Dog in the Oil Manger

The Ukrainian Parliament was to vote on a bill last Thursday, amending the law on concessions with a clause extending the scope to the Odesa-Brody oil pipeline and the rest of Ukraine’s oil transportation network. The vote was preceded by a morning meeting of the Verkhovna Rada Fuel and Energy, Nuclear Policy, and Nuclear Safety Committee, presided over by Andriy Kliuyev, the nominal committee chairman and fuel-and-energy vice premier. In fact, he held the meeting at his cabinet office and did what was to be expected, trying to talk the committee members into accepting the cabinet’s stand. The vote, however, did not take place and Verkhovna Rada determined to adjourn the concessions issue. Adam Martyniuk said that both the cabinet’s bill and that submitted by Rayisa Bohatyriova, leader of the faction Regions of Ukraine and the Communist faction member Pylyp Buzhdyhan were postponed for want of feasibility studies to be done by the cabinet.

Both bills were deliberated by the parliament earlier. Andriy Kliuyev represented the cabinet one, stressing that the current legislation on concessions makes it possible to take into account practically all the specifics of projects subject to concession, rent included. In a debate with Rayisa Bohatyriova, of his own faction, and the Red Pylyp Buzhdyhan, Mr. Kliuyev noted that drafting a separate Odesa-Brody concession bill would make no sense without first legislatively providing for the construction of such concessional projects. The vice premier, who had just returned from London where, among other things he had discussed the possibility of the Odesa- Brody concession with local businesspeople, also stressed that, given the circumstances, negotiating a deal with potential concessionaires would a “waste of financial and human resources... Unless we work out a concession agreement and proceed to implement it, we’ll have to wait very long before this oil pipeline actually starts functioning.” Mr. Kliuyev added that the cabinet has decided on steps to be taken after the Odesa-Brody concession bill is passed, envisaging the establishment up of an international consortium involving the proprietors and consumers of oil being thus transported via Ukraine. The vice premier further declared that Azerbaijan, Kazakhstan, Russia, and Chevron Texaco had made it clear they were interested in becoming parties to the concession agreement; after founding the consortium, the Odesa-Brody pipeline and the Southern Oil Terminal would be subject to concessions. “It’s standard business practice,” Mr. Kliuyev emphasized, adding that the Baku-Tbilisi-Dzheikhan oil pipeline is concessional, as are the pipeline projects to be carried out in Bulgaria and Romania. “State companies have grown accustomed to this mode of pipeline operation,” summarized the vice premier.

Premier Viktor Yanukovych appeared in parliament the following, obviously in an attempt to enhance the cabinet’s position, saying that Ukraine and EBRD had reached an agreement in London on financing the prolongation of the Odesa-Brody pipeline to P л lock. He also mentioned preparations being made for a meeting of governmental and business representatives interested in the development of the Eurasian Oil Transportation Corridor, with Odesa-Brody being part thereof, involving Ukraine, Azerbaijan, Kazakhstan, Poland, and the European Union. Ukraine and Azerbaijan had agreed on cooperation in principle, in operating the Odesa-Brody pipeline and extending the pipe to P л lock. Azerbaijani Premier Tair Ogly Rasi Zade said that the Odesa-Brody project is of quite some interest for his country and for the companies prospecting for and developing Caspian oil fields.

Verkhovna Rada deliberated last Wednesday. Our Ukraine Oleksandr Hudyma’s bill proposing to delete pipelines and power transmission lines from the lists of concessional projects, and it was apparent that the bill stood a slim chance of being passed from the outset. The parliament had voted down the bill banning the privatization of Odesa-Brody on Tuesday and this had prompted Oleksandr Hudyma to forecast that Our Ukraine could once again besiege the podium, blocking parliamentary work “if we cannot use logic to prevent passing bills undermining Ukraine’s national security.” The threatening forecast, however, never came true. OU Yuriy Orobets, member of the fuel-and-energy committee, told The Day Thursday that most of his faction had determined to abstain from voting on the concessions bill. He further specified that the faction would not vote against the bill, but would take no part in the vote, adding that there would be no podium siege. It looks like Mr. Kliuyev’s arguments had their effect, as evidenced by The Day’ s interview with Deputy Ivan Dyiak who said there was no meeting of the fuel-and-energy committee, period, since the meeting had taken place at the cabinet, meaning it must have been dominated by the vice premier.

Most likely, Our Ukraine had lost the momentum and practically considered the issue decided, considering that even the Communists, having what Mr. Dyiak called the golden share, had supported the majority, albeit with reservations (likely to be explained by the Red faction’s recent inveterate opposition to the concessions bill). The people’s deputy produced a copy of the bill submitted toward the end of last year by Petro Symonenko and Stanislav Hurenko, proposing a moratorium on sales, privatization, corporatization, leasing out, concessions on, and other changes in state property, such as oil, gas, and ammonia transportation networks of Ukraine.

The Communist stand in the matter remains to be ascertained. Heorhy Kriuchkov, one of the faction leaders, chairman of the parliamentary national security and defense committee, told The Day last Thursday: “We must launch the Odesa-Brody oil pipeline into operation, the sooner the better, whatever the operating mode. I’m not sure about the vote today, but this is our [Communist] stand.” Alla Oleksandrova, leader of Kharkiv’s Communists, made the Red stand even clearer, saying the Communist faction supported the concessions bill amendments concerning the transportation of oil via the Odesa-Brody pipeline. She added, however, that some of the deputies proposed amending the bill, at the meeting of the committee, to the effect that the final text of the concessions agreement should specify the pipeline’s operating mode [e.g., obverse or reverse — Author ]. She felt sure that “this mode is not an article of the law, but a contractual clause.” She specified that the Communists would support the pipeline’s concessional status, but that the operating mode should reflected in the agreement, with reference to specific firms, subject to ratification by parliament. Regardless of whatever fluctuations, on the part of Communist deputies, acting in keeping with their party guidelines, it is safe to assume that there is a degree of progress in the direction of pragmatism and the recognition of national priorities.

What makes the situation ironic is that there is no way to determine the competence of the Social Democrats making up the bulk of Our Ukraine. Those with first-hand knowledge about Odesa-Brody’s almost ten-year history assume now that these people are simply unable to learn from their own mistakes. The reader should be reminded that the pipeline concession issue was like the bullfighter’s red cape to the faction’s leader (most typically represented by Taras Stetskiv). And that they were prepared do away with all those conceiving and subsequently championing the idea, attacking them using their media resources. The Yushchenko cabinet bungled the concessions and consortium project. The result was that the Odesa-Brody pipeline is still practically idling. After rejecting the concession-consortium idea, they came out with nothing else, save the reverse mode, an extremely hazardous and antinational idea that had nearly come true. Acting like the proverbial dog in an oil manger seems a strange concept of patriotism.