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Ukraine, ChevronTexaco to Discuss Pipeline

October 13, 2003

KIEV, Ukraine (AP) _ Ukraine plans talks with American oil powerhouse ChevronTexaco this week that could seal a deal to pump Caspian Sea crude to Europe via a hotly contested Ukrainian pipeline, closing out Russian competitors, an official said Monday.

If the sides come to terms in London, Ukraine’s 674-kilometer (419-mile) pipeline stretching from the Black Sea port of Odessa to Brody in western Ukraine could be filled with ChevronTexaco oil by the end of the year, said Mykhaylo Honchar, an adviser to Oleksandr Todiychuk, Ukraine’s chief negotiator on Caspian Sea oil transportation.

Annual supplies could exceed 9 million metric tons, the equivalent of 180,000 barrels a day, he said.

The pipeline has remained largely idle for two years amid bickering over whether to accept Russian oil _ which flow from Brody to Odessa for loading onto tankers _ or oil from the Caspian Sea area, which would flow the other way.

An agreement with ChevronTexaco, which controls one of the world’s largest oil deposits in Kazakhstan, would scotch a competing Russian deal.

Last week, Ukraine’s pipeline operator pressed the government to accept an offer from Russian-British giant TNK-BP to start pumping 450,000 tons of its oil through the pipeline to Odessa. TNK-BP has also promised to supply up to 9 million metric tons for the pipeline.

The government has said it won’t decide the issue until January.

Russian and Caspian suppliers have been pressuring Ukraine to decide on the pipeline’s direction for months, seeking to boost exports while oil prices are high. Analysts say whoever gets oil into the pipeline first will enjoy greater influence over a decision on permanent use.

The expected ChevronTexaco-Ukraine talks come days after U.S. Vice President Dick Cheney discussed the pipeline with Ukraine’s Prime Minister Viktor Yanukovych.

Washington has strongly opposed running Russian oil from Brody to Odessa, claiming it will increase Ukraine’s dependence on Moscow and chances of a spill in Turkey’s clogged waterway.

Ukraine-U.S. relations have warmed considerably since President Leonid Kuchma agreed to send some 1,650 peacekeepers to join a Polish-led stabilization force in Iraq.

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