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

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

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

The Caspian regions considerable fuel riches attracted the worlds oil-and-gas giants and the largest states with their geopolitical and geo-economic interests. Not so long ago all sides involved were busy assessing the regions oil and gas reserves and the potentially promising markets. Today they are becoming involved in extraction and transportation of the local energy resources that are mainly used in Europe.

The Black Sea-Caspian region has attracted attention for the following reasons: an expected decline in hydrocarbons extraction in Europe and a simultaneous increase in their acquisition in the Caspian area; the need to diversify the sources of imported energy fuels; limited carrying capacities of the traditional routes through which Russian, Azeri and Kazakh oil reaches Europe via the Black Sea Straits, which calls for alternative routes. Completed military operation of the United States and its allies in Iraq and a possibility of their control over oil extraction there speeded up the process. Part of the Iraqi oil minus the amount the United States will consume itself may be sent to the European markets via Turkey and the Black Sea. There are signs that the delimitation of the Caspian Sea will be finally completed and that the five coastal states will increase oil extraction there. In these conditions rivalry over the right to move oil and gas to the world markets along the old and new routes will become fiercer.

In the context of an unfolding uncompromising struggle Ukraine pins its hopes on the complete stretch of the Eurasian Oil Transportation Corridor (EOTC) that includes the Odessa-Brody pipeline well known in the world as an idling pipeline and the idling oil terminal in the port of Iuzhniy at Odessa. One wants to know which oil Kiev may expect in its pipelines and which of the main players on the European oil market may become interested in the so-far idling capacities. Obviously, oil will come from the Caspian and, possibly, from Iraq. Consequently, its potential owners may become interested in the Ukrainian variant.

Caspian Prospects

Kazakhstan will play the key role in the Caspian regions energy fuel future. The sides involved in the Main Export Pipeline (MEP) Baku-Tbilisi-Ceyhan and those that claim deeper involvement in oil transportation in the region have staked on Kazakhstans oil reserves.

According to the Ministry of Energy and Mineral Resources of Kazakhstan, the proven oil reserves amount to 3.6 billion tons. In 2002, 47.2m tons were extracted (an increase of 18 percent over 2001); 39.4m tons of them were exported. Large reserves give hopes that the figure will continue growing. According to preliminary estimates, by 2005 extraction of liquid hydrocarbons (oil and gas condensate) will reach 60m tons a year; the figure for 2010, 100m tons.

To translate these plans into reality the republic adopted a Program of Developing the Kazakhstani Sector of the Caspian Sea for the years 2003-2015. This period is divided into three stages. At the first stage (2003-2005) it is planned to create conditions for complex development that will include wider prospecting on the shelf and extension of coastal infrastructure as well as main international tenders for developing oil fields. At the second stage (2006-2010) it is planned to develop the local resources at a faster pace, at the third (2011-2015), to stabilize the amount of extracted oil.

According to preliminary estimates, the recoverable reserves of the Kazakhstani sector are over 8 billion tons of conventional fuel; the largest oil-bearing structure Kashagan (the northern part of the sea) is expected to contain 1.7 billion tons (the assessment is being checked). Prospecting is carried out by the Agip Kazakhstan North Caspian Operation Company that is expected to start industrial extraction in 2005 and proceed in three stages in accordance with the Program of Development. At the first stage extraction is expected to reach 22m tons of oil a year; at the second, 45m tons, at the third, 60m tons.

Ambitious plans are expensive. On the whole it is planned to attract $52 billion of investments into the oil sector up to the year 2015 and to bring the level of extraction up to 150m tons a year. If the program develops successfully, in 2005 the republic will supply 1.2 percent of the worlds total oil demand; the figure is expected to reach 6 percent in the future.

Azerbaijans contribution to the total Caspian extraction is large enough; in 1994, the republic started developing its oil-and-gas marine fields Azeri, Chirag and in the deep-water part of the Gunashli field. Combined their recoverable resources are over 600m tons.

According to different sources, the prospected Caspian oil reserves are from 17 to 34 billion barrels (2.3 to 4.6 billion tons), which is nearly equal to what the United States has on its territory (22 billion barrels, or 2.9 billion tons) or to the North Sea riches (17 billion barrels, or 2.3 billion tons). According to American experts, the forecasted oil reserves of Kazakhstan may be nearly 235 billion barrels (over 30 billion tons) more with the total cost of $4 trillion. Russian experts cited similar figures (from 4 to 30 billion tons) at the CaspianXXI: From Politics to Business summit.1 In future, this amount of oil will cover from 3 to 5 percent of what the world needs.

