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Feasibility study of Brody-Plotsk pipeline to be reconsidered

Oil&Gas Materials 4 September 2014 19:57 (UTC +04:00)

Baku, Azerbaijan, Sept. 4

By Emil Ismayilov - Trend:

Sarmatia International Pipeline Company will reconsider the feasibility study of the construction of Brody-Plotsk (Adam's gate) due to proceeding of works without additional funding by the European Union (EU), Sarmatia IPC CEO Sergei Skripka said Sept.4.

IPC was established on July 12, 2004 by Ukrtransnafta and the Polish company PERN Przyjazn to attract investments for the design and completion of Odessa-Brody oil pipeline to Plotsk.

"The need for a revision of the feasibility study of the project appeared due to the fact that it will be implemented without additional financing of the European Union," Skripka said.

He added that the revision of the feasibility study, as well as the planning of the pipeline route in Poland will be held after the final decision to increase the authorized capital of the Sarmatia IPC, which is tentatively expected in October this year.

Currently, the authorized capital of the IPC is 20.06 million zlotys (about 5 million euros).

"The issue of increasing of the share capital, which is tentatively expected to amount to 10-20 percent, is currently under negotiation with members of the IPC," Skripka said.

Previously, funds in the amount of about 120 million euros were reserved to support the project within the framework of the EU "Infrastructure and Environment" program. However, the possibility of using of these funds was lost (the fault of the Polish side), since according to the regulations of the general meeting of Sarmatia IPC, decisions can be made only on a unified basis.

Currently Sarmatia continues to seek other sources of funding, including other EU funds, said Skripka.

The Brody-Plotsk oil pipeline (Adam's gate) construction project, as an integral part of the Euro-Asian Oil Transportation Corridor, can actually create the conditions to ensure the diversification and oil supply from one of the most stable region in the world (referring to the Caspian region) and the most promising one in terms of energy supplies.

The research on choosing the oil pipeline's future the Brody-Plotsk (Adam's gate) route has been completed. The length of the route will be 377 kilometers, some 120 kilometers of which will be built in Ukraine, and 257 kilometers in Poland.

Sarmatia's shareholders include SOCAR (Azerbaijan's State Oil Company), Georgian Oil and Gas Corporation Ltd. (GOGC), Ukrtransnafta, Polish Przedsiebiorstwo Eksploatacji Rurociagow Naftowych Przyjazn S.A. and Lithuanian AB Klaipedos Nafta with equity participation of 24.75 percent at the key shareholders and one percent at the Lithuanian company.

The Odessa-Brody oil transportation project was planned to diversify oil supplies to Ukrainian refineries and develop the country's transit potential. The pipeline's construction was completed in May 2002. The main line has a length of 674 kilometers, with a pipe diameter of 1,020 millimeters. The pipeline's and terminal's capacity is 9-14 million metric tons per year.

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