David Preiger, D.Sc. (Econ.), head of the Department of Transport Communications Development Problems, National Institute for the International Security Problems (Ukraine)

Irina Maliarchuk, Ph.D. (Econ.), state expert, Department of Transport Communications Development Problems, National Institute for the International Security Problems (Ukraine)

Taisia Grinkevich, Chief consultant, Department of Transport Communications Development Problems, National Institute for the International Security Problems (Ukraine)

Active antiterrorist struggle that followed in the wake of 9/11 and the present developments around Iraq may change to a great extent the worldwide energy supply system.

Globalization and transnational economic contacts that became obvious in the last quarter of the 20th century moved the Middle East to the center of the worlds economic and political life. Its oil fields, the worlds richest, serve as the foundation for a world oil market while oil remains the most desirable commodity in the world trade of energy sources.

The war, that will shift the spheres of influence in the energy sphere, began under the pretext that Saddam Husseins regime can no longer be tolerated: it leaves no hopes of gaining control over the Arab oil (including the Gulf countries). It was in Baghdad that Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela instituted OPEC in September 1960.

The political crisis in Venezuela, one of the leading oil producers, that cut short the flow of oil from this country as well as purely economic problems that are pestering the United States are responsible for the present situation. According to the forecasts of the Congressional Budget Committee budget deficit of 2002 (forecasted at the level of $145 billion) will extend to 2003-2005 fiscal years. In this context the White House sees the U.S.-led struggle against global terrorism, and the need to reform and reequip the armed forces as a justified and logical answer to its problems. Protracted expectations of the war has shaken the market, sent the oil prices up thus inviting another economic crisis in the United States and the developed world as a whole.

There are several factors behind the insistent desire to remove Hussein. First, even under pressure of international sanctions Iraq is potentially one of the players on the world oil market (the country has 10.7 percent of the proven oil reserves thus coming second after Saudi Arabia). Second, the cost value of its oil is very low: from $2 to $5 per barrel; the cost value of oil coming from the Kirkuk oilfields is even lower, $1 per barrel. Third, Iraq also has considerable gas reserves.

Information: According to BP Statistical Review of World Energy Iraqs proven oil reserves amount to 112.5 billion barrels (expected reserves to 215 billion barrels). The country comes second after Saudi Arabia with its 261.8 billion barrels. Compare this with Kuwaits oil estimated reserves of 98.6 billion barrels; Irans, 89.7 billion; Russias, 48.6 billion; the U.S., 30.4 billion barrels. Every day Iraq extracts 2.4 million barrels (starting with 2002 it cut down its extraction to 1.2 million). The figure of daily extraction for Saudi Arabia is 8.8m; Kuwait, 2.1m; Iran, 3.7m; Russia, 7.1m; the U.S., 7.7m. (While possessing 3 percent of the worlds proven oil reserves the United States consumes about 25 percent of oil extracted in the world. In 2001 the Persian Gulf countries supplied 22.8 percent of oil the United States exported.)1

The proven reserves of Iraqs largest developed oil fields are the following: Medjnun, 20 billion barrels; Western Kurna, 15; Halfaya, 5; Zubeir, 4; Bai Hassan, 2; Buzurgan, 2; Habas, 2; Abu Jirab, 1.5; Naziria, 2; Hormala, 1.5 billion barrels. The promising oil fields: Eastern Baghdad, 11 billion, Kirkuk, 10, Rumeila, 10, Nahr Umar, 6 billion barrels. By 01.01.1998 the natural gas deposits amounted to 109.8 trillion cubic feet; in 1997, 128 billion cubic feet were extracted and consumed. The carrying capacity of the main oil pipelines: Kirkuk-Ceyhan, 0.8 to 1.6m barrels a day; Iraq-Saudi Arabia, 1.65; Banias, 1.1-1.4; the strategic Iraqi pipeline, 1.4m barrels a day. The countrys total daily carrying capacity is 1.4-2.4 million barrels of oil.2

In the nearest future Iraqs forecasted oil reserves have a chance to be greatly increased because the latest horizontal and simultaneous drilling technologies will increase extraction. Until recently the country never conducted full-scale R&D in the oil sphere. Studies of deep-seated oil bearing strata of the Jurassic and Triassic periods (mainly in the Western Desert) may bring to light more oil reserves, therefore Baghdads statements to the effect that it would be able to bring up its daily extraction to 3 million barrels a day within one year; to 3.5 million barrels a day in 3 to 5 years, and to 6 million barrels in 10 years are not totally groundless.

