Odesa-Brody pipeline awaits oil (04/28/02)

Odesa-Brody pipeline awaits oil

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Oil should enter the Odesa-Brody pipeline - the controversial and long-awaited shipping route from Central Asia to the energy-hungry West - in a matter of weeks, announced Ukrtransnafta on April 13. However, it will be several years before the "black gold" will flow regularly through the transport tube.

Ever since plans were first announced for the Odesa-Brody pipeline, which is scheduled to connect to the Polish port town of Gdansk when finished, there have been questions about whether the pipeline is more economically viable than routes through Turkey and southern Europe or the sea lanes of the Dardanelles and the Bosphorus Sea into the Mediterranean.

Now a study recently completed by the U.S. company Halliburton, Kellogg, Brown & Root in conjunction with Cambridge Energy Research Associates, which was commissioned by the U.S. Trade and Development Agency, reports that there would be a demand in the European market for Caspian oil flowing through Ukraine.

"The substantive opportunities of the Euro-Asian oil transport corridor are tied to the extension of the Odesa-Brody pipeline in the direction of Gdansk," the report states, according to an Ukrtransnafta press release.

The report, announced during a meeting of the working committee on the Euro-Asiatic Oil Transport Corridor project, which consists of representatives of Ukraine, the United States, Poland and the European Bank for Reconstruction and Development, said the oil would initially find a market in Germany, Poland, the Czech Republic and Slovakia.

The report recommends continuing the construction of the transport line to the town of Plotsk in Poland, where it would be hooked to an existing line to carry the oil to Gdansk and concludes that the extension of the transport line through Poland to Gdansk and the implementation of another planned project, the Druzhba-Adria line, would guarantee its viability.

If combined, the two routes would allow for much of the oil shipped out of the developing Caspian Sea region, which may contain the second largest oil reserves in the world, to bypass the high-risk and heavily traveled Bosphorus-Dardanelles shipping route by giving oil transporters the option of moving oil over land through Ukraine.

The project to connect the Ukrainian pipeline to the Druzhba-Adria line particularly intrigues developers. It would move oil from Ukraine through Hungary to the Adriatic port city of Omisalj in Croatia and allow for the efficient movement of Caspian oil beyond Europe.

The report notes that at this stage of planning the Odesa-Brody pipeline could not hope to be fully loaded at its scheduled opening in 2005. It concludes, however, that it would be expedient to continue work on the Eurasian oil project and to develop an international consortium.

The Odesa-Brody pipeline was completed in 2001, but remains empty, while Ukrtransnafta - a wholly owned subsidiary of Naftohaz Ukraina, which in turn is a public corporation of the Ukrainian government - continues working to form an international consortium of multinational corporations that would have an interest in moving the oil westward, and to find someone to assume control over the Pivdennyi Oil Terminal in Odesa.

Tatiana Yefremova of Ukrtransnafta's press service said that partners of all sorts are under consideration, including oil extraction companies, shipping outfits, oil transport companies and others who might determine that an investment in the Odesa-Brody tube is worthwhile.

"The fundamental goal for developing the consortium is to ensure an effective, efficient and profitable oil pumping system of all the partners in the consortium," explained Ms. Yefremova.

Until oil is found for the pipeline to pump, however, it must be filled so that it does not begin to corrode and deteriorate. The filler will remain in the tube until it is finally pushed out by a product ordered by customers.

In the next weeks, Ukrainian officials will perform final tests to ensure the pipeline's quality. Then the first oil tankers will arrive at the Odesa Terminal to begin the process of filling the enormous tube, to safeguard it while Ukrtransnafta and the international multinationals decide its fate.

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