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

• the rehabilitation, rationalisation and modernisation of oil and gas inter-state transport and associated infrastructure, and the institutional aspects of inter-state oil and gas trade and transit
• the assessment of the feasibility of new oil and gas export routes.

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.

It is anticipated that the 1996 Programme will, in time, result in the identification of projects suitable for international financing. In the meantime there are situations where relatively small and well focused investments could considerably improve the conditions of international gas trade and transit. Among these investments are those that:

• are required to restore safe operations, avoid or clean up environmental damages and ensure continuous reliable operations of facilities and supply of oil and gas
• would be required to improve the accuracy and reliability of cross border trade. The projects being considered may include investments related to a combination of the following items:
• additions to existing facilities that would be required to improve operations (installation of scrapper traps, slug catchers) or repair, modernisation and upgrading of cross border facilities such as metering stations, gas quality control facilities and telecommunication facilities
• revamping or addition of oil and gas storage facilities with a regional role
• projects aiming at improving the protection of existing facilities (cathodic protection, revamping of existing or installation of new oil and gas treatment facilities)
• addition of telecommunications facilities
• provision of equipment and training to support more efficient maintenance programmes.

The main objectives of these projects would be to:

• take action that would make it possible to have a rapid and positive impact on critical aspects of the operation of existing systems and that would be replicable
• prevent further deterioration of existing facilities by either improving maintenance or adding facilities that reduce the risk of further damage to these facilities.

The scope of these projects will be based on detailed analysis made by Tacis-supported experts in close consultation with Tacis and the Working Group. Each project would include:

• selection of the site(s) where these facilities should be installed
• detailed engineering studies for both the equipment and the construction to support cost estimates on which actual financing could be based
• preparation of technical tender documents
• procurement and installation of equipment
• training of local staff in project preparation and management techniques to ensure efficient implementation
• monitoring and control during installation of equipment.

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 concrete measures be taken as early as possible so that bottlenecks that may prevent international oil and gas trade can be eliminated. This is even more important for gas trade for which there is no other alternative than the use of the existing inter-state gas transmission system.

Three projects are currently being identified for Central Asia, the Caucasus and Western NIS (Ukraine, Belarus and Moldova). Each project will be appraised independently and dealt with in a separate annex providing a detailed description and justification. Preliminary investigations as well as ongoing discussions with representatives of these countries indicate that the projects for each of the regions mentioned above could consist of:

Central Asia

Urgent rehabilitation of existing compressor stations that have exceeded their useful economic life as well as metering facilities. Provision of spare parts and overhaul of the facilities are required to ensure continuous service until the stations can be replaced by new ones. Provision of strategic priority equipments for gas quality and quantity control, infrastructure maintenance and infrastructure diagnosis.

The Caucasus

The projects likely to be considered include the rehabilitation of cross-border metering facilities or improvement of telecommunications. Provision of strategic priority equipment for gas quality and quantity control, infrastructure maintenance and infrastructure diagnosis.

Ukraine, Belarus and Moldova

The projects being considered include the rehabilitation of cross-border metering facilities or improvement of telecommunications. Provision of strategic priority equipments for gas quality and quantity control, infrastructure maintenance and infrastructure diagnosis.

Regarding their launch, these projects might de divided into regional sub-contracts as well as services and/or procurement contracts. Procurement of equipment should be done according to the Tacis regulations. These 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 will 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.