How to end the Odesa-Brody intrigue
Verkhovna Rada’s ratification of the SES agreement inspired those campaigning for the Odesa-Brody reverse mode to resort to new machinations, to prevent light Caspian oil — and Ukraine, as a transit operator — accessing the European market. Does this shed additional light on the whole single-economic-space affair?
For many in Ukraine, Russian Transneft CEO Semёn Vainshtok’s statement that the Odesa-Brody reverse mode is no longer a topical issue for Russia became a true revelation. He said that the reverse mode was necessary to activate additional Baltic Pipeline Network’s export capacities, increasing the oil flow to 42 million tons a year, without further problems and extraordinary measures. “We solved that problem in February, so the Odesa- Brody reverse mode is no longer a priority,” said Mr. Vainshtok, but did not explain the problem (The Day’s experts note that Russia’s interest in the project came down to getting the Ukrainian pipeline under control, block, and bury it).
In any case, Transneft is now in a position to tighten the screws on the Ukrainian pipeline project. In the second quarter of 2004, the Russian company included no quotas in the oil supply schedule for the Pivdenny sea terminal and the Brody railroad station, explaining this by the Ukrainian government stating that the Odesa-Brody pipeline and Pivdenny terminal would be filled with technological oil this April, and that a considerable part of Brody’s oil storage facilities would be involved in an experiment to pump oil via the Druzhba pipeline to the oil refinery in Kralupy (Czech Republic). Characteristically, the Odesa seaport reduced oil transshipments by 32.3% in March 2004 (compared to the same period last year), because Russia had increased international rail carriage rates by an average of 12%, while the duties on oil products, coking coal, and coke — these being strategic products for Ukraine — went up 22-48%. At present, Ukraine’s rail transit rates are 2.2-2.5 times lower than Russia’s. This brings one back to the so-called single economic space, where we are promised mountains of gold.
The process seems to have entered a new phase. Despite Mr. Vainshtok’s revealing statement, the Russian TNK suddenly came out with assurances that they were still interested in the Odesa-Brody pipeline’s reverse mode, and that their stand remained as before. Aleksandr Gorodetsky, President of TNK-Ukraine and main reverse mode consultant with Naftohaz Ukrainy’s CEO Yury Boiko, insists that “Brody-Odesa transport of Russian oil looks to us as not only a possibility, but a realistic and commercially viable project.” Most likely, this position reflects a sequel to [Russia’s] policy of dictatorship mixed with promises. “Ukraine still has a chance to reserve 9 million tons of oil to load the Odesa-Brody pipeline,” he says.
Nor was it coincidental — but most likely with the knowledge of Messrs. Gorodetsky and Boiko — that the Ukrainian government failed to convene a stockholders’ meeting and carry out cadre changes at Ukrtransnafta. In fact, the antigovernmental forces are acting in the open. Thus, one of the deputies to the director general contested his superior’s effort to convene a stockholders’ meeting in court. The Holosiyeve District Court in Kyiv promptly banned the meeting for failing to observe corporate bylaws when preparing the meeting, ruling that the agenda was not coordinated with the board. It was obviously an attempt to stall and eventually terminate any efforts to put Ukrtransnafta in order. The company leadership is currently the main obstacle in the way of implementing the tasks set by the cabinet. Meanwhile, now is the best time to activate Odesa-Brody capacities to pump Caspian oil to Europe. It cannot be postponed any longer, otherwise Ukraine’s image and budget will suffer. Under the circumstances, one is tempted to ask who is boss in this country.
