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ODESSA - BRODI: AND REVERSE ALL THE SAME

BAKU.19.05.2004.MEDIA-PRESS: On this week the President Leonid Kuchma has removed a post of Special Envoy of Ukraine on the Eurasian oil transport route, which was founded in 2001. Mr. Alexander Todiichuk occupied it and the main trend of it activity the realization of the project of the oil pipeline Odessa - Brodi in the western trend. Just he has been the main oppositionist of the project of temporary consumption of the oil pipeline in reverse trend from the western regions of Ukraine to Odessa, which was offered by the Russian Company TNK.
As "Nezavisimay Gazeta" writes, the Edict of Mr. Leonid Kuchma on retirement of Mr. Todiichuk and removal of the structure subordinated to him as well some recent declarations of the Ukrainian President allow conclusions of experts that Kiev intends to refuse of the perspective of oil transport cooperation with the West and is ready to receive the Russian offers on the project Odessa - Brodi. In exchange Ukraine most likely takes account on softening of energy resources exportation regime by Russia. At least, a decision on demonstrative removal of the post of Mr. Todiichuk is explained in following way: "Since 2002 up to date, in spite of numerous decisions of the Cabinet and Ministry of Fuel of Ukraine, total commercial operation of the main oil pipeline Odessa - Brodi did not begin. Loading of other components of the oil transportation system of the country made only 52% from capacities. Only 2.1 MM tons of oil at a potential capacity of 9 MM tons were transported through the terminal "Yuzni" (Odessa). Because of this the state budget of Ukraine does not receive hundreds millions dollars".
Several days earlier Mr. Kuchma has called reasons of such state and said that Ukraine has not managed to sign contracts for oil transportation by the route Odessa - Brodi with neither sellers nor purchasers. "I give you an aircraft, depart to Baku, Astana and get contracts", - the President has surprised on press conference answering to notes of journalists on possible signing contracts on oil deliveries with Azerbaijan and Kazakhstan. He added that Mr. Nursultan Nazarbayev is ready to supply only the technological oil and the negotiations on commercial contracts are not conducted for the present. As it is known, Azerbaijan also delays a decision of this issue for undetermined time.
From the other hand, by the words of the Ukrainian President, Poland (the main partner of Ukraine on construction completion and operation of oil pipeline) and the European Union do not make steps for a start of total operation of the project. Mr. Leonid Kuchma has signed: "Poland has constructed the terminal in Gdansk and pipeline up to Plotsk for escaping from escaping from dependence on Russia. However, since 1999 this pipeline operates in reverse trend and today the Russian deliveries make 92% of oil deliveries to Poland. Because they are cheapest!".
As to issues of the Ukrainian-Russia cooperation in the oil field, Leonid Kuchma has noted that is guided by political motives, but not economic purposefulness. "If we turn noses, they will leave us behind (the Russian side suggesting cooperation to Ukraine is mentioned - "NG") and these pipes will be delivered to scrap-metal (Odessa - Brodi - "NG"), - the President has said. And the national interests do not allow to dig $500 MM, which were allocated by Ukraine has allocated into the project and wait a good weather from the sea. A clever one does not do in such way".
Henceforward the Cabinet of Ukraine will be engaged directly in the issue of filling up the pipeline "Odessa - Brodi" by oil. On the background of extremely successful negotiations conducted in Moscow in the past week by the Premier Mr. Victor Yanukovich, the next Russian trend of the realization of "Odessa - Brodi" does not causes doubts from the experts, "Nezavisimay Gazeta" resumes.


THE CONSTRUCTION OF THE WESTERN PART OF THE KAZAKHSTAN-CHINESE OIL PIPELINE WILL BEGIN IN 2004 ALREADY - THE PRESIDENT OF KAZAKHSTAN DECLARES

