Identifier
Created
Classification
Origin
08BRATISLAVA161
2008-04-10 14:19:00
CONFIDENTIAL
Embassy Bratislava
Cable title:
UKRAINIANS PRESSING SLOVAKS TO BATCH CASPIAN CRUDE
how-toVZCZCXRO8799 PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR DE RUEHSL #0161 1011419 ZNY CCCCC ZZH P 101419Z APR 08 FM AMEMBASSY BRATISLAVA TO RUEHC/SECSTATE WASHDC PRIORITY 1656 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEHAH/AMEMBASSY ASHGABAT PRIORITY 0031 RUEHKV/AMEMBASSY KYIV PRIORITY 0043 RUEHMO/AMEMBASSY MOSCOW PRIORITY 0681 RUEHTA/AMEMBASSY ALMATY PRIORITY 0048 RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
C O N F I D E N T I A L BRATISLAVA 000161
SIPDIS
SIPDIS
E.O. 12958: DECL: 04/10/2018
TAGS: ENRG ECON EPET LO RU UP
SUBJECT: UKRAINIANS PRESSING SLOVAKS TO BATCH CASPIAN CRUDE
ON THE DRUZHBA
REF: A. BRATISLAVA 35
B. LAITINEN/SLOWINSKI EMAILS
Classified By: Ambassador Vincent Obsitnik for Reasons 1.4 b) and d)
C O N F I D E N T I A L BRATISLAVA 000161
SIPDIS
SIPDIS
E.O. 12958: DECL: 04/10/2018
TAGS: ENRG ECON EPET LO RU UP
SUBJECT: UKRAINIANS PRESSING SLOVAKS TO BATCH CASPIAN CRUDE
ON THE DRUZHBA
REF: A. BRATISLAVA 35
B. LAITINEN/SLOWINSKI EMAILS
Classified By: Ambassador Vincent Obsitnik for Reasons 1.4 b) and d)
1. (C) The Ukrainian pipeline operator UkrTransNafta is
aggressively pushing a one-day trial to "batch" 40,000 tons
of Caspian crude from Brody in Ukraine to the Kralupy
refinery in the Czech Republic. The goal, according to
Bratislava-based UkrTransNafta representative Mikulas
Rakovsky, is to test the systems and show that the Ukrainian
pipeline company can coordinate with partners along the
Druzhba pipeline on a trial basis. UkrTransNafta hopes to
accomplish this before the end of April so that the results
can be announced at the Kyiv Energy Summit that is set to
take place on May 22-23. The test is reportedly designed to
show that Odessa/Brody/Druzhba is a viable option for
transporting Caspian crude to western markets. Rakovsky
noted that the 40,000 tons of crude is already available in
Brody and will be shipped pending an agreement with all of
the operators along the Druzhba.
2. (C) Ukranian President Yushchenko is reportedly behind the
efforts to achieve a successful trial before the end of the
month. Rakovsky said that the Czech government and pipeline
operator Mero support the project, and that Russia is not
opposed to the test. Rakovsky said that President Putin told
Yushchenko that Russia would guarantee supplies along the
Druzhba in the future and would allow Ukraine to seek
alternative routes. Yushchenko reportedly sent letters to
the Slovak President and Prime Minister asking for support,
and also dispatched his energy advisor, Bohdan Sokolovsky,
and the Chairman of UkrTransNafta, Igor Kyriushyn, to
Bratislava last week for discussions with the GOS and Slovak
pipeline operator Transpetrol.
3. (C) Slovak PM Fico and Economy Minister Lubomir Jahnatek
support the trial, but Transpetrol believes that there are
several technical obstacles that must be overcome before they
can approve the project. The GOS is a minority shareholder
in Transpetrol. Transpetrol Board member and Yukos Finance
representative Jan Kridla told EconOff that the company would
benefit from a successful test, but it was their
responsibility to first ensure that the test would not pose a
risk to their supply commitments. (Note: Yukos Finance would
likely be the greatest beneficiary since a successful test
would likely increase the value of the 49 percent Transpetrol
stake that it is currently trying to sell (Reftel)).
Transpetrol also had concerns about violating its current
agreements with Transneft, which UkrTransNafta argues will
not be an issue for a one-off test.
4. (C) Both Rakovsky and Kridla said that Kyriushyn is under
significant political pressure to complete the one-day test
by the end of April, and would likely lose his position if he
is not able to do so. Kyriushyn told Transpetrol that
UkrTransNafta will cover all of the costs associated with the
project and use its staff to overcome the technical hurdles.
UkrTransNafta believes that the test can be carried out
without any upgrades to the pipeline system, and that the
main issue is one of cleaning. A technical team from Ukraine
arrived in town on Tuesday (4/8) and is meeting with
Transpetrol engineers to address the technical issues.
