July 22, 2008

Ukrainian Minister Questions Draft Deals to Use Pipeline to Pump Oil Towards EU

Text of report by Interfax-Ukraine news agency

Kiev, 22 July: The Fuel and Energy Ministry has a number of questions to the draft agreements on the use of the Odessa-Brody oil pipeline in the original direction [towards Europe], which were forwarded for consideration to the ministry by Ukraine's oil transport system operator Ukrtransnafta.

"We have lots of questions to the draft agreements, starting with the mechanism for agreeing them," Fuel and Energy Minister Yuriy Prodan said at a news conference in Kiev today. He added that the documents were not initially agreed with Ukrtransnafta's supervisory board, as its statutes required.

The ministry's lawyers studied the draft agreements and said that they contained no financial guarantees from clients commissioning the loading of the Odessa-Brody oil pipeline in the original direction. At the same time, the draft agreements stipulate substantial penalties for Ukrtransnafta in case of its refusal to transport oil, Prodan said.

"We also question granting an exclusive right to use the Odessa- Brody pipeline to one company," Prodan said. The relevant provisions of the draft agreements should be analysed to ensure they are in line with the Energy Charter ratified by Ukraine, he added.

Prodan also said that the signing of the agreement should be coordinated with the participants of the Polish company Sarmatia Sp.z.o.o.

"I think that the decision to sign the agreements on the use of the Odessa-Brody pipeline in its original direction, which is an important and responsible decision, should be made by the Cabinet of Ministers of Ukraine," Prodan said.

Originally published by Interfax-Ukraine news agency, Kiev, in Russian 1220 22 Jul 08.

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