THE EURO-ASIAN OIL
TRANSPORTATION CORRIDOR reliable way for the strengthening of European
energy security
IV Meeting of the Eastern
Partnership
Platform 3 “Energy Security”
27th October, 2010
Brussels
PROJECT OVERVIEW
EAOTC Assets will comprise:
Lease of existing assets
Mazeikiai
Contracts with third parties for capacity e.g. longterm arrangements
Gdansk
Schwedt
Plock
Ownership/operatorship
infrastructure
Adamowo
of
newly
Leuna
Kralupy
Brody
Bratislava
EAOTC will be characterised by:
Odessa
Ability to receive and deliver crude oil at a number of
receipt and delivery points
Transport 5/10/20/30/40MTA of Caspian crude
Traverse through participating countries and the
Black Sea
Batumi, Kulevi, Supsa
Baku
Flexibility to deliver Azerbaijan, Kazakhstan and
other CA crude oil
constructed
MPR “Sarmatia” Sp z o.o.
GOGC
EAOTC PROJECT FEASIBILITY STUDY
• March 2008 – MPR “Sarmatia”
announced
the
tender
for
preparation of the EAOTC Project
Feasibility Study.
• April 14, 2008 – MPR “Sarmatia”
in presence of the Presidents of
Ukraine and Poland signed with
consortium of KBR/Granherne Ltd
(UK),
Purvin&
Gertz
(UK),
Greengate
LLC
(USA)
the
Agreement for the Feasibility Study.
• April 24, 2009 – Shareholders of
MPR “Sarmatia” approved the
Feasibility Study prepared by
Granherne consortium.
CASPIAN OIL RESERVES & PRODUCTION
Current Operations
Caspian Crude Oil Reserves
(billion barrels)
350
300
Kazakhstan
250
( 0.3 / 7 )
Uzbekistan
( 0.6 / 2 )
Georgia
( 0.3 / 0.6 )
Azerbaijan
(29 / 73)
( 7 / 39 )
Turkmenistan
( 0.6 / 38 )
Volume (MT/yr)
( 30 / 92 )
Russia
Potential
Expansion
200
150 Current
Spare
Utilisation
100
Reserves (billion barrels)
Proven
Source: BP Statistical Review of World Energy 2007
Possible
50
0
Caspian region has significant crude oil reserves
Azerbaijan and Kazakhstan will be key exporters
Exporting crude oil from the Caspian through EAOTC will
providechallenges and opportunities
Max.
Capacity
FUTURE PRODUCTION &TRANSPORTATION
• Caspian production
has doubled since
2000
Current
Systems
existing pipeline transportation system capacity
------
upgraded pipeline transportation system capacity
• Production is
expected to double
again by 2020 due to
strong increase in
Azerbaijan and
Kazakhstan
• Current oil pipeline
systems will reach
their ultimate capacity
in next five years.
New transportation
infrastructure will be
required then
PRINCIPAL FUNCTIONS
POTENTIAL EAOTC OPERATING JURISDICTIONS
Azerbaijan
Georgia
Black Sea
Operations
•
•
Manage and
coordinate activities of
operating companies
Ensure compliance
with applicable
environmental
standards/laws
•
Batching
•
Capacity use
management
Ukraine
Tariff
•
Establish tariff rates
•
Service as point of
contact with shippers
on all matters related
to use of system
•
Manage affairs with
host governments
EU/Poland
Services
Implementation
•
•
•
Manage development,
financing and
construction of Project
Manage and
coordinate expansions
and new pipeline
sections
EU/Lithuania
•
Firm long-term
capacity
•
Short term – “spot” –
capacity
•
Oil Trader
Agreements
Sarmatia will be able to act as a “One Stop Shop” in transportation of crude oil
from the Caspian to the European market.
