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Kazakhstan agrees to expand oil export capacity through Ukraine

Kazakhstan, the second-largest oil producer in the former Soviet Union, agreed to expand Ukraine's oil export capacity as the central Asian country strives to triple crude production by 2015.

A Kazakh trade delegation led by President Nursultan Nazarbayev signed a number of agreements in Kiev, including participation in the construction of new terminals at the Black Sea port of Yuzhny. Kazakhstan will also help build a pipeline linking Yuzhny to the port of Odessa. „Kazakhstan is very interested in oil refineries in Ukraine,” Nazarbayev said at a joint press conference today with his Ukrainian counterpart Viktor Yushchenko. The two countries agreed to study building an oil refinery at Brody, near the Polish border, at the end of an oil pipeline from Odessa. A decision will be made in the second half of the year. Both countries are looking to decrease their dependence on Russia.

Kazakhstan relies on Russia for transit of most of its oil exports and Ukraine gets most of its energy from Russia. Russian President Vladimir Putin said yesterday at a press conference in Moscow that Russia was seeking to manage Ukrainian natural-gas pipelines in exchange for letting Ukraine pump gas at Russian fields. „We've already talked a lot about building a new pipeline that would increase capacity by 20 billion cubic meters of gas,” Yushchenko said. „But if we think about existing pipelines, they are strategic assets for Ukraine.” Pipelines are state property by law, Yushchenko said, and that status can only be changed by the parliament. „I can say that these talks about joint-management of existing pipelines is in the distant future and we're not conducting any talks on that now,” Yushchenko said. (Bloomberg)