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The Warsaw Voice » Business » May 28, 2008
ENERGY
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Summit in Kiev
May 28, 2008 By Andrzej Ratajczyk   
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The presidents of seven countries attended an energy summit of countries from the Baltic, Black and Caspian Sea regions in Kiev, Ukraine, May 22-23. The main aim was to create "a common energy space" that would allow the interested countries to become independent of Russia in raw material deliveries.

The meeting's host, Ukrainian President Viktor Yushchenko, said that the countries taking part in the summit should oppose any attempts at monopolizing energy raw material sources and deliveries. Speaking after the meeting, he said that the general objective of the summit had been achieved, namely that the participating countries have begun building their energy security.

Yushchenko added that one important task of the summit was to create safe and predictable delivery and transit systems. That's why the aim should be to make oil and natural gas deliveries free of politics, he said.

The Kiev summit was the third meeting of Eastern European heads of state dedicated to the issue of energy-related cooperation over the past 12 months. The previous meetings were held in May last year in Cracow and in October in Vilnius.

The Cracow summit produced a declaration on establishing a company to deal with a plan to extend the Odessa-Brody oil pipeline from Ukraine to Płock and Gdańsk in Poland. At the Vilnius meeting, the presidents of Azerbaijan, Georgia, Lithuania, Poland and Ukraine signed an agreement to establish the Nowa Sarmatia consortium to handle the Odessa-Brody extension project and also reached an agreement on a transport corridor for oil and natural gas.

The Kiev meeting brought together the presidents of Poland, Lithuania, Latvia, Estonia, Ukraine, Georgia and Azerbaijan. Despite previous announcements, the leaders of Romania and Moldova did not attend, though officials from those countries were present, as were officials from the European Union, Slovakia, Kazakhstan, Bulgaria, and the United States.

Participants showed the greatest interest in the issue of oil deliveries from deposits on the Caspian Sea to Western Europe via a Polish-Ukrainian oil pipeline running from Odessa to Gdańsk. The pipeline from Odessa to the town of Brody near the Polish border was built in Ukraine in 2001. Today it carries Russian oil from Brody to Odessa, which runs contrary to the original idea of it being used for carrying oil from east to west. During the summit, Yushchenko said the direction in which oil is pumped through the Odessa-Brody pipeline would change. The Ukrainian president said the Odessa-Brody pipeline pumping oil westwards, together with surrounding infrastructure, should form the foundation of the common energy space.

Participants agreed to set up a working group that, with "the involvement of the European Union," would develop guidelines and implement mechanisms and principles of the Caspian-Baltic-Black Sea energy space in accordance with the national laws of the individual countries and EU law. This was the first time that Brussels, which had so far treated the initiative as a regional event, showed official interest in the project, as testified by the presence in Kiev of Andris Piebalgs, EU commissioner for energy, who said this kind of meeting was extremely important.

The energy summit in Kiev ended with the signing of a joint declaration on the principles of global energy security, in which the presidents appealed for a halt to exploiting energy for political purposes. This was especially important for former Soviet and Eastern Bloc countries. In recent years Russia has turned off the tap on oil and natural gas many times, taking advantage of a monopoly inherited from the Soviet Union.

The presidents also signed a declaration on the concept of the Baltic-Black-Caspian Sea Energy Association and on efforts to establish a Euro-Asian corridor for transporting oil.

According to Polish President Lech Kaczyński, the conclusions of the Kiev energy summit mean significant progress compared with the previous meeting in Vilnius, while Georgian President Mikheil Saakashvili said that the summit's results "are a step towards building a free market for energy in Europe." Kaczyński said he hoped "the fourth meeting will be an even greater success."

The next summit, in Azerbaijan in about six months, is meant to bring a concrete answer to the question of when oil will begin to flow along the Odessa-Brody-Płock pipeline.

Paweł Nierada, an expert from the Sobieski Institute in Warsaw, says the Kiev summit will have positive implications for Poland. "One can see a clearer outline of the area of shared interests that includes Poland, Ukraine, the Baltic states, and Belarus," Nierada said. "If the countries of the Caspian Sea basin or the Black Sea region can be added in a sensible way to this area of common interests and shared economic and strategic potential, then we could really be facing an economic alliance with extremely serious potential."

Nierada says Poland stands a good chance of leading the project, as one of the largest countries in terms of population and an EU member. "The key priority should be to bind the European Union and Ukraine. The simplest way of achieving this would be to bind Ukraine and Poland. Of course, the Odessa-Brody pipeline is only one area of mutual benefits," Nierada said. "Another area of cooperation that could be advantageous to both countries and to the EU is cooperation in the power industry. This is an area where Polish companies could really mean a lot."

Since the start of this year oil prices on world markets have grown by more than 30 percent, exceeding the $135 per barrel mark last week. High oil prices are worrying drivers, but on the other hand may encourage countries to obtain oil from new sources, such as the Odessa-Brody-Gdańsk pipeline, which, once it is extended from Ukraine to Poland, will open the way to Europe for high-quality oil from Caspian Sea deposits.

Yushchenko said at the Kiev summit that the Polish-Ukrainian pipeline "is one of the most functional oil transport projects and could give the EU and Ukraine access to new sources of energy."
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