PROJECT PHASING
First Phase
Expansion
Develop
Full Scale Implementation
Design
20 / 40 MTA
5 MTA
Operate
Build
EAOTC will have the flexibility to ramp up to a maximum 40 MTA
TRANSPORTATION – 5 MTA
Mazeikiai
Gdansk
Schwedt
Plock
Adamowo
Tie-in to
Southern Druzbha
Leuna
Kralupy
Brody
OBP operating South
to North
Existing oil tankers on
Caspian Sea
Bratislava
Pivdenny
Existing Port
Facilities
Kazakhstan
Oil Fields
Existing Port
Facilities
Rail Transport
across Azerbaijan
and Georgia
<73,000 dwt tankers
on Black Sea
Batumi, Kulevi,
Supsa
Baku
Azerbaijan
Oil Fields
TRANSPORTATION – 14,5 MTA
Mazeikiai
Gdansk
Schwedt
Leuna
Plock
Adamowo
Tie-in to Northern
Druzbha
Kralupy
Brody
Bratislava
Odessa
Batumi, Kulevi,
Supsa
Baku
TRANSPORTATION – 20/40 MTA
Mazeikiai
Gdansk
Schwedt
Leuna
Plock
New Pipeline Plock
- Gdansk
Adamowo
Tie-in to Northern
Druzbha
Kralupy
Upgraded Pipeline Adamowo - Plock
New Pipeline Brody - Adamowo
Brody
Additional pump and
storage capacity on OBP
Bratislava
Upgraded marine terminal at Pivdenny
New port at Kuryk
Odessa
New marine
terminal at Supsa
New larger
tankers on
Caspian Sea
New pipeline
Sangachal - Supsa
Batumi, Kulevi,
Supsa
New port at
Karadag
Baku
Full Scale Project implementation will optimise existing and new infrastructure
GRANHERNE SELECTED TARIFF RESULTS
5 MTA
Sarmatia tariffs compare
favourably with existing
alternative routes for
shippers entering system at
Baku
Sarmatia tariff for 2011
projected to be $1 less than
to Kralupy via BTC via
Trieste
40 MTA
Tariffs structured based on
“cost of service” model
Structured as function of
distance and volume
transported and the build out
phase
IRR projected to be 13-15%
over projection period
Tax harmonisation and preferential fiscal regime (where possible), as enjoyed by other
pipeline systems, will benefit user tariffs and shipper netbacks
Plans of Crude Oil Transportation
After 2021
More then 30 MTA
2019
20 MTA
2017
10 MTA
2011 - 17
Up to 5 MTA
POLAND/EU SUPPORT
According to the decision of Poland in July
2009 MPR “Sarmatia” was granted the
right to get 495 mln PLN (120 mln EURO)
from the funds of the Operational Program
Infrastructure and Environment (EAI) for
the construction of the Brody – Pock Oil
Pipeline.
In January 2010, MPR “Sarmatia” signed
the Preliminary Agreement with EAI
Program coordinator - Institute of Oil and
Gas from Krakow on Project preparation.
Brody – Plock Oil Pipeline Project
March 2010 – MPR “Sarmatia”
announced the tender to carry
on investigations according to
the Preliminary agreement with
INiG.
July
30,
“Sarmatia”
2010
–
signed
MPR
the
Agreement with the winner of
the tender – ILF Beratende
Ingenieure GmbH
Procedure of IAE Program
Decision of the European Commission on Project financing
Application Form for financing
Feasibility
Study
Routing
Report
Environ.
report
Public
support
notyfic.
Milestones of Brody – Pock Project
Milestone
Deadline
Submission of 1st edition of the application for
Project co-financing
10.12.2010
Completion of the Feasibility Study
10.12.2010
Planned date of obtaining environmental decision
31.10.2011
Submission of final application for Project cofinancing
20.12.2011
Technical Documentation
(Detailed Route Engineering)
30.09.2010
Construction Permit
31.03.2013
Finish of the project
31.12.2014
Brody – Plock Pipeline Project
 Two alternatives routes to be discussed (Base Case EAOTC Study)
Throughput:
Diameter:
Design Pressure:
Wall Thickness:
40 MTA
42”
60 barg
11.9mm
(acc. to API 5L)
Project Brody – Pock Implementation Time Schedule
Base case
OIL CONSUMERS
•Two Ukrainian refineries – Galychyna
and Naftohimik Prykarpattya confirmed
their interest in receiving up to 5 MTA
of the Caspian crude oil through
EAOTC
• MPR
“Sarmatia”
carries
on
negotiations with Polish refineries
concerning Caspian oil delivery
•In November 2009 SOCAR started the
regular delivery of Azeri Light crude oil
to the Ukraine. This is another
confirmation of the viability of EAOTC.
BENEFITS OF THE PROJECT
• creates an alternative, independent and reliable transportation route for the
crude oil from the Caspian Region to Europe;
• offers European customers an ability to deliver up to 40 MTA of high quality
Caspian crude oil per year;
• allows to increase the level of energy security in the participating countries and
EU, improves level of reliability of supply – demand balance for its customers;
• provides for integration of Ukrainian oil transportation system with Polish and
European ones increasing European Energy Solidarity and improves the
economic ties between the EU and countries participating in the Project;
• gives an opportunity to develop further cooperation and partnership between EU
and oil producing countries of Caspian Region.
EXPECTATIONS AND NEXT STEPS
• the continuation of strong political support for the EAOTC project
from the participating countries and EU institutions;
• support within the framework of EU Eastern Partnership Programme;
• the timely preparation of the Inter-Governmental and Host
Governmental Agreements concerning EAOTC;
• negotiations with potential shippers and consumers of crude oil.
• financial support from European funds, EBRD, EIB and other
international financial institutions.
Euro-Asian Oil Transportation
Corridor Project can significantly
improve the energy security of EU
and neighboring countries
68 Nowogrodzka St.,
02 – 014 Warsaw, Poland
tel. +48 22 5040770, fax +48 22 504 0771
sarmatia@sarmatia.com.pl
www.sarmatia.com