The oil-related situation in the Middle East is exerting considerable influence on the future of the Caspian oil complex. On the eve of a new Gulf War Washington and Astana entered into an agreement under which Kazakhstan pledged not to cut down its oil extraction during 90 days that would follow the beginning of hostilities in Iraq. (The strategic oil reserves in the majority of countries will last precisely 90 days.) The United States pledged to buy any amount of Kazakhstani oil.

This agreement was born by the fact that in case of war with Iraq the OPEC countries would be unable to ensure uninterrupted oil supplies to the world markets. According to the Minister of Energy and Mines of Algeria Chakib Khelil (who was chairman of OPEC for several years) OPEC will be short of extracting and exporting capacities even if oil extraction in Iraq is cut for a short while. The war will undoubtedly affect other Persian Gulf countries, the largest oil exporters.

In the nearest future oil from Kazakhstan and from the Caspian Sea in general will not completely replace the Iraqi oil on the world market: according to American estimates Caspian oil amounts to not more than 4 percent of the world reserves. At the same time, the war will negatively affect world economy thus giving the Caspian states, Kazakhstan in the first place, a chance to join the group of major oil exporters. In expectation of this the U.S. Department of Energy excluded the republic from the list of unstable states in which it found itself immediately after gaining independence. (The list contains other CIS countries, Iraq, Iran, North Korea, China, and Israel).

In the next ten years the United States plan to invest $200 billion into the oil and gas industry of Kazakhstan. Great Britain is consolidating its ties with the republic: its largest oil and gas companies, together with American firms, have been working in the country for some years. The changed attitude to Kazakhstan was confirmed by the recommendation the House of Lords issued for the government to regard Kazakhstan as a strategically important partner. The lords were convinced that if the British government formulated a correct approach Astana would have become Londons main Central Asian ally.3

One can surmise that Russia agreed to Astanas firmer positions on the world oil market because practically all oil extracted in Kazakhstan is moved across Russias territory. It should be added that these developments have coincided with strengthening strategic oil-related cooperation between the U.S. and Russiathe process launched by Putins American visit and an interstate energy forum in Houston. According to analysts a more active cooperation between the U.S. and Russia, Kazakhstan, and Azerbaijan testifies that Washington was doing its best while contemplating the war to shape a sort of an alternative to OPEC out of the Caspian three to be able to somehow regulate the worlds oil prices in its interests.

The Persian Gulf situation predetermines, to a great extent, how Caspian oil will reach Europe and other large oil consumers. In fact, the Baku-Ceyhan option that Russia finds unfavorable has become more real. At the same time, the Eurasian Oil Transportation Corridor (EOTC) the considerable part of which belongs to Ukraine improved its chances to be realized.

Lets have a closer look at these oil pipelines. The idea of the Main Export Pipeline (MEP) Baku-Tbilisi-Ceyhan and the pipeline between Odessa and Gdansk via Brody was formulated in the early 1990s with an intention to move Caspian oil. Being regarded as rivals at the early stages today they look like mutually complementing ones. This is confirmed by a tripartite statement signed by the presidents of Georgia, Ukraine, and Azerbaijan about their countries integration into the new system of the East-West energy corridor. Early in 2003 President of the Georgian International Oil Corporation G. Chanturia confirmed that both South Caucasian republics together with Ukraine were prepared to address the EU with a request to create, within its own projects, a program of diversification of the energy routes leading from the Caspian region to Europe, including a variant crossing Ukraine. In its turn Kiev announced its intention to contribute to MEP. After the Ukrainian-Georgian summit of 18-19 December, 2002 the president of Ukraine instructed the corresponding ministries to study all the related questions and to take all the necessary measures to involve their enterprises in supplying equipment, materials and services in the course of realization of the Georgian stretches of the Baku-Ceyhan oil pipeline and of the Baku-Tbilisi-Erzurum gas pipeline.

It is expected that the 1,740 km-long Baku-Ceyhan pipeline will cost $2.95 billion; its first phase will carry 30m tonnes of oil a year and will gradually reach the figure of 50m tonnes. It is expected that the pipeline will reach its design capacity by 2015 when the region starts exporting from 100 to 120m tonnes of oil. The pipeline is expected to become the main route leading from the Caspian Sea to the western markets.

