96.07 - Institutional Issues and Strengthening of Regional Cooperation

The present project deals with the technical assistance on institutional issues in support of regional co-operation. The countries involved in this project were Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Urkaine, and Uzbekistan.

The purpose of the project was to design:

• A mutually acceptable framework to improve and maintain safe and reliable conditions for oil and gas trade and transit, both for interstate trade in Central Asia, the Caucasus and Western CIS countries and for exports
• Practical solutions for payment of commodities and services related to oil and gas interstate trade and to finance future projects

The major outcome of this project was the negotiating and drafting of a multilateral framework agreement (the INOGATE Umbrella Agreement) which would incorporate and consolidate all the issues related with interstate hydrocarbon transportation. The UA did this in a way combining maximum flexibility, minimisation of investment risks, acceptability of international financing mechanism, protection of the Beneficiaries' interests and protection of the environment.

The project also compiled a comprehensive country report on each Beneficiary, containing concise and complete information on the economic situation, the structure of the energy sector and the legislation affecting the energy sector and investment climate in each country. The preparation of bilingual Reference Book was also undertaken by the project, covering economic, legal and technical aspects of oil and gas transportation and including a score of model documents.

The Umbrella Agreement was a major breakthrough in connecting hydrocarbon producing countries and the international market, undoubtedly marking this as the greatest achievement of the project.