The already extracted amounts of oil in the region and those expected in future need adequate carrying capacities to move the oil to the world markets. Kazakhstan supports an idea of several transportation routes and is discussing economic expediency of several options: Kazakhstan-Russia; Kazakhstan-China; Kazakhstan-Turkmenistan-Iran and further on to the Persian Gulf; Kazakhstan-Azerbaijan-Georgia-Turkey. The bulk of the exported oil will reach the Black Sea coast through pipelines and by railways and be concentrated in Batumi and Poti (two Georgian ports) and in Novorossiisk and Tuapse (two Russian ports). From these ports oil will cross the Black Sea in oil tankers and reach Europe through the Straits. It is the Black Sea Straits that have become the key circumstance in the oil game on the European field.

The Turkish March for Transit Pipes

The Black Sea Straits are a 325 km-wide zone that includes the Bosporus (33.4 km long and 700 m wide in the narrowest place), the Dardanelles, and the Sea of Marmara. Today, their carrying capacity is stretched to the utmost. In 2001, on the average 150 ships (20 of them were tankers) passed through the Bosporus in both directions every day. On top of this several hundred passenger trips are made between the European and Asian parts of Istanbul. Traffic in the Straits is 4 times more intensive than that through the Panama Canal and three times more intensive than through the Suez Canal.2 In 2002, the total volume of oil and oil products handled in the Black Sea ports, the greater part of which reached Europe through the Bosporus, was about 150m tons.

The mounting load on the Straits forces the Turkish government to tighten the traffic and transit rules. One of the main arguments is a high probability of ecological disasters: in the last 50 years there were about 500 critical situations there, 40 of which were described as emergencies. At the same time, tighter rules were probably suggested by Turkeys interest in the Baku-Tbilisi-Ceyhan MEP.

The prospects of higher oil extraction in the Central Asian Caspian republics and Russia and the limited transit capacity of the Black Sea Straits call for a search for alternatives. The choice will depend on a great variety of economic and political factors; the markets current and future demands; the steps undertaken by all interested countries to realize the national strategies of energy security will also play an important role.

Together with the Odessa-Brody pipeline and the Baku-Ceyhan MEP still under construction the following pipelines are regarded as main alternatives to the Black Sea Straits3: Constanţa-Triest; Burgas-Alexandroúpolis, and the Trans-Balkan oil pipeline Burgas-Vlorë. Having acquired a clear idea of the Ukrainian part of EOTC and its potential advantages, let us analyze the basic parameters of other possibilities.


This route known as SEEL (South Eastern European Line) will connect the port of Constanţa in Rumania and the port of Triest in Italy. According to the ambassador of Rumania to Azerbaijan Tasin Gemil, there is a functioning oil pipeline in Rumaniaall that is needed is to extend it to Italy. The project is estimated at $800m. It is expected to start with 5m tons of oil a year and to bring this figure gradually up to 35m tons. Oil from Kazakhstan on which Rumania counts will cross the Caspian to Baku, it will reach either Poti or Novorossiisk to be moved by tankers to Constanţa. It is expected that former Yugoslavia, Slovenia, and Italy will use the oil. The ambassador maintains that the EU and the U.S. supported the project.4

It should be said that the route was changed several times. Until 1999 it was planned to move oil from Rumania via Slovenia and Croatia to Hungary or Yugoslavia; its cost was estimated at about $1 billion with an annual carrying capacity 30m tons. Later an American Parsons Energy and Chemicals Group Inc. analyzed cost efficiency of a Rumania-Hungary-Slovenia-Italy route the cost of which was assessed at $400m. Today, another variant is under discussion: Constanţa-Omisalj (Rumania-former Yugoslavia-Croatia) from which the pipeline will be extended to reach the port of Triest in Italy via Slovenia.5 The route was changed because of fighting in the Balkans and later during post-war stabilization.

