Poland Tapping Up Ukraine for Oil

WARSAW, Poland -- A proposed pipeline bringing oil from Ukraine to Poland could come onstream within three years and pay for itself within eight.

The chief executive of PERN, Wojciech Tabiś, has proposed bringing Caspian Sea oil to the Baltic via an extension of Ukraine's Odessa-Brody pipeline. In an interview with Reuters, he said that the zł.2 billion extension needs a throughput of 15 million tonnes a year to be profitable.

Originally, when Ukraine built the pipeline, it planned to ship Caspian crude to Gdańsk in Poland, but Kiev reversed the plan under Russian pressure. However, the new administration, under President Viktor Yushchenko, is moving away from Russia and towards the EU at a rate of knots, and wants to implement the original idea. Tabiś is confident that the project will be carried out.

"This pipeline will certainly be built - the only question is when. Ukraine needs it, Poland needs it, and Europe needs it," he said. Prime Minister Marek Belka said that Ukraine and Poland will set up a working group to push the project forward, and Tabiś said the next step is to draft a business plan for the extension to Gdańsk.

"The tender for a consultant to write the feasibility study should be announced in May, and according to the current schedule, the oil should start flowing 2.5 to three years after the study is completed," he said. "The investment should pay off in seven to eight years."

Poland appears anxious to find a non-Russian source for crude oil, although the new pipeline may be unsuitable for many Polish refineries as they are currently configured to refine high-sulfur Russian crude.