Technical, Economic, Financial and Legal Advisory Support for the Development of the Project Concept for the Odessa-Brody-Plock Oil Transportation System

Project Description

The Ukrainian Government completed the construction of Odessa-Brody pipeline in 2001. The state oil transport company Ukrtransnafta was established having one of its main objectives to develop the commercial attractiveness of the Odessa-Brody pipeline and promote pipeline system integration with European oil transport systems. On 13 May 2003, the EC declared the Odessa-Brody-Plock oil transportation Project as a Project of Pan-European Interest. For the development of the Project the trilateral EU-Ukraine-Poland Joint Expert Working Group (OBP JEWG) was created. In July 2004, two state oil companies of Ukraine (Ukrtransnafta) and Poland (PERN Przyjazn) established the joint venture “International Pipeline Enterprise Sarmatia, LLC”. The project provides support to Sarmatia in further developing the Project for the extension of the pipeline from Brody to Plock.
The planned activities of the project are as follows:
*To develop and submit the OBP Framework Business Plan
*To enhance further the Framework Business Plan and submit the Enhanced Framework Business Plan
*To provide assistance in corporate project structuring and arranging for financing
*To provide further analysis on the Ukrainian oil market (Brody refinery) and the use of the Southern Druzhba pipeline for batchwise shipping of Caspian Basin crude oils and feedstock
Project activities were divided into several stages and directions
Activity 1: Data Collection
Activity 2: Data Analysis
Activity 3: Preparation of the Framework Business Plan
Activity 4: Identification of the optimal routing for the pipeline and preparation of Feasibility/Engineering Studies
Activity 5: Project Facilitation
Activity 6: Multimode transport as immediate solution
Activity 7: Support to the OBP Joint Expert Working Group

Project Objective

To assist Ukraine in the diversification and security of its energy supplies, and, specifically, to provide an independent assessment of the extension of the Odessa-Brody-Plock crude oil pipeline to Poland in terms of its commercial, technical and environmental viability.

Specific Objectives

To provide Framework Business Plan.

Expected Results

As at October 2006:
The project has been 90 % completed.
*OBP Framework Business Plan submitted on 20 January 2006
*Enhanced OBP Framework Business Plan, dated 5 May 2006, 450 pages, Annexes 1-3 containing preliminary environmental assessments and detailed routing maps in Ukraine and Poland was submitted
*Enhanced OBP Framework Business Plan was approved on 19 May 2006
*Preliminary Study on the Feasibility on Batch Operation on the Southern Druzhba Pipeline System, dated 8 June 2006 was prepared
*Site Visit Report: Brody – Plock Pipeline Route, Poland Part, dated 01.07.2006, was prepared
*Draft Intergovernmental Agreements (Poland-Ukraine) and Multi-party drafts have been produced

The remaining activities are as follows:
*Brody refinery assessment and assessment of the Ukrainian oil markets
*Linear Programming