Construction of the Ukrainian part of the Eurasian Oil Transportation Corridor that consisted of the oil-handling Iuzhniy terminal and the Odessa-Brody pipeline was started in October 1996 and completed in August 2001. The first phase of the terminal was commissioned in December 2001. The entire route will be 673.7 km long, the diameter of the pipe, 1,020 mm, carrying capacity of the first phasefrom 9 to 14m tonnes a year, estimated cost, $465.4m. If extended to Plock in Poland the pipeline will bring up its carrying capacity to 32m tonnes a year. To match an increased demand the capacity can be brought up to 45m tonnes a year. So far, the pipeline remains idle for a number of reasons.4

Both projects received mighty impulses in the latter half of 2002: on 1 August, 2002 constituent documents of the Baku-Tbilisi-Ceyhan company (BTC Co.) were signed in London by British Petroleum (38.21 percent of shares); State Oil Company of Azerbaijan (25 percent); Statoil of Norway (9.58 percent); Unocal of the U.S. (8.9 percent); TPAO of Turkey (7.55 percent); Eni of Italy (5 percent); Itochu of Japan (3.4 percent); and Amerada Hess of Kazakhstan (2.36 percent). On 18 September the projects first stone was laid in the presence of the presidents of Azerbaijan and Georgia as well as Senior Advisor to the U.S. President for Caspian Basin Energy Diplomacy Steven Mann. In the first quarter of 2003 pipes will be laid in Azerbaijan and Georgia, this stage being completed late in 2004. Pumping of oil is planned for 2005. The progress is slow. When the constituent documents had been signed the Dutch and French negative assessments of the pipelines ecological safety caused a lot of trouble. The pipeline was to run along the Borzhomi Gorge and across the Borzhomi spa famous for its mineral waters. The negative assessments forced the Ministry of Ecological Safety of Georgia to pose 32 questions to the newly formed company. If it failed to give clear and unambiguous answers to them the project would have been buried. The following caused the greatest concerns: the pipeline threatens to pollute the mineral waters and the soil in the gorge and in the Borzhomi-Kharagaul Forest Reserve; it may damage the tourist industry that brings money to the region. On the other hand, the investors negatively reacted to possible changes in the route that sent the projects costs up.

The problem was resolved early in December 2002 after prolonged and difficult negotiations in which the American side also took part. The Georgian government and BP signed an agreement under which 17 km of the pipeline would run along the Borzhomi Gorge while BP guaranteed the projects ecological safety. The Georgian side included a clause under which BP agreed that the government of the country that owns the territory will have the right to resort to any measures up to and including discontinuation of the MEP contract if BP failed to live up to its pledges.5

The project will go ahead as the British AON Corporation confirmed its readiness to contribute to the routes insurance in the form of financial guarantees of the projects safety, insurance of construction works and all possible risks created by the functioning pipeline. In addition, it is planned to set up a system ensuring the pipelines safety: current developments and risks are calling for them. All sides involved have recognized this. It is expected, in particular, that the Georgian military now being trained in the United States according to a specialized program will guard the Georgian stretch of the pipeline. (About two thousand people will be trained in the next two years.) Other power structures of Georgia will also contribute to guarding the pipeline. Georgian analysts do not exclude a possibility of American units being involved in guarding the pipeline in the foreseeable future.

The projects success depends, to a great extent, on support of Kazakhstan, the regions key oil producer. Much has been done to attract it to the project: the U.S. Agency for International Development allocated $250 thou to Astana to pay for feasibility studies. The United States is prepared to fund the Aktau-Baku-Tbilisi-Ceyhan route if the result proves satisfactory. The amount of funding will be determined when the Kazakhstani leaders officially agree to sign a corresponding bilateral document with Azerbaijan.

Early in December 2002 Astana officially invited Baku to start negotiations and to draw a draft document. Today, Kazakhstan moves its oil through the Russian lines to Novorossiisk yet the country wants to diversify its export routes, therefore its position on the Baku-Ceyhan project is conditioned by the capacities of the Caspian Pipeline Consortium (CPC) that will not cope with the entire amount of oil extracted in Kazakhstan (especially when the Kashagan oil fields are commissioned). In addition, the country is not happy with Russias intention to raise the transit tariffs. (The CPC shareholders agreed with Moscows decision to announce the Tengiz-Novorossiisk main pipeline a Russian natural monopoly that deprived Kazakhstan of the right to set tariffs.)

