ODESSA-BRODY-PLOTSK OIL-PIPELINE: A STEP TOWARDS LIBERALIZING EUROPEAN OIL MARKET Antonin Sinagel, the independent expert (Czechia)

Only a small amount of shares of all natural soil treasures in our planet are located where the people need. It concerns oil, too. The soil treasures are located mainly in the places of difficult access, also under seabed. To deliver the oil to the places of consumption remains as a big problem.

Oil transportation by sea or by train is dangerous enough and environmentally risky. The oil purchasers have an opportunity to choose its brand and then – the price. The oil refinery plants are flexible, have the best initial indicators and do not demand big product resources.

The oil transportation by pipelines is more safe, environmentally reliable and cheaper. Everyone knows, but not each recognizes that the transport corridor – pipeline – is immovable, and it does not use power, and as it runs underground, the damages of collisions are impossible.

It is inconvenient that the ORP is fixed with the oil extraction places, because of that they do not have alternate application. It concerns the Central European ORP, associted with Friendship oil-pipeline, as well.

Combined transfer is a safe way of providing the ORP in Western Europe with oil, it unites both the profitable and unprofitable sides. For example, let us see one of the biggest oil transporters in Europe–German company TAL (Trans-Alp line). The pipeline which takes its start from Italian port Triest and directs towards Inholshtadt in Germany, has 1,000 mm diameter, is put into exploitation in the end 1967. In March of this year billion tons of oil is pumped by it. The ORPs connected with TAL oil-pipeline do not satisfy the limited oil deliveries.

After changing the political situation in the beginning of 90th, the REB oil started to be pumped by this pipeline, and later Azeri Light oil, Tengiz and other sorts of oil from former USSR. The way from the eastern Black Sea region to Triest and Inholshtadt via Bosporus strait is long and safe.

When in 1996 the oil delivery from Triest to Czechia via Inholshtadt started on the new pipeline MEPO IKL, it became obvious that the REB oil is only at 340 km distance from German border, as it is transported to Czechia by Friendship pipeline.

In 1997 the negotiations started with oil-refinery plants from Inholshtadt and Carlsrue about possibility of reversing this pipeline and providing REB oil delivery, or some other sorts of oil to Germany. The negotiations did not improve further the issue investigating. The investments which considered transfer of only one sort of oil (that one, which is more profitable) was too risky for the parties. Later it became obvious that from power and technical capacities point of view would be estimated for a little scope. In 1999 the project was frozen.

Odessa-Brody oil-pipeline project implementation in 2001 gave a hope for liberalization of European transport network (with possibility of its future continuation till Poland Plotsk, further to Gdansk port by the existing pipeline).

This project considers the topic which is talked much about: access to the Caspian oil pipeline without limited opportunities for REB purchase, decline of the ecological risks by declining the number of ports on delivery ways, declining the number of tankers and transport ways on the Black Sea. I think that putting Baku-Ceyhan oil-pipeline into exploitation does not cause danger for the project implementation.

I think that during the preparation and implementation of such a project, it is necessary (that we failed to achieve in negotiations with potential consumers from Germany) to sign three-sided agreements or contracts among the providers, with us, as with transporters, and with consumers, mainly, about the quantity, terms, oil sorts and their prices. It is necessary to agree about tariffs on transfer on the basis of these terms.

The negotiations on governmental level have only a declarative character. The projects in western regions are not provided with finances, as in EU new member-countries, too.

I believe that we succeed in establishing preparatory consortium formed of the representatives of providers, transporters and oil consumers, which will propose a model of European transport corridors in East-West direction, something like as the corridor for natural gas.

As time goes by they will provide a whole chain combinations together with Euro-Asia corridor and TAL oil-pipelines in Germany, and SEPL in France.

The decisions will be ambiguous and premature, without complex approach to all sides proposals, which are enabled in European oil-pipeline network, in the case of one-sided approach.

European oil network liberalization – is "a long distance race". Odessa-Brody-Plotsk project is its basis.

We do not have to speak about oil without variety of its proposed sorts. Providing negotiability (from both sides in future) of the eastern-western lines, which ends in the south of Omishel, in the center – in Inholshtadt, in the north – in Shperhau, - must be the next step. If all the parties agree and be sure about the future, then Odessa-Brody project implementation will be implemented without obstacles.