This variant has several attractions: the terminals in Constanţa can handle up to 30m tons of oil a year (Bucharest offers the local oil refinery with an annual capacity of up to 7m tons). The pipeline will reach an area with big refineries, which makes further transportation unnecessary. (Italy with its refining capacity of up to 2.45m bar/day is the worlds leader.) This route will make it possible to deliver oil to ten Rumanian oil refineries, though all of them should be first modernized. Potentially, oil from Constanţa can be delivered by the Danube river system to many European countries up to and including those on the North Sea. When this pipeline is linked to the TAL (Transalpine Pipeline), oil will be moved to Switzerland and Germany. This opens up a perspective for a common European oil pipeline system with accesses to the Black (Constanţa), Adriatic (Triest), Baltic (Wilhelmshaven), and North (Rotterdam) seas. Potentially, oil can be sent to other world markets (the port of Triest can handle tankers of over 200 thou tons deadweight).

To realize the project Rumania that is eager to strengthen its transit positions on the eve of joining the European Union needs complete support from Kazakhstan as the main Caspian oil producer. So far, however, Kazakhstan favors the Burgas-Alexandroúpolis route supported by Greece and Russia. One can even surmise that Moscows opinion will decide Astanas final choice. Lacking pipelines of its own reaching sea coasts (it has a share in the CPC) and its own railways to export its oil independently, Kazakhstan is already experiencing difficulties with delivering its oil to the markets.

This is especially important for Ukraine that counts on Kazakhstani (and Russian) oil to load its own oil pipelines. Taking into account the carrying capacity of its northward pipelines, one can say the following about Kazakhstans pipeline export potential. The Atyrau-Samara pipeline can move 0.3m bar/day (15m tons a year); Kazakhstan has an annual Russia-established export quota. From Samara oil can be moved either to European refineries along the Druzhba pipeline system; or to Ukrainian refineries and the Black Sea oil terminals through the Samara-Lisichansk-Snegirevka-Kherson-Odessa pipeline; or to Russias Black Sea coast through the Samara-Sukhodolnaia-Tikhoretsk-Novorossiisk pipeline. In addition, Astana and Moscow have already agreed to use the Baltic Pipeline System (BPS) together. Kazakh oil will reach it via Samara. By 2014, the Tengiz-Novorossiisk pipeline of the CPC will reach its maximum capacity of 1.34m bar/day (67m tons a year). The total figure will be 1.64m bar/day or 82m tons of oil a year. From this it follows that if by 2015 Kazakhstan reaches the level of 110 or even 150m tons a year, it will have extra amounts of oil with no pipelines to move them: at first the surplus will be 25m tons a year, five years later, 15 to 18m tons more. Even if it manages to refine half of the amount at home, 10 to 45m tons of oil will have to be exported. Here we deliberately ignore the pipeline under construction that is 635 km long and that will connect the Karachaganak oilfields with the port of Atyrau; by 2005, it will handle 5m tons (with condensate), later the figure will increase to 10m tons. For this reason when pondering over Bucharests suggestions Astana will have to think how to move oil to the western (Rumanian) Black Sea coast.

Today Kazakhstan sends up to 2m tons of oil to the Black Sea coast along a rather complicated route: from Tengiz to Aktau on the Caspian Sea, across the sea in tankers to the port of Dubendi (at Baku); then the oil is moved by a pipeline Dubendi-Ali-Bairamli and then by a railway to the port of Batumi. There are three so far hypothetical variants of moving oil to Baku: by tankers; through a submarine pipeline between Aktau and Baku; through a surface oil pipeline along the Caspian coast from Kazakhstan, across Russia and Azerbaijan to Baku. They cannot be realized without adequate international agreements in which the last word will probably belong to the RF. The United States will have its say, too, if the third variant is realized: it is doing its best to prevent Russia from playing a greater role when it comes to oil transportation from the Caspian along the MEP.

Let us have another look at the Black Sea and the future of its pipelines if they have enough oil to carry.


It was Greek large shipbuilding companies that first forwarded the idea back in 1994; for several years it remained unrealized until the political situation in Bulgaria and the piling up problems of the Bosporus revived it. The new Bulgarian government under former King Simeon unequivocally supported the project in close cooperation with Russia.

