipeline, which would include two pumping stations along its route, would have an initial capacity of 14.5 million tons per year, increasing later to an annual capacity of 30 million tons.

Following the signing ceremony Mr. Shuliko and Ambassador Pifer met with the media. Mr. Shuliko said the Ukrainian pipeline was discussed during the recent meeting of the Kuchma-Gore commission during which U.S. Vice-President Al Gore was non-committal on support for a Caspian oil pipeline through Ukraine.

Mr. Shuliko also reported that the plotting of the route, to be completed by year's end, will take into account ecological factors, while also ensuring that the line does not run through politically unstable areas. Mr. Shuliko had earlier said that investments of more than $200 million are needed to complete construction of the Odesa-Brody pipeline and another $150 million is required to finish construction of the Pivdennyi oil terminal. Analysts have said that the oil pipeline is almost half-done, while the oil terminal in Pivdennyi is only 20 percent finished.

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