Ukraine has 395 million barrels of proven oil reserves, the majority of which are located in the eastern Dnipro-Donets basin. Although Ukraine has made efforts at exploration, particularly in its sector of the Sea of Azov, oil production has remained relatively flat since independence.
Consumption, on the other hand, has fallen dramatically, from 813,000 barrels per day (bbl/d) in 1992 to 296,000 bbl/d in 2002. Despite this decline in consumption, Ukraine remains highly dependent on imported oil, most of which comes from Russia with lesser amounts coming from Kazakhstan. In 2002, net oil imports totaled roughly 212,000 bbl/d, representing 70% of consumption.
Oil Transit
Ukraine's geographic location makes it an ideal corridor for oil and natural gas to transit from Russia and the Caspian Sea region to European markets. Most of the oil transited via Ukraine is Russian oil, and is sent through the 1.2-million-bbl/d Druzhba pipeline, the southern fork of which runs through Ukraine.
Ukraine also hopes eventually to become a transit center for oil from the Caspian Sea region, which is expected to increase significantly over the decade. The leading potential conduit for this oil in Ukraine is the Odessa-Brody pipeline, which was completed in 2001 and extends from Ukraine's Black Sea port of Odessa northward to the city of Brody. The pipeline was initially intended to load Caspian Sea oil from the newly completed Black Sea marine terminal, Pivdenniy (or Yuzhniy), and carry it northward through the Ukrainian system and on to Europe with an initial capacity of roughly 300,000 bbl/d. However, for roughly two years the pipeline remained mostly dormant. Ukraine finally acceded in summer 2004 to significant pressure from Russia and agreed that the pipeline should be used in reverse, to move oil from Russia southwards to tankers in the Black Sea and shipped onwards to world markets. Whether the Odessa-Brody pipeline will be permanently reversed, as per the Russian proposal, remains unknown at the present time, as the Ukrainians have been noncommittal.
