06.06.03

Chernomornaftogaz to launch two fields in Sea of Azov in 2003-2004

Ukrainian state company Chernomornaftogaz (a subsidiary of Naftohaz Ukrayiny) plans to launch two gas fields in the Sea of Azov - North Bulganak and North Kerch - in 2003-2004, a source in the company's press service told Interfax.

The fields will be launched within one year of each other and their development will make it possible to increase annual gas production by 650 million cubic meters by 2005, the press service stressed.

Work at the North Bulganak field will begin in mid-June this year. The Tavrida drilling unit will be used to drill two multi-shaft wells at the field, one of which will be brought on-stream at the end of 2003.

Chernomornaftogaz will use its own and borrowed funds to finance the development of the North Bulganak field, the source said. In particular, the company will spend 30 million hryvna received from bond placements on the development of the field.

It is planned to start development of the North Kerch at the end of 2004. A single underwater pipeline will join both fields, 28 km in length, which will connect with the Djankoi-Feodosia-Kerch gas pipeline.

Chernomornaftogaz is involved in exploraiton and production of oil and gas in the Black Sea. The company operates over 1,100 km of trunk gas pipelines, 43 gas distribution stations, 10 stationary marine platforms, an underground gas storage facility with a capacity of 1 billion cubic meters, and a service fleet of 22 ships.

The company is developing 17 gas fields in the Black Sea and the Sea of Azov, with total explored reserves of about 60 billion cubic meters of gas. The company is also developing one oilfield on the Crimean peninsula.

Chernomornaftogaz plans to increase gas production 5.8% year-on- year to amount to 865 million cubic meters in 2003.

The official exchange rate on June 4 was 5.333 hryvna to the dollar.

(Interfax)

Ukrainian govt proposes to ratify agreement on Druzhba-Adria integration

The Ukrainian Cabinet of Ministers has approved a draft law on the ratification of a multilateral intergovernmental agreement on the integration of the Druzhba-Adria pipelines. This decision was reached during a Ukrainian government session in Kyiv on Wednesday, Ukrainian Energy Minister Serhiy Yermilov told journalists.

He said that implementation of this agreement will make it possible to transport an additional 15 million tonnes of oil to the Croatian port of Omisalj on the Adriatic Sea. "For Ukraine, this will compensate losses in oil volumes caused by the construction of the Sukhodolnoye-Rodionovsakaya pipeline bypassing Ukraine," he said.

The minister reminded that the implementation of the project is planned in three stages: the first involves transit of 5 million tonnes of oil, the second - 10 million tonnes, and the third - 15 million tonnes of oil.

It is planned to attract additional investment for the second and third stages. Additional investment is not needed for the first stage by any of the countries involved except for Croatia, which needs to make some technical adjustments on its section of the Druzhba-Adria pipeline.

In response to questions on the possibility of starting the first supplies of oil, the minister noted that this would take place immediately after Croatia finishes this work. "We expect that the start will be before the end of this year," he said.

Speaking about the volume of investment to be attracted for the second and third stages, Yermilov noted that this issue would be dealt with in the feasibility study. The minister reminded that a single transit tariff has already been set - $0.64 per tonne over 100 km, which makes this pipeline competitive.

The Druzhba-Adria project involves the creation of an export route for oil from Russia, and possibly from the CIS to the world market, including the North American market, via the deep-water port of Omisalj, bypassing the Bosporus and the Dardanelles. It is planned to gradually load and increase the existing pipeline capacities. The total length of the route exceeds 3,000 km. Russia, Croatia, Ukraine, Belarus, Slovakia and Hungary signed an agreement on the unification of the Druzhba and Adria pipeline systems in December 2002 for 10 years, with the possibility of being extended.

(Interfax)