KIEV, Oct. 28 - Azerbaijan will increase supplies of Caspian crude to Ukraine, Azerbaijani President Ilkham Aliyev said Thursday after a meeting with his Ukrainian counterpart Viktor Yanukovych in Kiev.

Azerbaijan, already the second-largest supplier of oil to Ukraine after Russia, has been steadily delivering its crude for the past 12 months.

“We already increased oil supplies to Ukraine. This year more than 1 million metric tons of Azeri oil was supplied to the Ukrainian market,” Aliyev said. “In the future we hope to increase the supplies, as we plan to increase extraction of Azeri oil.”

The Azerbaijani oil supplies to Ukraine are underway since late 2009. The shipments are made by oil tankers to an oil terminal in Odessa, after which the oil is moved by TransDniprian oil pipelines to UkrTatNafta, Ukraine’s largest oil refinery by capacity.

The Kremenchuk-based UkrTatNafta in October 2009 signed a long-term agreement with SOCAR, Azerbaijan’s state oil company, for the supplies of 240,000 mt of crude oil monthly.

The agreement anticipates that the oil supply contract with SOCAR will be automatically continued each next year, representing the long-term commitment for Caspian Sea oil imports by Ukraine.

Azerbaijan supplied 1.05 million metric tons of oil to Ukraine in January through September, compared with about 780,000 mt delivered in 2009.

“It is very important that we receive [Azeri] crude for our oil refineries,” Yanukovych said at the press conference. “It is essential to the economy of Ukraine.”

Yanukovych also said that the Azeri crude will be play a significant role when Ukraine reverses its Odessa-Brody oil pipelines, allowing the Azeri crude, to reach European markets.

He said the government will work hard to reverse the oil pipeline, which is currently moving Russian oil for exports via Odessa oil terminal.

Azerbaijan, a major producer of Caspian oil, is one of the key countries that are expected to supply crude oil that will go from Odessa to Brody and further to markets in Poland and the Czech Republic.

Alieyev said that Azerbaijan, as part of the Odessa-Brody reversal project, may also become a gate for its neighbor Caspian Sea countries, such as Kazakhstan and Turkmenistan, to supply crude oil to Ukraine and further to Europe.

“This project will also facilitate better integration of the Black Sea and Caspian Sea regions,” Aliyev said. “We create another very reliable energy route that will link the oil-rich Caspian Sea with markets of Ukraine, with markets of Europe.“

“This will be a large-scale energy cooperation that will bring benefits to all,” Aliyev said. “I believe that the year of 2010 was a turning point. We see it only as a good beginning of a long-term cooperation.”

Azeri oil supplies would complement supplies of Venezuelan crude that are also supposed to be moved through the reversed Odessa-Brody to Belarus.

Earlier this month Ukraine has agreed in principle to reverse Odessa-Brody pipeline to start massive shipments of Venezuelan crude to Belarus.

Ukraine plans to make a test-run shipment of 80,000 mt of Venezuelan crude in November to an oil refinery in Belarus, according to energy and fuel minister Yuriy Boyko.

Venezuelan President Hugo Chavez, following talks with Yanukovych earlier this month in Kiev, said his country plans to move up to 10 million metric tons/year of crude to Belarus.

At least half of that crude is expected to go through Ukraine, while another half will probably reach Belarus via one of Baltic ports, according to first deputy prime minister Andriy Kliuyev.

The 674-km long Odessa-Brody, capable of moving up to 12 million mt of oil annually, was built in August 2001 to help Ukraine diversify imports of crude oil away from heavy dependence on Russia.

However, the pipeline stayed idle until September 2004, when Ukraine had accepted Russia’s proposal to use the route for moving its crude from Brody to Odessa for exports via Pivdenniy oil terminal.

In 2008 Azerbaijan was ready to supply up to 5 million mt/year of Caspian Sea oil via Odessa-Brody, but the project had failed to materialize. (sb/ez)