Georgia has not lost its transit function

One of the main purposes for the Russian aggression in Georgia was to deprive the country of its transit function, or at least discredit it. The 4th economic summit held in Baku on November 14 has shown that despite this, Georgia’s transit capabilities are being respected. The realization of the Odessa-Brody-Gdansk project, which is very important for Ukraine and several other Northeast European countries, is possible only by crossing Georgian territory. The abovementioned project was highlighted at the Baku Summit.

Ukraine has long been trying to realize the Odessa-Brody-Gdansk oil pipeline project. This project will enable Ukraine to provide itself with oil by bypassing Russia, and also to transport its own oil to Poland and the Baltic countries. However, the project has been hindered by the fact that Ukraine could not acquire the needed oil: Azeri oil is not sufficient even for the Baku-Tbilisi-Ceyhan pipeline. There was a need to attract Kazakh oil, and on November 14 the leaders of seven countries – Azerbaijan, Georgia, Ukraine, Lithuania, Latvia, Poland and Turkey, signed the Baku Declaration, which envisages supplying Kazakh oil to Europe via Azerbaijan and Georgia.

Azeri State Oil Company SOCAR and Kazakh State Company Kazmunigas have agreed to work together on this project. According to their agreement, a Trans-Caspian transport system will be created which will transport Kazakh oil to Azerbaijan for further re-export. To begin with 500 thousand barrels of oil will be transported, and this amount will increase to 1.2 million barrels in time. Work on creating a Trans-Caspian transport system will probably be complete by 2012.

The route of transporting oil to Ukraine will be as follows: oil received from Azerbaijan will be sent to Supsa, then transported to Odessa by tanker and pumped into the Odessa-Brody pipeline. This pipeline, 667 kilometres long, was built in 2001 and cost USD 200 million.

In order to transit Caspian oil to European market, a new 500 kilometre pipeline will need to be built which would pass through Ukraine and Poland. If agreement on constructing an additional oil pipeline is reached between Ukraine and Poland, by the end of 2010 or beginning of 2011 the Odessa-Brody-Gdansk pipeline will be ready to transit its first batch of oil.