Kiev, Minsk sign oil delivery agreement

Belarus on 17 January concluded an agreement with Ukraine that will give it access to crude oil from the Black Sea while bypassing Russian pipelines. Ukrtransnafta and the Belarusian Oil Company signed the two-year contract for the guaranteed annual transit of four million tons of oil through Ukraine's oil transport system using the Odesa-Brody oil pipeline to the Belarusian oil refinery in Mozyr.

Ukrainian Energy and Coal Industry Minister Yuriy Boiko said after the signing ceremony that the agreements with Belarus were profitable. "We are pleased with the work we started," Ukrainian radio quoted him as saying. Boiko added that the contract between the Belarusian Oil Company and Ukrtransnafta would not affect the interests of Russia on oil transit via Ukraine to Europe.

The first trial shipment of oil was successfully transported by the Odessa-Brody pipeline to the Mozyr refinery in Belarus in late November. "The direct transportation of oil by the Odessa-Brody pipeline to the Mozyr refinery via the Druzhba trunk pipeline, started on 20 November, was successfully finished at around midnight Tuesday," Itar-tass quoted Belneftekhim spokeswoman Marina Kostyuchenko as saying earlier. She said that no problems had arisen with the transportation of Russian oil to Western consumers during this period. "The pipelines were not used to their maximum capacity. The concerns expressed to this effect by some foreign specialists proved wrong," she added. The pipeline transported 24,000 tons of oil daily during the trial run. The Mozyr-Brody-2 pipeline transported oil to Hungary, Slovakia and the Czech Republic at the same time at a rate of around 50,500 tons.

In late October, a contract was signed in Minsk for a trial shipment of oil by the Odessa-Brody pipeline in the direct mode. Also a contract was signed for transportation of oil by the pipeline in the same mode in 2011-2013 and on oil supplies to Belarus on swap terms, Itar-tass reported.

The Odessa-Brody pipeline is currently operating in the reverse mode in the direction of Black Sea ports. The pipeline carries around 105 million barrels of oil per year. The Odessa-Brody pipeline is a crude oil pipeline between the Ukrainian cities Odessa on the Black Sea and Brody near the Ukrainian-Polish border.

There are plans to expand the pipeline to Plock, and furthermore to Gdansk in Poland. The pipeline is operated by UkrTransNafta, Ukraine's state-owned oil pipeline company. Odessa-Brody was originally intended to reach Gdansk in order to transfer oil from the Caspian Sea (mainly from Kazakhstan) to the Polish Baltic Sea port and from there to the rest of Europe. The Pivdenny maritime terminal in Odessa and the pipeline between Odessa and Brody were built in May 2002 by Ukrnaftogazbud and operated by UkrTransNafta. UkrTransNafta was established to develop the commercial attractiveness of the Odessa-Brody pipeline. However, the pipeline remained unused until 2004. As sufficient capacities of oil supplies were not agreed, in July 2004 the Ukrainian government accepted Russian oil companies' proposal to reverse the pipeline flow to make it transfer Russian oil southwards to the Black Sea and from there to Mediterranean destinations. Currently the oil is shipped to the pipeline from the junction of the southern branch of the Druzhba pipeline. In March 2010, Ukraine's ambassador to Belarus proposed the pipeline begin operating in the averse direction in order to deliver Venezuelan crude to Belarusian refineries.

The transit contract with Ukraine signed on 15 January guarantees Belarus roughly one-third of its annual crude oil needs via a route uncontrolled by the Kremlin, which has come into conflict with Belarusian President Alexander Lukashenko over bilateral trade.

Belarus last year signed an agreement with Venenzuela for the delivery of up to five million tons of oil. Minsk is negotiating terms with Azerbaijan for the delivery of another eight million tons.


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