Ukraine and the Association Agreement: Stuck in a Traffic Jam

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Oil

PROHIBITION AND ELIMINATION OF UNAUTHORIZED TAKING OF OIL AND OIL PRODUCTS TRANSPORTED THROUGH THE TERRITORY OF UKRAINE (ARTICLE 275 OF THE ASSOCIATION AGREEMENT) Each Party shall take all necessary measures to prohibit and address the unauthorised taking of oil and oil products transited or transported through its area.

In 2014-2017, the special units of PJSC Ukrtransnafta, which performs functions to eliminate unauthorized extraction of oil and oil products transported through the territory of Ukraine, revealed more than 150 illegal pipeline tie-ins. The market value of stolen oil exceeds UAH 150 million. The greatest number of encroachments on state ownership was recorded in the Zakarpattia, Lviv and Zhytomyr regions. However, despite the increasing number of cases, in which organized crime groups use modern methods and equipment for the unauthorized withdrawal of oil (horizontal directional drilling, trenchers, high pressure hoses, special rubber tanks, etc.), systematic work is not being carried out regarding this issue. In early 2016, NJSC Naftogaz of Ukraine initiated increased liability for damage to main oil pipelines and developed a concept for guaranteeing their safety, which would include, in particular, the introduction of modern oil metering systems and systems for early detection of cases of interference with the operation of main oil pipelines. However, the relevant regulatory documents were not developed.

Summary Improving the situation of counteracting unauthorized taking of oil and oil products transported through the territory of Ukraine is possible only under the conditions of an integrated and coordinated approach by the competent public authorities, which is currently absent.

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