BAKU.19.05.2004.MEDIA-PRESS: The construction of the western part of the Kazakhstan-Chinese oil pipeline Atasu - frontier passage Alatau, as it is expected will start in 2004. The President of Kazakhstan Mr. Nursultan Nazarbayev has told about this on press conference in Peking, where he is with state visit. By his words, this pipeline by a length of 1 thou km will be completed by the end of 2005.
The agreement on the construction of the oil pipeline Kazakhstan - China, a total length of which makes about 3 thou km was signed in 1997. Up to date 448 km of pipeline have been built and put into operation. The Chinese side is ready to make investments to the projects by many millions, the state Chinese sources report.
The given project will allow Kazakhstan increasing its export potential at growing world prices for oil. However China hopes to solve partially its energy problems. Jus a growth in oil consumption in China is one of he determining factors of oil market.
As BBC notes, "hopes of Peking on Russia have not justified themselves, at least to date". The question is about a pipeline, through which oil should be delivered from Siberia to the northeast of China through the city Datsin. However in the last time the Russian officials do not remind Datsin. Nakhodka with Nakhodka as a target has been preferred. Most likely, a reason of choice of Nakhodka is that the oil company "UKOS" supported the Chinese variant and ex-President of it is in the prison in expectation of court. Many observers say also that Russia has received too attractive finance offer from Japan.
For extension of the cooperation to the East, a new oil pipeline is required for Kazakhstan. By preliminary estimates, the construction of the pipeline will cost totally $3bn. The project has two stages. By 2010 pipeline will be laid on the segment Atasu - Alahshankou and then by 2035 between points Keniyak - Kumkol - Atasu. Expectedly a capacity of the pipeline makes up to 50 MM ton of oil per annum.


THIS WEEK THE OPEC MAY TAKE A DECISION ON INCREASING QUOTAS ON OIL PRODUCTION AND EXPORT

BAKU.19.05.2004.MEDIA-PRESS: The OPEC may take a decision on increasing quotas for production and export deliveries of oil in the end of the current week - the 8th International Energy Forum in Amsterdam. A high-ranked source in the General Secretariat of the OPEC in Vienna has informed about this. He has not excluded that the increase may make 6%.
At the present time in accordance wit the decision of the 130th Vienna conference of the OPEC, the total quotas of oil production and export of the countries-members of the world oil cartel make 23.4 MM bbl per day. The increase of a level of export deliveries by 1.5 MM bbl per diem, the source has said.
At the same time, by the opinion of he experts, who are close to management of the OPEC, to date the production and export of oil make no less than 25 MM bbl per diem. Thus, on the Amsterdam forum only existing quotas will be legalized, the analysts believe.


MR. A. CHUBAYS WILL CONSIDER ISSUES OF THE RUSSIAN ELECTRIC POWER EXPORT IN BAKU

BAKU.19.05.2004.MEDIA-PRESS: The visit of the delegation of the RJC "UES of Russia" under a head of Mr. Anatoly Chubays should take place in the end of May. During the visit perspectives of cooperation with he RJC "Azenerji", particularly projects of ensuring reliable energetic supplying of Azerbaijan and south regions of Russia as well as the Russian electric energy exportation to the third countries through Azerbaijan should be discussed. A signing of Memorandum on Mutual Understanding in accordance of results of the meeting is possible.


THE PRESIDENT OF AZERBAIJAN HAS CALLED THE EUROPEAN UNION TO JOIN TO THE ADJUSTMENT OF THE KARABAKH CONFLICT

BAKU.19.05.2004.MEDIA-PRESS: The President of Azerbaijan Mr. Ilham Aliyev has called the EU to join to adjustment of the Karabakh conflict. "The Minsk Group of the OSCE contributes significantly to solving this problem, however we think that for achievement of concrete results attraction of the EU, all European social opinion should be useful", - Mr. I. Aliyev has said on the briefing in Brussels in accordance with results of the negotiations with the Chief of the European Commission Mr. Romano Prodi.
The Chief of the main Executive organ of the EU has expressed in his turn a readiness of joining to adjustment of the Karabakh conflict and signed that the European Union "absence of peace in this region troubles very much the EU". We are ready for assistance to adjustment process and make offers", - he has said. At the same time Mr. Prodi has informed that the EU is ready for deepening the economic cooperation with Azerbaijan within frameworks of the strategy "a circle of friends and neighbors" of the extended EU, to where Azerbaijan was included recently.
Answering to questions, Mr. I. Aliyev has called the recent meeting of the foreign ministries of both the countries "important for continuation of peaceful dialogue". "However we do not want negotiations for negotiations, we do not their imitation, - the President of Azerbaijan has emphasized. We support for subjective discussions with the Armenian side on new issues and problems, which should be able to give concrete results in adjustment of the conflict on a base of international laws and territorial integrity of Azerbaijan".