5. (C) Kridla expressed frustration that Transpetrol was
under pressure from all sides: the Slovak, Czech and
Ukrainian governments have all weighed in as have the
neighboring pipeline operators. Kridla felt that Transpetrol
had to ultimately have the support of its main customers, the
Slovnaft refinery in Bratislava, which is owned by Hungarian
MOL, and Ceska Refinerska (CRC),before going ahead with the
test. PKN Orlen, which is the majority owner of Unipetrol, a
51 percent owner of CRC, has reportedly approved the project,
but Kridla noted that there are other interests in CRC that
still need to give their approval.
OBSITNIK
SIPDIS
SIPDIS
E.O. 12958: DECL: 04/10/2018
TAGS: ENRG ECON EPET LO RU UP
SUBJECT: UKRAINIANS PRESSING SLOVAKS TO BATCH CASPIAN CRUDE
ON THE DRUZHBA
REF: A. BRATISLAVA 35
B. LAITINEN/SLOWINSKI EMAILS
Classified By: Ambassador Vincent Obsitnik for Reasons 1.4 b) and d)
1. (C) The Ukrainian pipeline operator UkrTransNafta is
aggressively pushing a one-day trial to "batch" 40,000 tons
of Caspian crude from Brody in Ukraine to the Kralupy
refinery in the Czech Republic. The goal, according to
Bratislava-based UkrTransNafta representative Mikulas
Rakovsky, is to test the systems and show that the Ukrainian
pipeline company can coordinate with partners along the
Druzhba pipeline on a trial basis. UkrTransNafta hopes to
accomplish this before the end of April so that the results
can be announced at the Kyiv Energy Summit that is set to
take place on May 22-23. The test is reportedly designed to
show that Odessa/Brody/Druzhba is a viable option for
transporting Caspian crude to western markets. Rakovsky
noted that the 40,000 tons of crude is already available in
Brody and will be shipped pending an agreement with all of
the operators along the Druzhba.
2. (C) Ukranian President Yushchenko is reportedly behind the
efforts to achieve a successful trial before the end of the
month. Rakovsky said that the Czech government and pipeline
operator Mero support the project, and that Russia is not
opposed to the test. Rakovsky said that President Putin told
Yushchenko that Russia would guarantee supplies along the
Druzhba in the future and would allow Ukraine to seek
alternative routes. Yushchenko reportedly sent letters to
the Slovak President and Prime Minister asking for support,
and also dispatched his energy advisor, Bohdan Sokolovsky,
and the Chairman of UkrTransNafta, Igor Kyriushyn, to
Bratislava last week for discussions with the GOS and Slovak
pipeline operator Transpetrol.
3. (C) Slovak PM Fico and Economy Minister Lubomir Jahnatek
support the trial, but Transpetrol believes that there are
several technical obstacles that must be overcome before they
can approve the project. The GOS is a minority shareholder
in Transpetrol. Transpetrol Board member and Yukos Finance
representative Jan Kridla told EconOff that the company would
benefit from a successful test, but it was their
responsibility to first ensure that the test would not pose a
risk to their supply commitments. (Note: Yukos Finance would
likely be the greatest beneficiary since a successful test
would likely increase the value of the 49 percent Transpetrol
stake that it is currently trying to sell (Reftel)).
Transpetrol also had concerns about violating its current
agreements with Transneft, which UkrTransNafta argues will
not be an issue for a one-off test.
4. (C) Both Rakovsky and Kridla said that Kyriushyn is under
significant political pressure to complete the one-day test
by the end of April, and would likely lose his position if he
is not able to do so. Kyriushyn told Transpetrol that
UkrTransNafta will cover all of the costs associated with the
project and use its staff to overcome the technical hurdles.
UkrTransNafta believes that the test can be carried out
without any upgrades to the pipeline system, and that the
main issue is one of cleaning. A technical team from Ukraine
arrived in town on Tuesday (4/8) and is meeting with
Transpetrol engineers to address the technical issues.
5. (C) Kridla expressed frustration that Transpetrol was
under pressure from all sides: the Slovak, Czech and
Ukrainian governments have all weighed in as have the
neighboring pipeline operators. Kridla felt that Transpetrol
had to ultimately have the support of its main customers, the
Slovnaft refinery in Bratislava, which is owned by Hungarian
MOL, and Ceska Refinerska (CRC),before going ahead with the
test. PKN Orlen, which is the majority owner of Unipetrol, a
51 percent owner of CRC, has reportedly approved the project,
but Kridla noted that there are other interests in CRC that
still need to give their approval.
OBSITNIK