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Odessa – Brody pipeline will transport Caspian, not Russian oil

Ukrainian Cabinet of Ministers decided at its meeting February 4 to use Odessa-Brody pipeline for transporting Caspian oil to Europe, RusEnergy reports. 
Task force established to elaborate along with oil-companies, the plan for using the pipeline. Ukrainian government is going to support the bill about granting concessions for Odessa – Brody pipeline and Yuzhy terminal.
 
According to Ukrainian Minister for Power and Fuel Sergey Ermilov, the government decision is based on economic arguments. “We are not going to live just 2 – 3 more years. We have to think what we are going to have in future”, he said.
 
According to the Minister, after 2-3 years of using Odessa-Brody pipeline there may be no need of it, because new pipelines may be constructed to replace it.
 
For several months there were debates in the Ukraine how to use the pipeline: to transport Caspian oil to Europe or to transport Russian oil to the Black Sea coast.
 
This issue resulted from clash of interests of different business groups, and the conflict was complicated by increasing competition in the global market for transporting oil. In particular, the biggest supporter of the “European option” of using the pipeline was so-called “Donetsk clan”, while biggest Ukranian oil and gas monopoly  “Naftogaz Ukrainy” company supported the interests of Russian oil industry workers. Its opponents interests are promoted by the Cabinet having one-forth of Ministers natives of Donetsk, including Prime Minister Viktor Yanukovch and Deputy Prime Minister for Power and Fuel Andrey Klyuev. Finally the Cabinet made a decision if favor of the “European option”.
 
Probably, in this way the “Donetsk clan” wanted to demonstrate who is the boss in Ukranian house, Strana.ru information agency wrote. 
 
As for the “Donetsk clan”, with the support of the EU it was pushing the project of using the idle pipeline according to its name, that is for transporting oil from Odessa to Brody, and then to constructing the supplement line from Brody to Polish city Gdansk. 

In May 2003 this issue was discussed during the visit of former Deputy Prime Minister on Power and Fuel Vitaly Gaiduk (also a representative of the “Donetsk clan”) to the EU headquarters in Brussels. For some time it was hard to understand why one of the most powerful financial and industrial groups of Ukraine started promoting Ukraine’s integration into Europe. The motivation was revealed after Industrial Union of Donbass corporation whose founder is Vitaly Gaiduk, declared its intention to participate in the tender on privatizing a steel plant in Poland (in which direction the pipeline supplement is supposed to be constructed).
 
Remarkably, the Donetsk corporation unknown in the West, surpassed the global leaders of steel industry and became the main candidate for purchasing Polish steel plant. After that event, information appeared that the Industrial Union of Donbass is going to participate in the tender on privatizing Dunaferr steel plant in Hungary. The Donetsk corporation is surely the main candidate for purchasing the steel plant, it surpassed such giant as Russian Severstal.
 
According to experts, the “Donetsk clan”  (which is not involved in oil business) decided on the pipeline “European option” because purchasing even middle-sized steel plants in Eastern Europe (the EU area) gives the hope that they will be able to export their steel products (mainly semi-manufactures) to the EU market which is very isolated and has high prices.
 
The current “oil war” can have one more cause: Ukrainian financial and industrial groups are concerned about Russian capital improving its positions in Ukraine. 
 
Korrespondent.net reported about the meeting of US-Ukrainian task force on the Eurasian oil-transporting corridor January 29 in Washington. The USA again expressed support to transporting Caspian, not Russian oil along Odessa -  Brody pipeline.
 
Meanwhile, US Energy Solutions company, the winner of the tender for composing business-plan for Odessa – Brody pipeline, submitted report of nine profitable options of using this pipeline January 27.
 
Ukrainian Minister for Power and Fuel Sergey Ermilov said that Energy Solutions called transporting Caspian oil in the direction of Brody as the most efficient option for this pipeline.
 
At the same time, Energy Solutions recommended the Ukrainian Cabinet to accept the offer of Russian-British TNK-BP company on transporting Russian oil along idle Odessa-Brody pipeline, but only for the period of three years.
 
Yet earlier the director of the business-plan project for transporting Caspian oil to Europe along Odessa- Brody pipeline, manager of PricewaterhouseCoopers auditing company Philip Hatman said that temporarily use of the pipeline for transporting Russian oil will block its usage for delivering oil to Europe in future.
 
The first part of Odessa – Brody pipeline was completed in May 2002. It can transport 9 – 14.5 million tons of oil per year and has tanks of 200 thousand cubic meters. Sea terminal for oil Yuzhny (city Odessa) is capable of processing oil-tankers up to 100 thousand tons. The plan have been elaborated for extending the capacities of the pipeline upto 40 – 45 million tons per year and increasing its tank capacity to 600 thousand cubic meters.
 
There are also plans to establish Eurasian oil-transporting corridor capable of transporting up to 45 million tons of oil to Europe, on the basis of Odessa-Brody pipeline after constructing supplement to it up to Polish town Plotsk.  The USA, EU, Poland and a number of countries of Caspian Sea area are supporting the project., the Obozrevatel reports.
 
Source: Russian and Ukrainian mass-media

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