THE NEXT MEETING OF THE FOREIGN MINISTRIES OF ARMENIA AND AZERBAIJAN WILL TAKE PLACE ON JUNE 20 IN PRAGUE

BAKU.19.05.2004.MEDIA-PRESS: The next, third meeting of the Foreign Ministries of Armenia and Azerbaijan Mr. Vardan Oskanyan and Elman Mamedyarov will take place supposedly on June 20 in Prague. The Foreign Minstry of Armenia Mr. Vardan Oskanyan has informed about this on press conference.
He has positively estimated results of the previous meeting with the Foreign Minister Mr. E. Mamedyarov and noted that it was useful also because it was conducted after the meeting of the Presidents of both the countries and the Foreign Ministries have concrete orders from the Presidents and the constructive dialogue has been conducted on a base of them.
In connection with this we shall note that the other high-ranked state official of Erivan - the Security Council Secretary under authorities of the President of Armenia the Minister of Defense Serj Sarkisyan has declared in interview to the newspaper "Ayots Ashkhar" that "the offer of Azerbaijan to open railway communication with Armenia in exchange of liberation of 7 regions controlled by the Armenian side is not serous".
He has compared this offer to an effort of comparing to an ocean with raindrops. The offer of Azerbaijan to unblock transport communications is not serious first of all because in any moment Azerbaijan may to block again this communications. And this reason is sufficient enough. Naturally, a quantity and diversity of the transport communications always affects positively on economy, however Nagorni Karabakh should not and is can not become a price for this positive affect, Serj Sarkisyan has emphasized.
However the Foreign Minister of Armenia V. Oskanyan prefers to refrain submission of all spectrum of discussed issues and has declared, "while concrete decisions have not been taken, it is purposeless to submit different current projects and offers, which have been taken place during discussions". Matters of negotiations should be published only after positive shifts, approval of co-chairmen"- V. Oskanyan thinks.
Answering to the question of journalists, whether Baku has determined its position on a start point of continuing negotiations on the Karabakh adjustment, V. Oskanyan noted that in accordance with results of meetings we ought not to say that Azerbaijan disproves something. "There is not bases to affirm that we have not matters for talks; the meetings are held productively and they should be continued including a level of presidents", - the Foreign Minister has said. "The negotiations are conducted in all trends and we should hope that we manage to clear up in the next time", - V. Oskanyan has said.


THE COUNTRIES OF GUUAM INTEND TO FOUND THE INTERPARLIAMENTARY ASSEMBLY

BAKU.19.05.2004.MEDIA-PRESS: The foundation meeting on the Interparliamentary Assembly of GUUAM as it is expected will take place in the second mid of September in Kiev. The First Deputy Chief of Verkhovnay Rada of Ukraine Mr. Adam Martinyuk has informed journalists about this after the working meeting of Chiefs of Parliaments of the states-members of GUUAM on Tuesday.
By the words of Mr. A. Martinyuk, during the meeting the realization of the preliminary agreement on foundation of the IPA within frameworks of this organization was discussed. He has noted as well that this is a single international organization, which has not intergovernmental assembly.
Mr. A. Martinuk has noted that the chiefs of the delegations, who took part into the working meeting, have supported unanimously the issue of necessity of foundation of the IPA of GUUAM. At the same time he has determined that a delegation of Uzbekistan has not taken part into this meeting and it as well has not taken part into conference of chiefs of the European parliaments and interparliamentary assemblies of Europe. The participants have agreed that Ukraine will be an organizer of the foundation meeting on the IPA GUUAM.
And the next summit meeting of GUUAM will be held on June 16 in the Adjar village Chakvi near Batumi. The Premier of Georgia Mr. Zurab Jvania has told about this. By his words, on May 19 in Batumi the special sitting of the government of the government of Georgia will be held and it is devoted to organization issues of holding of the forthcoming summit meeting.
Mr. Z. Jvania expects that not only chiefs of the state-members of GUUAM will come to the summit meeting, but also numerous guests.


THE CASPIAN CENTER OF TECHNICAL TRAINING OF SPECIALIST OF EXTRA CLASS HAS BEEN OPENED IN AZERBAIJAN

BAKU.19.05.2004.MEDIA-PRESS: The Caspian center of the technical preparation of the specialists has been opened in the Sangachal oil terminal (near Baku). The companies-shareholders of the projects "Azeri-Chiraq-Guneshli", "Shakh-Deniz", export pipelines Baku - Tbilisi - Ceyhan and Baku - Tbilisi - Erzurum has taken part into the construction and equipping of the center of extra-class by a total cost of $12 MM.
On the main base the center may train 400 operators and other specialists during a year. The base has the teaching drilling and dispatching models for teaching personnel to methods of effective and safe conduction of works on the modern drilling equipment, which has been installed on the new platforms in the Caspian sea.
The installation teaching to the methods of conduction of the operations is uncial. It has been projected and made in the Great Britain. The personnel will receive the experience of putting into operation and operation of the equipment.
Moreover, a division with special equipment, extensively used in the oil and gas industry has been constructed in the center as well modeling devices for training drilling and production specialists; there are also 24 study rooms and offices.
As the President of BP-Azerbaijan Mr. David Woodward has noted on the ceremony, foundation of the center has affirmed again the intension of BP to execute operations in region by national highly qualified personnel. "We believe that significant investments to oil and gas industry in Azerbaijan and totally in the Caspian region should correspond to a high level of well-trained and purposeful personnel, which will ensure safe and effective work on our offshore and onshore objects. We are sure that qualification of the local personnel together with teaching at modern equipment available in the center will allow getting a contingent of highly qualified employees, who will be valuable gain for Azerbaijan and the region in total for next many years in advance".


