Warsaw and Brussels Warn Against Reverse

Ukraine now stands a better chance of avoiding putting the Odesa-Brody oil pipeline in reverse, despite pressure from Russian oil companies and their Kyiv lobby. Potential suppliers have been found to provide nine million tons of Caspian oil a year, as well as potential buyers for 4.5-6 million tons in Europe, said Ukrtransnafta President Oleksandr Todiychuk after his visit to Brussels to discuss the prospects of the Eurasian Oil Transport Corridor. Taking part in the talks were Ukraine, Poland, Slovakia, the Czech Republic, UK, Germany, and European Commission.

Mr. Todiychuk told the BBC that oil supply contracts had been signed and efforts were being made to transform Caspian oil purchase letters of intent and memorandums into contracts. He admitted that doing so was not easy, as there were problems due to what he described as the sharpening of new pipeline reverse trends. Primarily, in conjunction with Russia’s TNK- VR Company saying they were prepared to supply the Odesa-Brody pipeline with 450 tons of technological oil as a three-year loan. Although the TNK-VR leadership said their decision had nothing to do with the direction of oil transport, it did not take an expert to see that the whole thing was a stalling maneuver by the reverse mode exponents. By signing the contracts to pump the Russian Urals mix in the pipeline, Ukraine would be bound by them for their duration. “They want us to face the choice; it’s much better to pump [oil] using the same pipeline,” said Oleksandr Todiychuk, adding that the meeting in Brussels demonstrated Ukraine’s European choice, that it was becoming an element of the European energy strategy, and Ukraine would thus enjoy complete European support. But if we want a temporary attainment, he stressed, and if we start pumping in reverse, the pipeline will be solely a Ukrainian problem.

European Commission officials warned in Brussels that, should the Odesa-Brody pipeline be put in reverse, even if for a while, Europe would lose interest in that project, and this would last a long time. Poland came out with a similar admonition, in view of an agreement on bilateral oil pipeline integration to be signed in late October. The agreement will be made only after the Odesa-Brody pipeline is filled with light Caspian oil. Otherwise the Polish side will decline; Polish experts believe that considerable political risks are involved in the document. The Polish Vice Premier’s Adviser Tomasz Bartoszewicz said previously that the Polish section of the pipeline, from Brody to Plock, could be constructed in three years, and that it would cost И500 million. Until the project is completed, oil delivered to Brody would be transferred to tank cars and transported across Poland.

Ukrtransnafta’s efforts to increase the number of direct participants in the Odesa-Brody pipeline are also impeded by the cabinet that has not finally decided on how the pipeline will be used. The Ministry of Fuel and Energy, after appointing a tender in August for an independent expert to examine the feasibility study of the pipeline’s reverse mode, set the bids’ deadline: October 13.

Meanwhile, Oleksandr Todiychuk, as the Ukrainian representative of the Eurasian Oil Transportation Corridor, may soon resume as Ukrtransnafta’s Chairman of the Board. Yury Boiko, Naftohaz Ukrayiny Chairman of the Board (lobbying for the reverse mode), recently ordered an emergency stockholders’ meeting on Premier Viktor Yanukovych’s instructions in order to reinstate Todiychuk as Ukrtransnafta’s CEO. Under law, a stockholders’ meeting is to take place 45 days after it is advertised in the press. However, the press service of the special representative told The Day that the company’s General Director Stanislav Vasylenko is in no hurry to publish the ad.