On the other hand, Astanas decision was prompted by the intention of Eni, TotalFinaElf, INPEX and ConocoPhillips) that own 15 percent of BTC shares to move their part of oil along the Baku-Tbilisi-Ceyhan pipeline. They guaranteed at least 20m tonnes of oil a year. The talks with the State Oil Company of Azerbaijan convinced Kairgeldy Kabyldin, Managing Director for Transportation Infrastructure and Service Projects of the National Kazmunaigas Company that Astana should promise to move its oil through BTC a month after the line was commissioned. At the early stages oil will be moved across the sea by tankers to Dubendy and sent to the Sanchagal terminal. Later, an underwater pipeline between Aktau and Baku may be laidthe project has to wait until the legal status of the Caspian Sea is determined. There are several variants of how oil from Kazakhstan will reach the BTC pipes: an underwater pipeline from Aktau to Baku or another underwater pipeline reaching the shore to the north of Baku and then reaching Baku on land or tanker transportation to Baku.

As MEP becomes more and more real, Russia is gradually changing its negative attitude to it. According to Minister of Fuel and Energy of Russia Igor Iusufov, Russia will not object to constructing an underwater pipeline to move oil from Kazakhstan along MEP Baku-Tbilisi-Ceyhan if it bypasses its territory. If it crosses its territory Russia will be prepared to discuss its participation in the project.6 Russias participation in BTC has been already determined by the fact that LUKoil and ExxonMobil are AIOC shareholders: the BTC consortium announced that part of the oil extracted in Azerbaijan by the Azerbaijan International Operating Company, AIOC, that extracts about 15m tonnes a year and exports 9m tonnes should be exported only by MEP. Russia is interested in the project because the consortium shareholders will pay not more than $3 per tonne of transported oil while other users will have to pay more.

Russia has displayed its interest in the Ukrainian part of EOTC: since the late 1990s Moscow has been investigating possible alternatives to the Druzhba pipeline leading to the European market. Instability in the Middle East diminished oil supplies from the regiontoday Europe needs more oil than it can get from the troublesome area. So far, Russia is moving its oil to the south through the Baku-Novorossiisk and Baku-Supsa pipelines to the Black Sea terminals from which oil is carried by tankers through the Straits. The carrying capacity of these pipelines proved inadequate for Russias export needs, therefore the YUKOS company (that uses the Druzhba pipeline to reach the Brody pumping station from which oil is carried by railway to the Iuzhniy terminal at Odessa) together with LUKoil suggested that the newly built Ukrainian oil pipeline be used to bring oil from Brody to Odessa by reverse (possible loading is up to 5m tonnes a year). Kiev still hopes to extend the pipeline to Gdansk and to fill it with Caspian oil.

The first well-substantiated prospects for the use of the Ukrainian variant supplied by Halliburton Kellogg Brown & Root and Cambridge Energy Research AssociatesCERA appeared in spring 2002. Research was done to identify the degree to which European oil refineries might be willing to work with Caspian oil delivered by the Odessa-Brody pipeline. It turned out that East European oil refineries were ready to accept Caspian oil. If the pipeline reaches Gdansk it will bring oil to the refineries in Poland and even in Northern Europe. If the Druzhba pipeline is used for Caspian oil moved by the Odessa-Brody route, then Slovakia, the Czech Republic, Hungary, and Austria will get access to this oil as well. Ceska Rafinerska is prepared to use at least 2m tonnes of oil a year delivered through this pipeline; the Neftekhimik Prikarpatia of Ukraine is ready to use 1m tonnes of oil a year. Calculations confirmed profitability of oil deliveries to Schwechat Oil Refinery near Vienna and Doina refinery in Germany. In fact this variant is cheaper by at least two times than deliveries through Novorossiisk and 2.5 to 3 times cheaper than through Ceyhan in Turkey.

On 29 December, 2002 Ukrtransnafta Company that manages the Odessa-Brody pipeline completed the tender for developing a business plan and the project of the pipelines Polish stretch. American companies Price Waterhouse Coopers and Channoil Consulting won the tender. According to Norbert Justen, head of the European Commission delegation to Ukraine, the commission is prepared to allocate $5m for this aim.7

A visit of the new premier of Ukraine to Poland early in January 2003 provided positive impulses to construction of the Ukrainian part of EOTC. Premier of Poland Leszek Miller confirmed that his country was interested in the Odessa-Brody-Gdansk pipeline and formulated Polands main requirements to it: (1) it should be profitable; (2) its completion should be entrusted to an international consortium; (3) the amount of delivered oil should be determined together with the list of prospective users. The talks produced positive resultsat least they put an end to the scandal that flared up after an article published in an influential Polish newspaper Rzeczpospolita in October 2002 that accused the heads of the Golden Gate Company engaged in laying the pipeline on the Polish territory of corruption. There was an opinion that the scandal might have been provoked by transnational corporations that wanted to decrease the market value of the Ukrainian part when forming an international consortium.

