Ukraine, Azerbaijan Develop Route for Caspian Oil

The leaders of Ukraine and Azerbaijan met for talks on a new project to ship Caspian Sea oil to Western markets.

"It is very important for us to cooperate in the energy sphere," Ukraine's President Viktor Yushchenko said.  Yushchenko said Ukraine considered the use of the existing Odessa-Brody oil pipeline for delivering crude from the Caspian Sea to Ukraine and beyond to international markets to be a priority.  Azerbaijani counterpart, Ilham Aliyev said Azerbaijan was interested in diversifying its oil export routes.

Aliyev said oil would be flowing through the US-backed Baku-Tbilisi-Ceyhan pipeline, a route also designed to skirt Russia and deliver Caspian crude to world markets, at full capacity by 2008 while supply from the region would continue to grow.  The Odessa-Brody project would entail shipping Azerbaijani hydrocarbons from the Caspian to the Black Sea, across Ukraine and then north to Poland's Baltic Sea coast for resale onto world markets.

The pipeline was initially built in 2002 to reduce Ukraine's dependence on Russia for oil. But when Ukraine failed to obtain the necessary oil supply deals with other countries, it agreed in 2004 to transport Russian oil through the conduit in the opposite direction.  Yushchenko said Ukraine's state oil monopoly Ukrnafta had asked Azerbaijan's state oil company SOCAR to supply as much as five million tons of oil per year for the pipeline.  "Ukrnafta officials have asked SOCAR to formalize a schedule for shipments.  We're talking about 4.5 to 5.0 million tons of oil and 600,000 tons of technical oil to fill the pipeline," Yushchenko said.