Ukrainian Pipeline Unlikely Choice for Kazakstan

Ukraine is proposing that Kazak oil should travel to eastern Europe through its territory, but energy experts polled by NBCentralAsia maintain that the costs involved rule the project out for Kazakstan.



The main goal of a September 9-10 visit to Astana by Ukraine’s fuel and energy minister Oleg Boiko was to discuss possible Kazak participation in the Odessa-Brody pipeline, which could open in the next two or three years if there is enough Caspian oil from Azerbaijan and Kazakstan to fill it.



President Nursultan Nazarbaev discussed the project with his Ukrainian counterpart Viktor Yushchenko when the latter was in Kazakstan in June. Kazakstan does not currently have any energy supply arrangements with Ukraine.



The 670-kilometre pipeline, with a capacity of nine million tons per annum, was built in 2001 by Ukraine’s oil transport agency, and in 2003, Ukraine, Poland and the European Union signed an agreement to use it to transport Caspian oil. At a recent economic forum in Poland, the Ukrainian and Polish prime ministers, Viktor Yanukovich and Jaroslaw Kaczynski, announced plans to extend the pipeline to Plotsk in Poland.



Energy experts in Kazakstan have grave doubts that the country will end up with a stake in this pipeline because it carries high financial and political risks.



Using this route will be extremely expensive, since the oil will have to cross two seas – the Caspian and the Black Sea – to get to Poland. Once it arrives there, they say, it will have to be routed to the Baltic port city of Gdansk, since there is unlikely to be much local demand for it because this part of eastern Europe receives plenty of oil through Russia’s Druzhba pipeline.



Kazakstan’s oil exporters already have other, more lucrative routes available to them. For example, they could use the Russia-Bulgaria-Greece pipeline which goes from Burgas to Alexandropoulis, or the Turkish Samsun-Ceyhan route.



Ukraine’s political instability and energy problems are also cause for doubt, according to energy expert Yaroslav Razumov. If Ukraine and Russia resume their battles over energy, Kazakstan could be drawn in politically, and could even find that its oil siphoned off in transit, as has happened with Russian gas.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)