Presidents to agree on pipeline at Vilnius conference

  • 2007-10-03
  • Staff and wire reports
VILNIUS - Leaders of five East European countries intend to sign a breakthrough agreement on building a north-south pipeline that will supply Caspian Sea oil as far as the Baltic Sea, a Lithuanian Economy Ministry official said last week.
The presidents and prime ministers of Lithuania, Poland, Ukraine, Azerbaijan and Georgia will meet at an energy summit in Vilnius on Oct. 10 's 11, where they are expected to conclude a deal on a pipeline that will stretch from Odessa on the Black Sea to Brody, just east of Lviv in western Ukraine, across the Polish border to Plock and then north to Gdansk.

Neringa Pazusiene, an Economy Ministry official, told the Baltic News Service that two five-way agreements would be signed, one among ministries and the other among the corporate entities that would carry out the project.
"This will be the last step to be taken in order to get the project started. The ministerial meeting in Tbilisi served as a catalyst for reaching agreement," she said.
The deal, if signed, will be a major victory for Ukraine, Poland and Lithuania, which have been desperately trying to find alternative sources of oil given Russia's willingness to use its supplies as a lever of geo-political influence.

In the past four years Russia has punished four out of the five conference participants 's the exception being Azerbaijan 's by either ceasing oil and gas supplies or dramatically raising prices after a domestic development that angered the Kremlin.
Lithuania's Mazeikiu Nafta refinery has not received Russian crude since July 2006 after Russia ceased deliveries, allegedly due to a pipeline failure in Belarus but more likely due to the Baltic State's refusal to sell the enterprise, the country's largest taxpayer, to a Russian company.
The Black Sea-Baltic Sea pipeline would allow East European nations to fill their reservoirs with Caspian Sea crude extracted by either Azerbaijan or, quite possibly, Kazakhstan.
Pazusiene said that Deputy Economy Minister Vytautas Nauduzas last week participated in a meeting of energy ministers from the five countries planning to build an extension to the oil pipeline.
The ministers instructed companies involved in the project to draft documents necessary to bring new shareholders into Sarmatia, the pipeline operator company.

Sarmatia was founded by Poland's PERN and Ukraine's Ukrtransnafta.
In mid-July, shareholders gave the go-ahead for increasing the company's authorized share capital to 12 million zlotys (3.2 million euros) from 2 million zlotys to bring in Azerbaijan's Socar, Georgia's GOGC and Lithuania's Klaipedos Nafta.

The state-run oil product terminal operator, Klaipedos Nafta, expects to have 1 percent of the shares in Sarmatia.