The wider objective of the Tacis INOGATE programme is to identify priority measures with regard to crude oil, oil products and gas transportation to Europe and related transportation systems between producing areas and consumer markets.

The tasks of the INOGATE 96.02 study emphasise two main parts, namely Part A and B, within which are a number of interdependent issues and will thus be carried out simultaneously.

Part A - Rehabilitation of cross border oil and oil products supply systems.

Part B - Rehabilitation of the main crude oil and oil export lines to Europe, including the Druzhba Pipeline.

Both parts of the study are designed to cover the acquisition, critical review and upgrading of relevant data, the identification of current bottlenecks and, based on these first steps, the definition of rehabilitation / modernisation requirements for infrastructure with regard to crude oil and oil products transportation networks (with the Druzhba pipeline as a key issue), including storage and refining, in the ten Participating Countries. The above activities aim at the identification and preparation of rehabilitation plans and investment projects for short, medium and long term priorities, which will support the governments of the beneficiary countries in their own decision making process to optimise the respective countries' hydrocarbon industries.

Participating Countries

The Participating Countries in this project are 10 of the Newly Independent States (N.I.S), namely Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Turkmenistan, Ukraine and Uzbekistan.

Project Objectives

The project shall meet the following main objectives :

• to assess the market for crude oil and oil products in the countries involved and their neighbours, in order to identify, in close co-operation with beneficiary countries, the facilities required for transportation and refining of crude oil and storage, transport and distribution of refined products,

• to assess the capabilities of existing facilities to meet projected requirements under safe and efficient conditions, and assess the need for new transport, distribution and storage systems. Particular attention will be paid to the Druzhba oil pipeline and the ability to provide safe and reliable transit of crude oil,

• to compare the economics of crude oil and refined products pipeline transportation with alternative modes (railways, river and sea shipping),

• to prepare rehabilitation, rationalisation and modernisation guidelines,

• to identify priority projects suitable for international financing and prepare terms of reference for feasibility and other studies to prepare those projects to the stage of international financing,

• to train key staff in audit of facilities and project preparation techniques.

The study is an essential element in the preparation of technically and economically viable projects that need to be appraised and implemented within a legal framework.

Method of Working

The study will be developed following a first phase of collection of relevant information performed by teams deployed in the Participating Countries and with a substantial involvement of local subcontractors.

After a validation of the data collected, it will be assessed and technical, financial and environmental evaluations shall be carried out of the pipeline, railway and waterway transportation systems.

These in turn will lead to reports covering the various objectives of the study.

Planned Outputs

• Compilation of a text-type project database covering the market for crude oil and oil products in the beneficiary countries as well as the existing and future transportation networks,

• Preparation and organisation, in close co-operation with local experts, of audit programmes related to liquid export pipelines (mainly Druzhba systems in Belarus and Ukraine), transportation by rail, road, ship, refineries and storage facilities, evaluation and review of export transportation systems from the Caspian Sea to western markets

• At the same time preparation of a list of criteria concerning the economic viability/feasibility for short, mid and long term measures to be proposed to the beneficiaries during a workshop at midpoint of the project to be held from 13-17 June 1998 in Hanover.

• Execution of these audit programmes and assessment of technical / M&R and organisational conditions with emphasis on:

• urgent actions (to eliminate environmental and failure problems);

• immediate capacity improvement;

• mid- and long-term projects with identifiable and projected benefits.

• Analysis of audit results and listing of priority projects as the basis of a rehabilitation, modernisation and, if required, new construction programme, always taking into consideration economic feasibility, definition of further investment plans to be implemented by the Beneficiaries on the basis of the outcome of detailed analyses.