Russia eyes alternatives to Ukraine oil route

12:44, 05 June 2008
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Transneft is looking to redirect the oil it sends to Europe

Russian pipeline monopoly Transneft is looking to redirect the oil it sends to Europe via the Odessa-Brody pipeline as Ukraine plans to reclaim the route to pump Caspian crude to the West, according to Reuters.

Transneft President Nikolai Tokarev said recent comments from Ukrainian officials show Kiev is almost ready to complete its long-planned reversal of flows through the pipeline, which at present takes Russian crude through Ukraine to the Black Sea. “The plan is becoming a reality. It is not theoretical any more,” Tokarev told Reuters in an interview. “We should be prepared for the fact that, at some point, we may have some oil volumes that we will need to redistribute in other directions.”

Russia, which has been using the pipeline since 2004, will have to redirect the 9 million tons of oil per year, or 180,000 barrels per day, it currently pumps via the route to the Ukrainian Black Sea port of Yuzhny, near Odessa. “We have the potential to do so, but we will need to do all the calculations and work out new schemes to redistribute the flows,” Tokarev said. The Odessa-Brody pipeline carries about 4 percent of the oil exported by Transneft. The Russian pipeline monopoly exported 220.6 million tons of crude last year, most of it to Europe.

Kiev, which allowed Russia to use the route in reverse mode as Ukraine lacked the oil supplies to feed the line, is now planning to return to its original plan to bring Caspian Sea oil through Ukraine to Poland and the Baltic Sea. Igor Kiryushin, head of Ukrainian pipeline firm Ukrtransnafta, told an energy forum in Kiev last month Ukraine was ready to carry out an experimental shipment of 44,000 tons of light crude through the pipeline to the Czech Republic.

Ukrainian President Viktor Yushchenko, earlier in May, issued a decree to work out measures to redirect the pipeline to supply Europe from 2008. Tokarev said Kiev had secured funding to build the 900-km pipeline link from Brody to Poland’s Plotsk and signed an agreement with Azerbaijan to supply 475,000 tons of oil for a test delivery via the pipeline from Brody to Odessa. Poland and Ukraine rely almost entirely on Russia for their energy needs and want to get access to alternative sources. They have stepped up efforts to diversify away from their eastern neighbor ever since pricing disputes interrupted deliveries.

BBJ, Reuters

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