Objectives

The 1996 INOGATE technical assistance Programme, addresses priority projects dealing with:

• the rehabilitation, rationalisation and modernisation of oil and gas Interstate transport and associated infrastructure, and the institutional aspects of Interstate oil and gas trade and transit
• the assessment of the feasibility of crossing the Caspian Sea with oil and gas pipelines

These are essential elements of a Programme whose objectives are to promote the regional integration of the oil and gas pipeline systems, and to facilitate oil and gas transport both within the region and towards the export markets of Europe. These projects have been identified as priority projects by Tacis and the Working Group who recognise that they are long lead projects that had to be launched early in the programme in order to avoid delays in the subsequent phases.

The 1997 INOGATE projects include (i) urgent investments required to maintain oil and gas interstate trade and prevent disruptions to operations or to the environment, (ii) the design and implementation of hydrocarbon management policies for oil and gas producing countries and (iii) institutional studies about alternative organisational structures of oil and gas transmission companies and of trading organisations with particular emphasis on those structures that would facilitate mobilisation of financial resources.

In this regard it is important to assess alternative land routes that could be used for Interstate trade and oil and gas export to Europe through pipelines crossing the Caspian Sea.

The feasibility study of crossing the Caspian Sea with oil and gas pipelines is primarily aimed at assessing the physical and economic conditions under which such crossing could be realised and form part of new oil and gas export routes that would supplement existing ones.

Further complementary studies are required to assess the alternative routes, down stream of the crossings, that could be used for oil and gas exports to the markets of western, central and eastern Europe. This should be the objective of a project to be implemented under the 1997 Tacis Interstate programme.

This project would build upon the preliminary conclusions of the feasibility study referred to above and would look into all possible land and marine routes or a combination of both, that could transit the projected volumes of oil and gas, propose alternative transit schemes and assess their relative technical, environmental and economic value.

The project will assess the feasibility of transporting oil and gas coming from the pipelines crossing the Caspian Sea to regional as well as export markets:

• using existing infrastructure, after rehabilitation. This assessment will be based on projections of future volumes of interstate trade and exports as well as their projected timing
• creating new routes to supplement existing ones, as well as creating supporting infrastructure such as storage, dispatching centres and associated telecommunications

The study will identify possible corridors, assess the cost of using existing facilities or of building new ones and recommend a development strategy that would be compatible with the expected volumes of transit and export as well as with the projected development of regional and export markets, taking into account projects already identified or planned.

Institutional appraisal

The proposed INOGATE technical assistance Programme aims at assisting the New Independent States in restructuring cross border oil and gas trade and in mobilising the considerable financial resources that are required to modernise existing systems, rationalise the use of existing facilities and ensure their safe and environmentally sound operation.

It is an essential element in the preparation of technically and economically viable projects that need to be appraised and implemented within a regional framework. Within this framework it is important that all aspects related to the technical, economic financial and institutional viability of projects be addressed as early as possible to ensure that investment projects are not delayed and to acquaint financial institutions with the INOGATE Programme and mobilise their financial support.

The detailed scope of the project will be defined by experts in close co-operation with the partner countries and will take into account previous studies and other technical assistance projects financed by Tacis or other agencies.

The projects would be implemented through the oil and gas companies and authorities of the countries concerned. They would be coordinated by the Working Group whose main function would be to ensure that all non-technical conditions related to the feasibility of the proposed investment projects are met and that issues requiring the cooperation of two or more countries involved are promptly resolved.