Ukraine initiates multilateral negotiations on Odessa-Brody-Plock project - Sarmatia head

KYIV, June 1 /UKRINFORM/. The Ministry of Energy and Coal Industry of Ukraine proposes holding in the near future multilateral negotiations of all the participants in the pipeline project Odessa-Brody-Plock (Azerbaijan, Georgia, Ukraine, Poland and Lithuania) to determine the possibility of signing an intergovernmental agreement, which is necessary for implementation of this project.

Serhiy Skrypka, director general of the international pipeline company Sarmatia, which was created specifically for the project, said this in his comments to UKRINFORM.

"Implementation of the project takes an intergovernmental agreement. The Ukrainian side, namely the ministry of energy and coal industry, a few days ago made the proposal to hold multilateral talks, which was sent out to all the participants," Skrypka said. According to him, the Ukrainian side proposes holding five-party interstate talks in Kyiv in June.

The Sarmatia director general reported that a start of completion of the oil pipeline Odessa-Brody to the Polish city of Plock and getting EU assistance in the amount of 495 million zlotys (about 120 million euros) takes a written consent of the governments of all member states to finance the project, because the EU aid covers only 30% of the funds for its implementation. Without these guarantees, Sarmatia will not be able to apply to the European Commission for assistance. Skrypka stressed that this year is the last one, when it is possible to apply for European funds for the construction of the pipeline.

The Sarmatia head also called strange the current position of Poland that it is not necessary to sign the intergovernmental agreement, when at the end of last year Warsaw declared willingness to approve the document. "The position of the Polish side relative uselessness of the intergovernmental agreement is greatly surprising. Five feasibility studies for the Euro-Asian Oil Transportation Corridor project were prepared by different well-known international consulting firms, including PriceWaterhouseCoopers, and in each of these studies it is written that an intergovernmental agreement is a prerequisite for implementation of the pipeline project," Skrypka said. He added that the Polish side knows about that, but this year it has radically changed its point of view.

As known, this year Warsaw, without abandoning its interest in the project, began to insist on the need for written guarantees from Azerbaijan on its readiness to supply at least 10 million tons of oil, and the intentions of consumers in Europe to receive it. Meanwhile, an inter-governmental agreement is considered in Warsaw optional for the start of the investment.

As reported, in 2004, Ukrainian OJSC Ukrtransnafta and Poland's PERN Przyjazn established IPC Sarmatia Ltd. for the extension of the oil pipeline Odessa-Brody towards Plock, preparation of construction documents, attraction of investment and ensuring construction work on the project. In 2008, the state energy companies of Azerbaijan, Georgia and Lithuania joined in the project.

The total cost of the project Odessa-Brody-Plock is estimated at 455 million euros, taking into account the construction of the Ukrainian (125 km) and Polish (270 km) sections of the pipeline. The EU has allocated for this project about 120 million euros, but the use of this money is possible only subject to completion of the pipeline construction by the end of 2015.