Ukraine Needs New Refinery Based on European Standards - Interview with SOCAR Deputy Vice-President

Ukraine, Kiev, 14 May / Trend corr Z. Novosvitski/ Trend 's Kiev-based special correspondent interviewed the deputy vice-president of the State Oil Company of Azerbaijan (SOCAR) Vitaly Baylarbayov:

Question: Last week during the meeting of the Ukrainian-Azerbaijani working group, it was stated that two Ukrainian refineries - Drogobych and Nadvirna Refineries - are ready to process 3mln tons of Azerbaijani oil. Has the time and volume of supply been agreed?

Answer: The meeting did not discuss oil supply to the above mentioned refineries. No achievement has been yet concluded in this connection. The discussions are underway but they are still far from completion. It is too early to speak of any concrete time or contracts.

Question: The representative of the Ukrainian Presidential Secretariat Sokolovski stated last week that Azerbaijan was negotiating for the purchase of a part of the two refineries' stocks. Was the issue really being discussed? How many stocks do Azerbaijan intends to purchase?

Answer: I cannot comment on the statements of the Presidential Secretariat's representative. We are not discussing our commercial projects and negotiations. The only thing I can say is that we are holding marketing researches regarding different Ukrainian refineries. That is all.

Question: What about the initiative declared by the Ukrainian President Victor Yushenko to create Baltic-Black Sea-Caspian energy transit union?

Answer: Any initiative intended to create a transparent principle providing uninterrupted transit must be supported. We unambiguously welcome the initiative. It must have a real content. That is the work to be done by experts, specialists at the level of both states and the companies, which may supply or receive resources through that system. Certainly, we welcome the initiative.

Question: This week the delegation of Ukrainian Fuel and Energy Ministry will be working in Azerbaijan within the Ukrainian-Azerbaijani working group. Which issues are expected to be discussed?

Answer: That is Ukrainian delegation, so I cannot say which issues they will discuss. I think the visit will certainly include acquaintance with our opportunities in the field of production and transportation. Our opportunities are really vast and I think they will interest the Ukrainian delegation. I suppose Ukraine will discuss the initiatives on creation of the Caspian-Black Sea-Baltic transit corridor, so as to get the first reaction of Azerbaijan in this regards.

Question: At the beginning of 2008, the President of Ukraine Victor Yushenko spoke of the plans on construction of an up-to-date oil refinery in Ukraine by Azerbaijan. Is this plan being realized at present?

Answer: Ukraine is a promising and fast-growing market which needs both oil and oil products. From this standpoint, this idea, which still remains as an idea for us, unambiguously, has a right to be realized. We will consider this business plan as other commercial and business perspectives if there is one.

If you ask me about the standpoint of Ukraine- whether there is need for it, as an expert from the oil company I believe that there is definitely a need for this. It is important to construct a new refinery in Ukraine on the basis of high European standards including ЕВРО- 4 and ЕВРО-5. As I know, there are no such kinds of refineries in Ukraine. But it should be constructed, as the way of Ukraine to the economic space of Europe unambiguously goes through the production of that kind of product.

Question: As to the Odessa-Brodi oil pipeline, there have been opinions that it should be filled up with the Azerbaijani oil...

Answer: We are studying the commercial efficiency of this pipeline and its fill up within the international oil pipeline company Sarmatiya. We expect the intermediate results by the beginning of the summit and the final results - by November 2008. The decision of pumping our oil depends on the results of this work and talks with the consumers, first of all with the various oil refineries in Ukraine, Poland, Czechia and Germany.

Question: Last year Azerbaijan supplied oil to Ukraine. Is there any oil supply plans for 2008?

Answer: We sell our oil through the open tender from export ports. When Ukrainian companies purchase this oil, they supply it to their refineries. It happened once, it will happen in the future as well. Maybe, it will happen in the future once your high quality oil is interesting for them.

It also concerns the European consumers who have already purchased our oil and have refined it in their own refineries. The oil from the Caspian region, particularly from Azerbaijan, accounts for 22% of the refining of the Kralupi refinery in Czechia. That is, once there is interest, the company with a correct configuration from the technical point of view will purchase our oil. The supply is carried out in this way. Whether they will take place in the future depends on the interest of the buyers, because our oil is a product which is bargained in the open market.

Question: Nevertheless, there is an agreement on Azerbaijan's oil supply to Ukraine...

Answer: The agreement can appear at any moment when relevant oil refinery and trader purchase the oil from the export port. We carry out sales constantly. Today there is not any inter-government agreement on long-term supply between Ukraine and Azerbaijan.

The correspondent can be contacted at: [email protected]

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