THE SECOND STAGE OF THE DEVELOPMENT OF "SHAKH-DENIZ" WILL START AFTER ACHIEVEMENT OF LONG-TERM AGREEMENTS ON GAS EXPORT

BAKU.19.05.2004.MEDIA-PRESS: A sanction for realization of the second stage of the development of the offshore gas field "Shakh-Deniz" will be given only after achievement of long-term agreements on export of the Azerbaijan gas, the President of the State Oil Company of Azerbaijan (SOCAR) Mr. Natiq Aliyev has said.
By his words, now active negotiations on this issue are conducted with Greece and will be conducted with the Balkan countries and Italy. At deliveries of the Azerbaijan gas to Greece may start already on the first stage of the development of "Shakh-Deniz" that is in 2007. As the President of the SOCAR has declared, if the Turkish market is not able to receive all agreed volume of the Azerbaijan gas, Azerbaijan has a right to deliver it to Greece.
We shall remind that Azerbaijan Gas Supply Company, the operator of which the Norway company Statoil is, is engaged in marketing of the Azerbaijan gas. By the words of the Vice-President of Statoil Mr. Peter Melby, gas from Azerbaijan will be competitive on markets of the South Europe and potentially of Central Europe. However to date timely start of deliveries of the Azerbaijan gas to the market of Turkey is the main goal of the realization of projects on gas production in Azerbaijan. "The most important is gas deliveries to Turkey within mentioned terms. And there the Azerbaijan will be very competitive by its cost", - he has emphasized.
Mr. P. Melby thinks that the most purposeful in growing gas production on "Shakh-Deniz" gradually in accordance with market requirements. "On a base of our experience on the European market the gradual increase of the capacity of the development of the field is more profitable than a jump into the new stage, - he has said. In any case a cost of each variant should be calculated and one of them should be chosen".
"Stage-1" of the development of the gas condensate field "Shakh-Deniz" with a cost of $3.2 bn includes installing of the platform at a sea depth of 105 m, the construction of two underwater pipelines with a length of 100 km of each from the platform towards to the Sangachal terminal as well the construction of the South-Caucasian gas pipeline Baku - Tbilisi - Erzurum. The production of the primary gas from the field "Shakh-Deniz" is planned by the mid of 2006.
The "Stage-1" of the development of the field provides the production of 178 bn cubic meters of gas and 34 MM tons of condensate. The maximum production will make 8.4 bn cubic meters of gas and 2 MM tons of the condensate per a year.
BP (25.5%), Statoil (25.5%), the SOCAR(10%), LUKAgip(10%), OIEC (10%), TotalFinalElf (10%) and TRAO (9%) are the participants of the project "Shakh-Deniz".


ABOVE 4 THOU METERS WERE DRILLED ON THE FIRST EXPLORATION WELL ON THE AZERBAIJAN OFFSHORE STRUCTURE "ZAFAR-MASHAL"

BAKU.19.05.2004.MEDIA-PRESS: On the first exploration well on the Azerbaijan offshore structure "Zafar-Mashal" 4300 meters have been drilled. The Vice-President of the SOCAR Mr. Khosbakht Yusifzade has informed the journalists about this. By his words, in the next time the drilling workers will start to lowering down of column to the well and after this the sinking will be continued.
The operator of the project - ExxonMobil has changed several times a place of construction of the well for a high water appearance, and drilling workers could not stop it. The Danish company Maersk Contractors conducts drilling from the semisubmersible floating drilling rig SFDR "Lider".
The project depth of the bore hole makes 6800 meters. The Main objective of the boring is stripping of the "suite of a break" and the 8th horizon of the "Balahany suite".
Before selection of the laying place of the bore hole, JV Caspian Geophysical, founded by both the SOCAR and transnational Company Schlumberger, has conducted three-dimensional seismic survey (SS) in the are of 85 square kilometers.
The Structure "Zafar"-"Машал" was revealed as a result of seismic researches in 1961, but the first geophisical works at it were conducted in the 1985 and 1987 years. Exploratory boring at block was not conducted.
A drilling of the exploratory well is conducted from the submersible floating drilling rig (SRDR) "Leader". The Danish company Maersk Contractors is the drilling contractor.
According to the contract, for exploratory period a contractor is obliged to conduct here three-dimensional seismic survey and bore 2 exploratory bore holes. The Contract on "Zafar-Mashal" was signed on April 27, 1999 in the USA. The Market shares in it are portioned as follows: the State Oil Company Azerbaijan - 50%, American companies ExxonMobil - 30% and Conoco - 20%. The total investment in the project make $2 milliard approximately, but forecasted oil supplies make 140 mln tons, 100 mln of which are of the "Zafar" and 40 mln tons of "Marshal".