Success or failure of the Ukrainian route depends to a great extent on the position of the world community and the EU in the first place. The Unions leaders want to diversify the sources of oil that reaches the European market and take measures to prevent skyrocketing oil prices. It is expected that a war in Iraq may send the prices up to the $40 per barrel levelthis happened in 1991 during the Operation Storm in the Desert. Ukraine hopes that the presentation of the project and tripartite talks in Brussels scheduled for February 2003 will convince the EU to provide financial support for extending the pipeline to Gdansk. The talks are expected to produce a Ukrainian-Polish interstate agreement: in an interview given to Interfax-Ukraina Germans Ambassador to Ukraine Dietmar Stüdemann said that Europe was interested in the project. So far Kiev is doing its best to pump technological oil through the Odessa-Brody pipeline. In October 2002 it set up Neftegazbezopasnost to guard the pipeline.

There is one more fact that adds to the value of BTC and Odessa-Brody-Gdansk projects: on 21 October, 2002 Turkey once more tightened the rules of passing through the Straits: vessels with hazardous cargoes (oil and oil products are among them) should use the Straits only in the daytime. Their lengths are limited as well: those passing through the Bosporus should not exceed 200 m and those through the Dardanelles, 250 m (the previous figures were 230 and 290 m, respectively). All vessels of 500 tonne displacement and all vessels carrying hazardous cargoes should be insured against producing any ecological hazards and should correspond to the international ecological standards. Only double-shelled tankers are allowed into the Straits.

There is an opinion that the new rules will complicate the situation for Russia and those of the foreign companies that carry their oil through the Straits. Beginning in 2004 Novorossiisk alone will receive 28m tonnes of Tengiz oil every year; with the second phase of the CPC completed the figure will reach 67m tonnes. The Straits will hardly cope with this amount of oil; at the same time, Russia will hardly promptly replace its outdated tankers with new ones for technological and economic reasons. Analysts have already pointed out that it will have to use the Odessa-Brody-Gdansk and BTC lines (the latter will require a branch to connect the Russian pipeline network with the MEP route). According to Vice President of LUKoil Leonid Fedun this will allow Russia, first, to move part of its oil bypassing the Straits; second, the MEP will bring high-grade Caspian oil to the Mediterranean and will relieve its pressure on inferior Russian oil on the European markets.

One cannot say that the prospects for BTC and Odessa-Brody-Gdansk lines are brilliant: according to Director of the Turkey Project Center for Strategic and International Studies Bülent Aliriza, as soon as Saddam Hussein is removed the MEP will not be needed because cheap Iraqi oil will return to the world markets. He expressed this opinion in an interview to Associated Press and pointed out that the final cost of Azeri oil supplied through MEP would be six times as high as that of Iraqi oil. It would take more time to reach the West because Iraqi oil is much closer to Ceyhan. (So far, the oil moved from Iraq to Ceyhan is subject to the international economic sanctions applied to Iraq.) Turkey that expects to earn $200-300m every year from MEP transit will profit much more if it normalizes trade with Iraq (today sanctions cost Ankara about $40 billion of losses).8 The American plans of post-war managing the Iraq oil sector will probably decrease an interest in Caspian oil.

The future of EOTC is also dim: according to Ukrainian experts, the Odessa-Brody pipeline will bring profit only if at least 6m tonnes of high-grade Caspian oil are moved through it every year to Ukrainian and European refineries. This will be possible if the pipeline is extended from Brody to Gdansk with its second-largest Polish refinery (4.5m-tonne capacity). Today it belongs to the Rafineria Gdanska (RG): 75 percent of the shares belong to Nafta Polska; 15 percent, to the workers, and 10 percent directly to the state. It is for two years now that Poland has been trying to privatize the RG (by selling the 75-percent state-owned packet). The results may affect the future of the Odessa-Brody-Gdansk pipeline because YUKOS and LUKoil, two Russian oil giants, are displaying their interest in RG. Even if one of them manages to buy the entire packet or part of it, then the Polish part of EOTC will probably remain on paper.