In 2001, Russia, Bulgaria, and Greece signed a memorandum of cooperation; in spring 2002, they decided to set up a consortium for the construction and exploitation of the pipeline (its total length is less than 300 km). The sides have equal shares in the consortium that they are free to distribute among national companies.6

The project was designed by the Latsis Group, the owner of Petrola Hellas, the third largest oil refinery of Greece; Greek firm Hellenic Petroleum (HP) is appointed the projects main operator. There is a newly formed joint stock company Transbalkan Pipeline entrusted with the task of construction and servicing the pipeline. The following firms are prepared to contribute to the project: Kopelouzos and Promotheus Gas of Greece; Bulgar Gas and the port of Burgas of Bulgaria, and Rosneft, Transneft, Slavneft, Stroytransgaz and Orel-Oil of Russia. It has been decided that 20 percent of the projects total cost of $688m will come from the sides involved; 20 percent will be covered by the money Greece invested in the EU funds, and 60 percent will be borrowed.

The first stage of the project will carry about 10 to 15m tons of oil a year; later the figure will increase to 35m tons. Construction will be launched as soon as the parliaments of Bulgaria and Greece ratify the agreement and when the partners agree on how to divide the profit.7

Kazakhstan was also officially invited to the consortium; president Nazarbaev supported the project, yet this interest has not yet received a legal form. If Astana refuses or if its involvement proves negligible (in fact, one can expect with certainty only the national KazMunaiGaz companys participation), the future of the pipeline will depend on Russias oil extraction in the Caspian sector and elsewhere. In any case, the additional amounts of Russian oil delivered to the Black Sea coast through the Transneft pipeline system that will either increase its carrying capacity or will join the CPC should be moved to the European markets. The planned pipeline may prove useful if the project is realized at all.

The Transbalkan Project

Those who are directly interested in the future main pipeline stretching from Burgas in Bulgaria to the port of Vlorë in Albania across Macedonia (it will be 913 km long with a carrying capacity of 35m tons) have the support of the U.S. government extended through the so-called South Balkan Development Initiative of the U.S. TDA. The British firm Brown & Root Ltd (daughter of American Halliburton Energy) has already supplied feasibility studies paid for by the U.S. budget. To realize the project the leading British and American companies (BP-Amoco-Arco, Texaco, and Chevron) working in the Caspian region set up an international consortium; later Albania, Bulgaria, and Macedonia signed a memorandum of understanding that vested the British-American consortium with exclusive rights and allowed the governments of these countries not to disclose the project-related confidential information. One of the advantages of the projected pipeline is the Albanian port that can handle tankers with the deadweight of up to 300 thou tons and that is close to Pan-European transport corridor No. 8.

* * *

One cannot but ask whether there will be enough oil to fill all pipelines at the same time. Lets have a look at a possible number of ships moving through the Bosporus published in a specialized Russian journal.


Calculation of Annual Load on the Bosporus by 2010 (mill tons)8

Oil Export Toward the Mediterranean (estimated pipeline and terminal carrying and handling capacity)

Export of Russian oil through Black Sea ports








Transshipment through Georgian ports (Batumi, Kulevi)


Total at the Black Sea entrance


Oil Export Toward the Mediterranean (forecasted extraction and supply directions)

Export of Russian oil through Black Sea ports








Baku-Tbilisi-Ceyhan (BTC)*


Total at the entrance to the Black Sea


The straits carrying capacity

Max 80

Overload of the strait without bypasses (except BTC)


Bypasses to leave the strait out (except BTC)









Total for the bypasses (except BTC)


Extra capacities of the bypasses (except BTC)

About 60

* The BTC project is discussed separately from all other bypasses because it avoids double transshipment and the Black Sea stretch

The quoted author is obviously sure that the MEP Baku-Tbilisi-Ceyhan will be completed. Indeed, the already distributed contracts worth $2.2 billion out of the total cost of $2.95 billion and the fact that 10 percent of the project has been completed are weighty arguments. There are certain circumstances that cast doubts: the United States intends to restore the Mosul-Haifa oil pipeline and branch it off to Ceyhan; the decision on loans for MEP continued construction was postponed till fall 2003 because the assessment of environmental risks had not yet been completed. (This adds some $700-800m, or 30 to over 50 percent, to the expenditures of the MEP members who agreed to fund continued construction themselves.) In light of the above the situation quenches optimism to a certain extent.

The Odessa-Brody pipeline may correct figures cited in the Table; if used in the reversive regime it may increase the load on the Straits; if extended to the Polish city of Plock it may attract even more oil. In any case, together with the MEP Baku-Tbilisi-Ceyhan it is considered one of the most real among other routes.

