After Nov. 15, the National Security and Defense Council is planning to discuss energy security issues with the president. An important topic of these discussions is the diversification of energy supplies to Ukraine, which has unfortunately remained on paper for many years.
This time, however, it may be possible to kick-start the project. We know that Ukraine has the Odesa-Brody oil pipeline, which is operating in the reverse mode and thus does not facilitate deliveries to Ukraine by alternative Russian fuel carriers. Now the situation may change because there is a possibility that this pipeline may be used to supply Europe with Caspian oil drilled in Kazakhstan. This country is prepared to compete with Russian oil companies to use Ukraine’s Odesa-Brody oil pipeline as part of the Eurasian Oil Transport Corridor.
Kairgeldy Kabyldin, director of KazMunaiGaz Co. told the Kazakh weekly Panorama: “This is a new market, so let’s compete and see whose oil will go there, Russian or Caspian. This is normal competition: whoever offers the highest price wins.” One year of the oil pipeline operating in the reverse mode has shown the ineffectiveness of this route, as there was pumping at the very start of its exploitation.
It is not about crowding out Russian oil from the Odesa-Brody pipeline but about the additional hydrocarbon volumes that Kazakhstan is capable of supplying and which, in its opinion, are “unquestionably necessary for the European market.” Kabyldin also noted that oil extraction is decreasing in the North Sea and the shortfall must somehow be covered. He went on to say that the Odesa-Brody pipeline will help avoid transporting certain quantities of oil via the Turkish Bosporus strait, which is too busy as it is, and which, allowing for certain transportation costs, can compete with deliveries from the Black Sea to the North and Baltic seas. According to Kabyldin, this project may help to retain the quality of Caspian oil during transportation, inasmuch as the Russian company Transneft does not have an oil quality bank. In this expert’s opinion, another important factor is the European Union’s support for the Ukrainian project. On the other hand, Kabyldin considers it “excessively politicized.”
Kabyldin declared that Kazakhstan is acting as an observer monitoring the development of this project, which is part of the Eurasian Oil Transport Corridor. But he predicts: “After this we will tell the companies that this is convenient.”
