Protocols of the Elders of Energy: True or False?
It was reported on May 23 that Presidents Leonid Kuchma of Ukraine and Aleksander Kwasniewski of Poland had discussed in Salzburg preparations for the June 22-23 Ukrainian-Polish Economic Forum to be held in Odesa.
Speaking in Germany, Pres. Kuchma noted that Ukraine expects to speed up the integration of its transport infrastructure into the European network after the EU enlargement. Interfax-Ukraine quotes him as saying, “The development of a Eurasian oil transit corridor and extension of the Odesa-Brody oil pipeline to other countries of Europe should assume pan-European importance.” The president also stressed that Ukraine believes the gas transit management and development consortium should be established on a multilateral basis only: “The consortium should incorporate both the producers and the main consumers of natural gas in Europe, first of all, Germany, Italy, and France.”
By all accounts it is no accident that Odesa was chosen as venue of the Ukrainian-Polish forum. It is clear that the destiny of the Odesa-Brody oil pipeline that Ukraine built to transport Caspian energy resources to Europe is now heavily dependent on whether the Ukrainian segment of the Eurasian Oil Transit Corridor will be further extended from Brody to large European ports. Poland is one of the most likely territories for the line’s extension. It is no secret that Polish leaders support the Ukrainians. At the same time, Poland has made a firm decision that the state will not be directly involved in this project (although they intend to appoint a government coordinator), leaving it to private companies. “Poland has a clear stand: only private capital will take part in the construction, but, since it is a strategic project, the state will keep an eye on it,” said Ukrtransnafta Chairman Oleksandr Todiychuk recently.
In Odesa, Polish company representatives will thus be able to thoroughly examine the oil transshipment complex in the port of Pivdenny and the oil pipeline’s point of departure and then make their conclusions.
Another two high-profile functions are to be held simultaneously in Brussels and Kyiv on May 27, where the Ukrainian oil pipeline, which is in bad need of being international, will be officially presented. While the capital of the European Union capital will be presenting the pipeline, that of Ukraine will host the international conference, Energy Security of Europe in the 21st Century. The official statement says the government considers this conference a top-priority event. A week ago, Prime Minister Viktor Yanukovych of Ukraine held a meeting on this problem. It was pointed out that the project of a Eurasian oil transit corridor is of a multifaceted nature for Ukraine and can only be implemented after taking into account the geopolitical, international law, financial, and economic factors that affect the development of the state. The head of government also stressed there have been certain recent positive changes in the implementation of this project. Ukraine has received a signal of support from the European Commission, the project has aroused interest among the leading German oil companies, and talks are going on to continue construction of the Odesa-Brody pipeline across the territories of Poland and Germany. The meeting pointed out that implementing the Odesa-Brody project will enable Ukraine and Europe to ensure their energy security and solve the problem of oil supply diversification. Ukraine will enjoy the steady status of a leading transit state and take a bold step towards integrating the Ukrainian oil transit system into the common European network of oil pipelines.
However, Poland is by no means the only country capable of laying the Caspian oil transportation corridor across its territory. The business plan worked out by PriceWaterhouse Coopers provides for transporting oil through the Odesa-Brody pipeline as well as through the system of other pipelines, now serviceable or under construction, to refineries in the Czech Republic, Austria, and Germany. The business plan is to be fulfilled in three stages. The first involves the delivery of Caspian oil to the Kralupy refinery (the Czech Republic) and to two refineries, Ingolstadt and Warburg, in southern Germany. The second stage provides for the transport of oil to the refineries in Schwechat, Austria, and Karlsruhe in south Germany. The third stage includes construction of a pipeline as far as Plock (Poland), with oil being delivered later to the German North Sea port of Wilhelmshaffen. Incidentally, Germany takes a positive attitude toward the Odesa-Brody-Gdansk oil pipeline as well as to its prospective extension to Wilhelmshaffen. This was recently mentioned by German Bundestag President Wolfgang Thierse. He noted that Ukraine was now drawing up a cost-effectiveness report on this project because it will be “linked with specific enterprises.” “Very much depends on the results of this examination, but this project does have a future,” said Herr Thierse.
Yet, it would be very good if international (non-)participation in the Ukrainian oil pipeline project were first of all determined by the policies of Kyiv. It will be recalled that our politician’s positive comments on the possible reorientation of the pipeline (not from south to north, as the project calls for, but from north to south, in which Russian oil companies are, above all, interested) triggered quite a strong reaction by the US, German, and Polish ambassadors who warned in a Day interview (No. 12, April 8) that in case of a reversal the Ukrainian pipeline could lose any European prospects and be superseded by other projects on the oil transit market.
As there were no official denials, this caused concern among the European countries interested in the import of Caspian oil coming through Ukrainian territory. Recently, when Ukraine was already preparing the aforesaid presentations, the oil pipeline encountered another obstacle: rumor has it that Naftohaz Ukrayiny has signed a protocol of intent with certain Russian entities on the reversal of oil flows through the Odesa-Brody pipeline. As the phrase goes, there is no smoke without fire. Diplomats also have begun not only to express uneasiness in private but also to predict failure to the planned Ukrainian presentations. They say it is better in this case to conduct talks about the Ukrainian pipeline with Russia.
Or perhaps the much-talked- about “protocols of the elders of oil and gas” is just a tall tale? In an attempt to clarify the situation, The Day turned to Bohdan Kliuk, Deputy State Secretary at the Ministry for Fuel and Energy. The answer was categorical and unambiguous: this is impossible because it cannot be possible. Yet, aware of some drawbacks in the system of governmental control over the Naftohaz Ukrayiny Company, one can suppose that the deputy state secretary is just out of the loop. Further journalistic investigation corroborated this version to a large extent. Two reliable sources (one in parliament and one close to Naftohaz) told The Day there really is a statement of intent signed without any governmental sanction. Moreover, one of the sources “comforted” us: a month has passed since then, with no developments in sight. In other words, the protocol has remained only a scrap of paper.
With due respect for its sources, The Day does not share this opinion. Such expressions of intents can show many things. First of all, they call into question the sincerity of Ukrainian intentions to enter Europe by, among other things, oil transit, as Mr. Todiychuk insisted in an interview (The Day , No. 13, April 15). In that case, the Brussels presentation of the pipeline is unlikely to bear fruit.
Giving in to The Day’s pressure, Naftohaz Ukrayiny has finally lifted the veil of secrecy from the protocol. Company spokesman Kostiantyn Borodin, on a business trip to London, confirmed that this document had been signed by Ukrtransnafta and Naftohaz Ukrayiny on behalf of Ukraine and by Transneft on behalf of Russia. He also set forth Naftohaz’s position based on the PriceWaterhouse Coopers expert opinion that the Odesa-Brody system is unlikely to be loaded before 2007. “Under these conditions,” Mr. Borodin said, “given the considerable funds invested, we believe it reasonable to use [the pipeline] in the reverse direction so that it does not rust away and brings in at least some revenue.” All we can add to this is that the protocol was signed long before it was made public.
