derekbrower.com

A focus for Petroleum Economist’s November issue about a moribund pipeline plan between Ukraine and Poland. The rest is here.

A LONG-DISCUSSED plan to import Caspian oil through the Black Sea and Ukraine to Poland received a boost last month when five former soviet states signed an agreement to develop the project. The plan would involve reversing the flow of the existing Odessa-Brody pipeline in Ukraine and extending it to Plock and Gdansk, in Poland. Poland and Lithuania, two signatories to a deal agreed at a summit in Vilnius last month, think the pipeline would help break their countries’ dependence on Russian crude supplies. Analysts say it is an old idea with little future.

For the Baltic States the political incentive to diversify oil imports has increased since Russia cut off piped shipments to the Latvian port of Ventspils, in 2003, and to Lithuania last year. Transneft, Russia’s state-owned crude-oil pipeline monopoly, says the break in exports is the result of technical problems with pipelines to the Baltics. Latvia and Lithuania say the cause is political.

The latest plan – also agreed by Georgia, Ukraine and Azerbaijan – would restore the Odessa-Brody pipeline to its original purpose: importing crude shipped through the Black Sea to Odessa and piping it to northwest Ukraine. After the 290,000 barrels a day (b/d) line was built in 2001, however, it stood empty for three years before the government of Leonid Kuchma, under pressure from Moscow, agreed to reverse its flow and lease capacity to TNK-BP.

(…)