Information: The RG was built when CMEA was still alive and adjusted to the Urals oil that came by the Druzhba pipeline from Russia. Today LUKoil and certain Polish intermediaries are involved in the process.

The two years of privatization efforts reflect the attitude of the Polish government to the pipeline. According to Russian sources in summer 2001 the consortium that includes Polish companies and is headed by British Rotch Energy won the tender for the controlling packet of shares. The consortium was expected to spend over $1 billion on the shares and investments yet it never got the shares because, according to official sources, the government was not satisfied with its financial guarantees.

To consolidate its victory Rotch Energy is looking for new partners the list of which includes YUKOS and LUKoil. The latter agreed to buy from Rotch Energy 49 percent of the consortiums shares so that to have a say in the refinerys future operation, in selling its products in Europe and the Baltic countries.

Recently, new aspects have become obvious in the process of privatization of Polish refineries. In August 2002 the Polish media made public information that YUKOS and Surgutneftegas of Russia were discussing with the local Konsorcjum Gdanska (KG), owner of a network of gas stations, their joint participation in privatizing the Gdansk refinery. The PKN Orlen Supervisory Council (Poland), the owner of the countrys largest refinery in Plock that processes from 85 to 90 percent of Russian oil exported to Poland through the Druzhba pipeline, made public its intention to take part in privatizing the RG. The company has a large (about 2,000) network of gas stations. This explains why in September 2002 Rotch Energy invited PKN Orlen to form an alliance.

There is an opinion that the PKN Orlen can indirectly buy 25 percent of RG shares plus 1 share thus getting the right to manage the company. This is quite possible because this variant will look after the interests not only of Poland (its companies will continue managing its enterprises) but of the European Union that wants to stop Russian companies that are moving at a fast pace into the countries-EU candidates. Ukraine may profit from this because potentially the EU is interested in developing the Brody-Gdansk pipeline to bring in Caspian oil and diversify the source of oil that reaches Europe.

Hungarys already announced intention to sell the state-owned part of shares (25 percent) of the MOL oil company may dim the future of Odessa-Brody project.

Information: MOL is the largest Hungarian company that owns three oil refineries and 440 gas stations in Hungary, Slovakia, and Rumania. In addition, it owns 34 percent of Slovnaft (a Slovakian oil company). By the end of 2002 MOL capitalization amounted to $1.92 billion.

YUKOS and LUKoil are among potential buyers. They have not yet confirmed their interest in the company but Ukrainian observers concluded that their participation in privatization might negatively affect the future of the Odessa-Brody pipeline because the Russian companies would send their oil to the Polish refineries controlled through the Hungarian company. (The latter plans to buy shares of the Plock refinery, part of the PKN Orlen that, in turn, is planning to buy Rafineria Gdanska.)

The future of the Ukrainian part of EOTC depends on what Bulgaria and Greece want to do to revive the Burgas-Alexandroúpolis project, a potential rival of the Ukrainian-Polish project: it will also move oil from the Black Sea coast to Europe bypassing the Straits (the designed carrying capacity is 35m tonnes, length, from 250 to 350 km, estimated cost, from $700 to 800m). It was back in 1994 that Russia, Bulgaria, and Greece signed an agreement on building the pipeline; it took them nearly eight years to obtain guarantees that the pipeline would be adequately loaded and would, therefore, bring profit. We are convinced that Greece and Bulgaria resolved the problem with the support of the United States (there are American oil companies working in the Caspian region), Russia (that protects the interests of LUKoil resolved to buy gas station networks in the Balkans, Greece, and Turkey and buy shares of petrochemical enterprises in Hungary, the Czech Republic, Rumania and Slovakia) and the EU since it should help its members buy enough oil from various sources to meet their needs.

The gradually developing cooperation among Astana, Tbilisi, and Bucharest threatens, to a certain extent, the Ukrainian-Polish project. Rumanian specialists discovered another oil field in Kazakhstan while Tbilisi has already invited Bucharest to join forces to build a terminal in Georgia to move oil to Constanţa. If realized the project may attract the lions share of Kazakh oil moved to Europe.

One can say with a great deal of regret that despite the efforts of the Central Asian countries and Ukraine the future of MEP and EOTC will depend on stronger players and on their ability to reach consensus among themselves.

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4 See: D. Preiger, I. Maliarchuk, V. Dutchak, The Ukrainian Part of the Eurasian Oil Transportation Corridor: Yesterday and Today. What About Tomorrow? Central Asia and the Caucasus, No. 3 (15), 2002, pp. 55-63.
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