THE PRESIDENT OF THE SOCAR: THE SYSTEM OF CORRELATION OF PRICES FOR ENERGY CARRIERS IN AZERBAIJAN SHOULD BE APPLIED ONLY TO LIGHT OIL PRODUCTS

BAKU.19.05.2004.MEDIA-PRESS: In Azerbaijan the system of correlation of prices for oil products is developed. By the words of the President of the SOCAR Mr. Natiq Aliyev, the question is about that if the world prices for oil change sharply, then inner ones for energy carriers in Azerbaijan should be changed too.
However, by the opinion of the President of the SOCAR, the similar practice in Azerbaijan should be applied only to the light oil products. If in dependence on world prices, ones for other oil products are changed, particularly for mazut, liquidated gas, primary benzene for oil and chemical industry this would affect negatively on the economy of Azerbaijan and prosperity of the population. In this case, Mr. N. Aliyev considers first of all the self-cost of the industrial production will grow up.
We shall note that the correlation of prices for energy carriers is one of the main demands of the IMF. However, by declarations of the government, inner prices will not increase in this year. By the words of the Minister of Finances of Azerbaijan Mr. Avaz Alekperov, two variants of adjustment of this issue have been considered jointly with the officials of the IMF. The first one is increase of prices and then their revision each quarter in dependence of prices on the world market. The second variant is increase of prices stage by stage.
We shall remind that still on February the Minister of Economic Development of Azerbaijan Mr. Farhad Aliyev has said that inner prices for energy carriers in Azerbaijan (without taking transport expenses into account) do not differ sharply from the world ones. Such statement was made in response to the demand of the IMF to Azerbaijan to increase the inner prices for energy carriers up to the world ones. Mr. F. Aliyev has emphasized also that the government will make all possible to prevent negative affection on the population of the country.
We shall remind that the IMF has postponed the term of execution of reliabilities on increasing of inner prices for energy carriers up to the world one. Earlier it has been planned to make this already in the beginning of 2004.


DOES UKRAINE NOT DOUBT IN THE PROFITABILITY OF THE PROJECT "ODESSA - BRODI"?

BAKU.19.05.2004.MEDIA-PRESS: The investigations of the British company "Pricewater House Coopers" and oil producing concerns working in the Caspian Sea, allow declaring that the issue of unprofitability of the project "Odess-Brodi" has been removed from the agenda. The Advisor of the Envoy of Ukraine on development of the Euroasian oil transportation route Mr. Mikhail Gonchar has said this commenting the statements of the President of the SOCAR Mr. Natiq Aliyev that Azerbaijan does not intend to take part in oil deliveries for the Ukrainian pipeline.
Commenting the opinion of Mr. N. Aliyev on politicizing the issue of operation of the system "Odessa - Brodi" in damage of the economic component, the specialist has noted that the projects of such kind have always a political component". By his words, nobody has a goal to pull somebody from ears. "We understand very well that the State Oil Company of Azerbaijan has limited investment opportunities and gives high priority to the construction of the oil pipeline Baku - Tbilisi - Ceyhan", - he has said.
Ukraine conducts negotiations on oil deliveries for "Odessa - Brodi" with the companies of Kazakhstan and Azerbaijan including private and international operators, delivering light oil, Mr. Gonchar has noted. As to agreement on conditions of pumping the Azerbaijan oil through Ukraine, which is not supported by N. Aliyev, the Ukrainian specialist has noted that this issue is solved on the governmental level. At the present time a preparation for signing this document is gone.
Mr. Gonchar has noted that for putting into operation of the pipeline "Odessa - Brodi" it would be necessary to carry out experiment for pumping of test party of light oil through the system "Druzba" with which it is connected up to the Czech oil plant in Kralup. However, by his words, this process oppositionists to the Ukrainian project delay this process on the international level.

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