ROMANIA THINKS BIG ON CASPIAN OIL.

Kazakh President Nursultan Nazarbaev paid an official visit to Romania on September 20-22. His talks with President Emil Constantinescu and Prime Minister Radu Vasile centered on recent Romanian proposals to import and transit massive amounts of Caspian oil. Bucharest has hit upon two ideas.

The first would link Romania to Russia’s LUKoil and Italy’s Agip companies, which are partners in Caspian oil projects. This plan also reserves a piece of the action for Serbia. It envisages transporting Caspian oil to Russia’s port Novorossiisk, thence across the Black Sea to Romania’s port Constanta and further westward via Romania and Serbia to Italy. The other proposal envisages that Romania would itself refine Caspian crude and export the oil products. The country’s oil-processing industry is centered on the Black Sea coast.

Romania has inherited from the communist era a huge oil refining capacity of 36 million tons annually, sixfold the country’s own crude output. Once geared for export, that refining industry now stands mostly idle and would be difficult to privatize even if the government intended it. Bucharest hopes to use Caspian oil to resurrect the industrial albatross on the Black Sea. LUKoil recently acquired a controlling stake in a Romanian refinery in another part of the country.

As regards east-west transit, Romania lacks the ways and means. Transporting the oil by barge on the Danube would maximize the costs of the operation, though it would make work for that other communist-era relict, the Black Sea-Danube Canal. Rail transport is similarly expensive and can only handle small amounts. On the other hand, laying an east-west pipeline across Romania would necessitate investment funds that are not in sight.

Nazarbaev for his part suggested using Russia’s Volga-Don Canal as a relative shortcut for transporting Kazakhstani oil to Romania. This scheme looks as far-fetched as Bucharest’s proposals. Even if that canal is used, the route via Russia is longer and less reliable compared to other options. Nazarbaev and his hosts also discussed Romanian participation in manufacturing drilling equipment for Kazakhstan and in building an oil-processing plant in Kumkol (Kyzyl-Orda region). Nazarbaev proceeded yesterday from Romania to Italy (Rompress, Russian agencies, September 21-22).–VS

GOVERNMENT DEBATES DRAFT INDUSTRIAL POLICY.