Solo for the Ukrainian Line

Having signed a joint declaration, the governments of Ukraine and Poland and the EU commission for EOTC met for a conference in Brussels on 27 May, 2003 to discuss the future of the Eurasian Oil Transportation Corridor. In this way the Odessa-Brody pipeline stopped being a purely Ukrainian or a Ukrainian-Polish project and finally acquired a European status. EBRD President Jean Lemierre announced that his bank was prepared to join the international oil transportation consortium as a crediting or investing member. (According to the joint stock company Ukrtransneft, there is a program of cooperation with the EBRD for 2003-2004 that can be regarded as a completed funding project to the sum of up to $400m.) It is expected that realization of the business plan compiled by PricewaterhouseCoopers (PwC) will start either late in 2003 or early in 2004. There are already two applications for moving up to 2m tons that came from the Neftekhimik Prikarpatia (Nadvirniansky Oil Refinery, Ukraine) and Czeska Rafinerska (the Czech Republic).

The situation around the unfortunate pipeline changed radically for several reasons: a suicide attack at tanker Limburg and the Prestige disaster off Spanish shores which convinced the European community that it needed safer oil transportation methods offered by pipelines; higher oil prices on the eve of and during the Iraqi conflict; economic disagreements between the EU and the U.S. caused by American sanctions against European metal products and export subsidies the American government gave its companies; Ukraines agreement to take part in the Baku-Tbilisi-Ceyhan MEP, which shifted Azerbaijans position: after several statements that it had no oil to send along the Odessa-Brody pipeline it finally agreed that it could find enough oil for the line.

One should take into account that control over the Iraqi oilfields and oil deliveries from this country directly to the United States put the companies working in the Caspian region face to face with a problem of selling the hydrocarbons they extracted. Today, the following American companies are working on the shelf: ChevronTexaco and ExxonMobil; the recoverable resources at the oilfields developed by the former (Apsheron, Tengiz, and Karachaganak) are 4,678 billion barrels; ExxonMobil works on the Azeri-Chirag-Gunashli complex, in Nebit-Dag, Tengiz and in other places with the recoverable reserves of 1,905 billion barrels. According to Wood Mackenzie, ChevronTexaco extracts over 100 thou barrels a day; ExxonMobil, over 68 thou barrels a day. Europe is the only market for this amount of oil while the Odessa-Brody pipeline is the only already existing transportation route.

According to the media, Polish businessmen have been displaying a greater interest in funding stretch to Plock: when completed it will let them reach the oil of Iraq and Kazakhstan. As an active member of the anti-Iraqi coalition Poland was offered control over one of the zones between Baghdad and Basra with fairly negligible oil reserves. According to the U.S. Energy Information Agency, out of the total 112,5 billion barrels of explored reserves of oil in Iraq the Western Desert (its almost entire territory being controlled by the United States) contains nearly 100 billion barrels. Poland has more real oil-related possibilities in Kazakhstan the prime minister of which officially invited Polish businessmen to develop and exploit oil and gas fields in the republic. Polish businessmen and the administration of the Atyrau Region signed a protocol of intentions. The sides announced that they intended to realize the Odessa-Brody-Gdansk project and to complete the stretch running across Poland. The Polish delegation was acting within a special state program Returning to the Eastern Markets designed to win back Warsaws positions in the former Soviet republics.

The Ukrainian-Polish project received additional impulse when Russian companies suggested that the Odessa-Brody pipeline should move oil in the opposite direction, from Brody to Odessa. It was Russian oil giants YUKOS, LUKoil, and TNK that expressed a desire to rent the pipeline for the period of 3 to 6 years. Though, according to Ukrtransneft, no official proposal has been filed yet, an annual rent of $10 to 15m is negotiated. The Russian companies expect increased oil extraction in Russia. The RF Ministry of Economic Development cites the following figures: up to 188.5m tons in 2003; 194m tons in 2004; 202m tons in 2005, which will require additional transportation capacities reaching the Black Sea. Ukraine informed Poland about the proposal.

This did not escape attention of those who are closely following the events around the Ukrainian part of EOTC and resolutely oppose any strengthening of Russias positions in the European and world markets.

