CEO Sarmatia: Construction of Brody-Plock pipeline must be completed no later than 2014

Azerbaijan, Baku, Feb. 4 / Trend E.Ismayilov /

The Sarmatia International Pipeline Company (IPC) expects to attract credit resources from the European financial institutions to c0ompletely finance construction of the Brody-Plock pipeline, Sarmatia IPC CEO Sergei Skripka said.

The project on construction of the Brody-Plock (Brody -Adamova gates) connecting the Polish and Ukrainian oil transportation system, which is part of the Eurasian oil transport corridor, is included in an operating program of the European Union, "Infrastructure and Environment" as priority project.

"Of course, the issue of deficient funds should be addressed. We are considering a range of opportunities, but certainly in the first place, we expect to attract credit resources from the European financial institutions such as the European Bank for Reconstruction and Development and European Investment Bank," he said.

He said the company does not rule out the possibility of obtaining funding for the project under other programs of the European Union, in particular the Eastern Partnership program, as well as commercial financing from banks.

According to Skripka, about 495 million zlotys (about 120 million euros) was allocated to this project under the Infrastructure and Environment program. The IPC must fulfill several conditions to obtain this funding (of course, it is part-funding). Some of these conditions are reflected in the preliminary contract, which the company had signed earlier with the Krakow Oil and Gas Institute operating as the coordinator of the program. The Institute has been monitoring fulfillment of these conditions. Based on the preliminary agreement, the company will have a number of additional studies to clarify the route and develop a detailed feasibility study for construction of the pipeline.

About 120 million euros is allocated for this project as part of the operating program of the EU budget. "This is money that will be transferred as financial assistance, and they are not subject to return," he added.

Previously, it was prepared a feasibility study of oil transportation corridor. "Now we have a large feasibility study. [...] Since construction of the pipeline via this money may be financed entirely within the EU, respectively, it is necessary to prepare a separate feasibility study for this site. Naturally, it will be prepared on the basis of the large feasibility study," he added.

According to him, a more detailed feasibility study to be prepared specifically for the construction of the Brody-Plock pipeline should reflect a number of aspects that are not included in the overall feasibility study, "which are mandatory in terms of the EU requirements. "Furthermore, we must prepare a report on the impact of the project environment and obtain the necessary environmental permits," he added.

He said, the IPC members' meeting decided to increase the authorized capital. "Presently, the co-sponsors allocate additional five million zlotys just to carry out research under this preliminary agreement [with the Krakow Institute]. After we will meet its terms, as though we had been given to about a year, we will be able to sign the main contract under which we will receive funding," Skripka said.

It will be possible to talk about the beginning of construction after the goals set in the preliminary contract reached. "However, the construction should be completed no later than 2014, and this is a strict requirement of the Infrastructure and Environment program," he added.

The Odessa-Brody oil project was planned to diversify oil supplies to Ukrainian refineries and transit facilities for the development of the country. Construction of the Odessa-Brody oil pipeline was completed in May 2002. The pipeline has a length of 674 km, diameter - 1,020 millimeters. The pipeline and the terminal's capacity are 9-14 million tons per year.

Azerbaijan is main supplier in this route (the Odessa-Brody-Plock-Gdansk). Azerbaijan can supply not only its own resources, but also oil from Central Asia, for example, from Kazakhstan.

The Sarmatia international oil pipeline company was founded in 2004. Now company's participants are SOCAR (the State Oil Company of the Azerbaijani Republic), Georgian Oil and Gas Corporation, Lithuanian company Klaipedos oil ", Polish oil company PERN Pshiyazn and Ukrtransnafta JSC.

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