Ukraine has less hope of getting Caspian oil

The Odessa-Brody-Plotsk-Gdansk oil pipeline is not a matter of urgent importance for Kazakhstan and Azerbaijan, Vladimiro Saprikin, Director of the Centre for Energy Programmes, said on November 5.

According to the analyst, these countries still have not brought to fruition their priority projects. In the case of Kazakhstan this is increasing the capacity of the Caspian pipeline consortium. For Azerbaijan this is the possible expansion and refurbishment of the Baku-Ceyhan oil pipeline. Realization of these two programmes demands a significant increase in Caspian oil extraction. Before these countries resolving these issues, according to Saprikin, it will be practically impossible for Ukraine to receive a significant amount of Caspian oil.

According to Saprikin, there are also other factors which prevent the realization of the Ukraine-Poland project. These are the war in Georgia and the explosion in the Turkish part of the Baku-Ceyhan pipeline, which have increased transit risk. “Caspian oil is heading for more refineries, but not in Ukraine. Less and less oil is left over for Ukraine,” Saprikin stated.

Ukraine is also not ready to receive Caspian oil. The Odessa-Brody pipeline is used for Russian oil transit to the Black Sea. Given the financial crisis and the oil price fall it is hard to imagine that the pipeline will start working in the opposite direction. Big infrastructure and road projects are likely to be frozen for several years, including the Odessa-Brody-Plotsk-Gdansk project.

It is possible that the project offered to Libya by President Yushchenko is a sign of frustration about the prospects of getting Caspian oil. On November 4, while meeting Libyan leader General Gaddafi, Yushchenko mentioned that establishing an oil refinery factory at western borders of Ukraine would be profitable for Libya. Yushchenko said this would enable Libya to sell its oil products in its petrol stations all over Ukraine.

Yushchenko recently made a similar offer to Azerbaijani President Ilham Aliyev, but the initiative has gone no further than statements.