The INOGATE 96.07 project addresses those institutional, legal, economic and financial issues that will support, to the extent possible, the development of a common or compatible framework for oil and gas interstate trade and transit, by introducing multilateral institutional and operational concepts. It is desired that in the course of this project concrete proposals will be made regarding further support from INOGATE to the setting-up of operational structures and the promotion of associationism amongst the Beneficiary Countries.

Within this context, INOGATE 96.07 project will offer advice as required by the INOGATE Beneficiary governments and organise relevant workshops.

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, on the institutional support for the rationalisation of the gas and oil trade and transport system among the INOGATE countries - and also with the West, has as the ultimate goal:

The Uninterrupted and Efficient Flow of Oil and Gas
among the INOGATE Countries and finally to Europe.

In the short term, the aims are the conclusion, or adaptation, of national and international agreements supportive to the above, which will enable western financing of the necessary investments and the creation of rationalised operations. This will have as a result:

The strengthening of the economy of INOGATE countries
and therefore their development.

Method of Working

In order to achieve the realisation of the above aims, the contribution of the present project will be to provide:-

• Assistance for a rapid development of the institutional framework covering oil and gas trade and transport, which will ensure that conditions required by investors, operators of pipelines and the capital markets (of Europe) are met.

• Assistance for the internationalisation of the effort through the introduction of the concept of a multilateral operating company.

• Help in the establishment of a Credit and Transaction Insurance Organisation, or whatever institutions are considered necessary and will be acceptable by all parties concerned in the course of the proposed work, to facilitate oil and gas transactions as well as oil - gas related trade agreements.

• A new form of associationism will be encouraged, and hopefully generated, among the Beneficiary States - to be founded on their common interest.

Furthermore the following key issues will be carefully tackled:

• Multilateral Co-operation: The multilateral co-operation in the Energy Sector in the region must advance, by seeking common economic goals, unaffected, to the extent possible, by other considerations.

• Generating Legislation: Oil and gas transport projects need solid legislation for investment protection and associated requirements must be enacted and guarantees must be found and offered to attract financing. It will be one of the principal actions of the contractor to indicate, and through technical assistance assist, the Beneficiary States to adapt the legislation and establish, if necessary, regulatory bodies to attract this type of investment from the West.

• Barter: A progressive transformation of barter trade into monetary terms is required, in other words a ⦣128;˦#156;dollarisation⦣128;™ of barter agreements. Only then the Beneficiary States will enter the realities and procedures of the international market economy and, through this, the necessary impetus will be given to their full production potential.

• Training: In the Beneficiary States, training for hydrocarbon contract negotiations is required. For this training to be successful and produce sustainable benefits, it must be an on-going process. The contractor addresses this issue with a methodology that ensures initial development of skills, continuous education and support through the creation of the appropriate data bases.

The whole project is organised around four workshops. Each workshop will be of four days duration and will be attended by 3 experts form each Beneficiary Country. During each workshop legal, regulatory, financial and technical aspects of the project will be covered. The names of the participants will be provided in co-operation and with the approval of TACIS and the Beneficiary States.

The work is carried out by two teams of experts one, the Mission Team, who will be visiting the Beneficiary Countries, and another one, the Home Team, who will be processing all the data.

Planned outputs

• Analysis of the current legislative and institutional framework for the transport of hydrocarbons in each Beneficiary Country.

• Analysis of the current financial institutions and the legal framework in place in each Beneficiary Country, to assist investment in the field of transport of hydrocarbons.

• Analysis of the current trade system between the Beneficiary states especially the barter agreements in place.

• Proposals for generating legislation and the development of the institutional framework for the transport of hydrocarbons in each Beneficiary Country, based on applicable ECT principles and world-wide accepted practice.

• Proposals for generating legislation and the development of the institutional framework for the founding of organisations to facilitate the trade between the Beneficiary Countries, mainly a progressive transformation of barter trade into monetary terms .

• Training: The contractor will prepare workshops and material with a methodology that ensures initial development of skills, continuous education and support through the creation of the appropriate data bases.