Sarmatia does not rule out attracting investors for Brody-Plock construction

Baku, Azerbaijan, Aug. 20
By Maksim Tsurkov - Trend:

Sarmatia International Pipeline Company does not exclude the possibility of attracting investors to implement the Brody-Plock (Adam's gate) oil pipeline construction project, Sarmatia Director General Sergei Skripka told Trend August 19.

He said that an oil price drop did not affect the project cost.

"Some 500 million euro will be required for the implementation of the first phase of the project," he said. "As the cost of pipes and construction work affects the project cost, rather than the oil price, it does not go down."

He said that while preparing the previous feasibility study, the company's plans were taken into account to obtain financing from the foundations of the EU Operational Program "Infrastructure and Environment".

"Some 120 million euro has been reserved for the project," he said. "However, the Polish side made a decision on the redistribution of these funds in 2013 as they must be used before the end of 2015. We just did not have time to do this. The new feasibility study, which we will prepare, must take into account the variants of the project implementation, apparently, without additional financing from the EU funds. As for attracting the investors, an analysis must be conducted. This option is definitely possible."

He added that the company's losses would be covered through the further profits.

"That is, from the moment when the oil pipeline construction is completed, the company's losses associated with the project preparation will be covered by the operating profit obtained from the oil pipeline activity," he said. "These costs are mainly associated with the ongoing activity and the payment upon the contracts."

The Brody-Plock (Adam's gate) oil pipeline is currently the sole missing part of the Euro-Asian Oil Transportation Corridor (EOTC).

As a result of realization of this project, the Caspian states will receive an additional reliable route for their oil supplies to the European market, new customers, and opportunities to work in adjacent markets will also expand.

The studies on the choice of a route for the future Brody-Adam's gate oil pipeline have been completed. The route's total length will be 377 kilometers, some 120 kilometers of the pipeline being built in Ukraine, and 257 kilometers in Poland.

The Ukrainian company Ukrtransnafta and the Polish company PERN Przyjazn established IPE Sarmatia on July 12, 2004.

The participants of Sarmatia are: the State Oil Company of Azerbaijan (SOCAR), Georgian Oil and Gas Corporation Ltd. (GOGC), Ukrainian UkrTransNafta, Polish Przedsiebiorstwo Eksploatacji Rurociagow Naftowych Przyjazn S.A. and Lithuanian AB Klaipedos Nafta. The share of the main participants is 24.75 percent each, while the Lithuanian company has a one percent share.

Odessa-Brody oil transport project was aimed at diversification of the oil supply to Ukrainian refineries and developing the country's transit opportunities. The construction of Odessa-Brody was completed in May 2002.

The length of the pipeline is 674 kilometers, while the diameter of the pipe is equal to 1,020 millimeters.

The capacity of the first stage of the oil pipeline and the terminal is 9-14 million metric tons per year.

Edited by CN

Follow the author on Twitter: @MaksimTsurkov

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