OIL MARKET SITUATION STIMULATES UKRAINE’S INTEREST IN AZERBAIJANI OIL.

Senior Ukrainian officials have in recent days strongly reaffirmed their country’s interest in importing Azerbaijani oil and transiting it to Central and Western Europe. Ukrainian Prime Minister Valery Pustovoytenko carried these proposals to Baku. The Ukrainian Ambassador to the United States, Yuri Shcherbak, also discussed these plans in Washington with Jan Kalicki, the U.S. government’s policy coordinator on both Caspian energy issues and trade with newly independent countries. The plan envisages the transit of Azerbaijani oil to Georgia’s Black Sea coast; expansion of the recently established ferry line to transport the oil from Poti to Odessa; processing part of the oil at Ukrainian refineries; and piping another part to the Polish border through the Odessa-Brody line, which can be branched into the Polish pipeline system for further transport westward. (Eastern Economist Daily, Ukrainian agencies, May 8 through 11)

The Ukrainian interest is not new. Its current surge can be traced to two factors. First, the slow progress toward finalizing the Azerbaijan-Turkey pipeline project against the background of declining oil prices, which caused hesitation among some investors. Second, the recently ascertained need to double the diameter of the Azerbaijan-Georgia pipeline in order to make it financially profitable. Such an increase in the throughput capacity would accommodate oil destined for Ukraine. Fulfillment of the plan would reduce Ukraine’s dependence on Russian oil.

UNCERTAIN FATE OF THE AIRCRAFT CARRIER VARYAG.