The Ukrainian press carried an open letter of ambassadors extraordinary and plenipotentiary of the U.S., Germany, and Poland that expressed their countries consolidated support for the Odessa-Brody project. Certain publications warned Kiev against any rash actions in its dialog with Moscow. Indeed, an unbiased analysis shows that the Russian side is moved by considerations which differ from those publicly stated. According to Vice Premier of Russia Viktor Khristenko, the pipeline system of Transneft can easily handle increased amounts of oil even if transportation through the port of Ventspils (Latvia) is not resumed. Export of Russian oil to Central Europe through the export pipelines and the Russian Black Sea port of Tuapse will considerably increase after reconstruction of the pumping stations on the Kholmogory-Klin pipeline (it will carry 16 to 17m tons a year more; the reconstruction will cost $50m) and mixing different grades of oil in it.

The Russian companies have not yet completely tapped the Michurinsk-Kremenchug-Iuzhniy route that includes 52 km of the Odessa-Brody pipeline: it can carry 18m tons of oil a year against the present contract load of 4m tons. The same companies designed another route: across Belarus to the Iuzhniy terminal via Brody; this is the longest of the already functioning routes starting in Samara: moving 1 ton of oil along it will cost $2.5 more than along any of the functioning lines of the Dnieper system. One should say that the Odessa-Brody project is the most serious rival for the Russian-Greek-Bulgarian Burgas-Alexandroúpolis project. Some of the Russian experts are convinced that if realized the Odessa-Brody pipeline will threaten Russias national interests.

Ukraine knows that the Russian proposal offers no advantages: it will increase the load on the Bosporus and cause Turkeys displeasure and will serve an additional argument in favor of alternative routes for Caspian oil with Russias involvement. The advantages of sending Russian oil in the reverse direction will be short-term while Kiev will lose time within which at least one of the alternative variants could be realized. Together with it Kiev will lose a chance to participate in moving Caspian oil to Europe. On top of this, if Kiev lets an opportunity to transport oil from the Georgian Black Sea terminals to slip between its fingers, it will create tension with its GUUAM partners, since a Eurasian Oil Transportation Corridor is one of the organizations stated aims.

Ukraine is studying all variants of the use of its EOTC stretch, including the Russian proposal and the variant of moving Caspian oil along the Odessa-Brody-Uzhgorod-Omisalj routes. This does not contradict the agreements on integrating the Druzhba and Adria oil pipelines, signed on 16 December, 2002 in Zagreb; technical capacities of the Croatian port of Omisalj make it possible to handle both Siberian and Caspian oil. This can be done today and requires practically no additional investments. Ukraine sees two sources from which oil can reach Iuzhniy: the Russian port in Iuzhnaia Ozerevka and the Georgian port of Supsa.

The Baku-Supsa oil pipeline with a daily capacity of about 100 thou barrels was reconstructed to serve the Baku-Tbilisi-Ceyhan MEP. The project has not yet been completed, therefore Georgia deems it possible to move Caspian oil to Odessa. President Shevardnadze announced this during his visit to Kiev in April 2003. To fill the Odessa-Brody pipeline 7 to 8m tons of oil delivered by railway from Georgia can also be used. The Georgian president is convinced that very soon this line would receive 15 to 20m tons of oil. He added: Georgia is doing its best to translate this into reality.9 Regrettably, he failed to clarify whether these plans had been discussed with the owners of oil that crossed Georgia on the way to the markets and with its buyers. If the oil pipeline is used in a reverse regime, it will become unsuitable for Caspian oil.

The PwC consulting firm has its own plan of how to realize the Odessa-Brody project in three stages that includes the use of the already existing Druzhba and Adria pipeline networks. At the first stage the annual amount of Caspian oil transported along the Odessa-Brody route will be 7m tons (of them up to 2m tons of oil will come from Russia). It will be distributed in the following way: 3m tons of Caspian oil will go to the Kralupy oil refinery in the Czech Republic (annual capacity 3m tons of light sweet oil); the Wogburg oil refinery in Germany will get 3m tons of Caspian oil (annual capacity 11.3m tons, 8m tons of this amount being light sweet oil) and Ingolstadt oil refinery (also in Germany) will get 1m tons of Caspian and up to 2m tons of Russian oil (annual capacity is 5.3m tons of oil a year, 3m tons of this amount being light sweet oil). At the second stage it is planned to move oil through the Ukrainian-Russian Odessa-Brody-Druzhba-Adria system to the Karlsruhe oil refinery in Germany with the use of the Transalpine Line (TAL) and a new not yet existing line that would reach the Schwechat oil refinery in Austria. The expected annual volume of traffic along the Odessa-Brody line will be 15.4m tons of Caspian and 6m tons of Russian oil (including the amounts of the first stage). Out of the total amount Karlsruhe (annual processing capacity 14.5m tons, 7m tons of which are light sweet oil) will get 2m tons of Caspian and 2m tons of Russian oil; the share of Schwechat (annual capacity 8m tons; about 3.5m tons of light sweet oil) will be 2m tons of Caspian and 2m tons of Russian oil.

