04.02.03

Ukrtransnafta to transport Caspian oil through Odessa-Brody-Uzhgorod- Omisalj pipe

Ukrtransnafta plans to transport Caspian oil through the Odessa-Brody-Uzhgorod-Omisalj pipeline over the next three years, while implementing the Druzhba-Adria project at the same time.

Company CEO Alexander Todiichuk said at a press conference on Monday that this issue was discussed at a meeting of a coordination committee of participating countries to integrate the Druzhba and Adria pipelines. The meeting took place on January 30-31 in Kyiv.

"The Odessa-Brody pipeline, joined with the Druzhba-Adria project, will allow Caspian oil to reach the American continent," Todiichuk said.

He said that reserves of oil in the Druzhba pipeline (on Ukrainian territory) amount to 9.2 million tonnes, of which 5 million tonnes may be used during the implementation of the Druzhba-Adria project.

"It was agreed to split the project into two parts - at the first stage transportation will amount to 5 million - 8 million tonnes, and later 8 million - 15 million tonnes," Todiichuk said, explaining that an increase in transportation to over 8 million tonnes will require significant investment from countries participating in the project.

The Russian oil companies Yukos and Tyumen Oil Company will equally provide the first five million tonnes of oil, Todiichuk said, adding that Yukos, as the co-owner of the Hungarian and Croatian company that owns the Druzhba-Adria system, is interested in increasing transport through this pipeline.

"We can easily transport another 4 million tonnes of oil through the pipeline," Todiichuk said.

Oil transit through the Odessa-Brody-Uzhgorod-Omisalj pipeline will not begin sooner than through the Druzhba-Adria system - it is necessary to finish construction of the pipeline in Croatia and to relay a section of the current pipeline, which will require investment of $50 million - $60 million.

It is planned to load the first oil received through the Druzhba- Adria pipeline onto a tanker in Omisalj in December 2003.

As reported earlier, an agreement to join the Druzhba and Adria systems was signed in Zagreb on December 16, 2002, for a 10-year period with the right to extend, by representatives from Russia, Croatia, Ukraine, Belarus, Slovakia and Hungary.

The Druzhba-A dria project involves setting up an export route to transport oil from Russia and possibly the CIS to the world market, including the North American market, through the deep-water port of Omisalj.

It is planned to gradually load and increase the current pipeline capacity. The total length of the route is over 3,000 meters. There will be a single tariff in place for the entire route of $0.64 per tonne per 100 km. It is planned to set a tariff for handling oil at Omisalj of $2.5 per tonne.