At the third stage new pipelines from Brody (Ukraine) to Plock (Poland) and from Schwedt to Wilhelmshaven (Germany) will be needed. The expected annual amounts of oil to be carried through the Odessa-Brody pipeline are 19m tons (including 8m tons/year of the second stage). Potentially, this oil will be used by the oil refineries along the NWO/NDO lines designed to process mainly light sweet oil (their annual consumption being 52m tons). Russian companies will have a chance to export their oil through a deep-water port of Wilhelmshaven. It was during the Hannover-messe-2003 international exhibition that the German side expressed its desire to receive oil along this route.

According to Pavel Golovnia, President of the Golden Gate company, it is planned to start construction of the Brody-Plock pipeline in the latter half of 2004 and complete it by the end of 2005. He informed the public that a border crossing had been already sited together with the best possible route in Poland across sparsely populated areas so that to cut down time and money needed to settle environmental problems. The money needed to build the line will be acquired at international financial markets, from commercial banks, in the first place. The cost of the linear pipeline portion is estimated at $300m; the pipelines total length will be 556 km, 106 km of which will go across Ukraine from Brody to the state border and 450 km will go across Poland.

The American PwC consultancy that has already completed a business plan of commercialization of the Ukrainian-Polish project is now preparing the feasibility study of joining the Odessa-Brody line with the CPC that would bypass the Black Sea. The new line will consist of two stretches: Tikhoretsk-Lisichansk that will bring Caspian oil to the Dnieper main oil pipelines system (DMOPS) and Kremenchug-Vinnitsa that will deliver oil from DMOPS to the Odessa-Brody line. The Russian stretch will be 270 km long, the Ukrainian part, about 300 km. These pipelines will not replace the marine route across the Black Sea from the Caucasian coast to Odessathey will rather complement it if filled with the CPC oil.

Today, the Ukrainian part of the EOTC is used as a trump card when talking to Moldova, the vacillating GUUAM member. It has been agreed to set up a bilateral Ukrainian-Moldavian work group to identify possible routes for the branches of the Odessa-Brody line on the Moldavian territory. A possibility of building an oil refinery in Moldova with an annual capacity of 1.5 to 3m tons and continued construction of an oil terminal in Jurjulesti are also discussed. This is a separate political rather than economic subject that has nothing to do with the European priorities and the European choice of the routes for Caspian oil.

1 See: B. Senin, Resursy Kaspia: ot predlozheniy k inventarizatsii, Neftegazovaia vertikal, No. 13, 2002, p. 74.
2 [http://www.respublika.kz/index.php?art=2002071928].
3 For more detail about the Baku-Ceyhan and Odessa-Brody routes, see: The Ukrainian Part of the Eurasian Oil Transportation Corridor: Yesterday and Today. What about Tomorrow?, Central Asia and the Caucasus, No. 3 (15), 2002 and Persian Gulf Developments and New Prospects for Old Oil Projects, Central Asia and the Caucasus, No. 2 (20), 2003.
4 [http://www.respublika.kz/index.php?art=2002071928].
5 See: M. Kravets, Neftianoy peredel Balkan, Neftegazovaia vertikal, No. 1, 2003, pp. 24-27.
6 See: Burgas-Alexandroúpolisaktual'nost rastet, Neft i kapital, No. 11, 2002, p. 58.
7 See: A. Andreev, Truba cherez Thermopylae, Neft Rossii, No. 9, 2002, p. 87.
8 See: M. Kravets, Kak oboyti Bosfor, Neftegazovaia vertikal, No. 4, 2003, pp. 102-104.
9 [http://press.lukoil.ru/index.phtml?menu=0&news_ident=15405#active_new].

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