Polish and Ukrainian officials confirmed Friday plans to form a join venture to extend a Ukrainian oil pipeline through Poland that could eventually carry Caspian crude to Western Europe.

The joint venture, between Poland's state-owned PERN, and Ukraine's Ukrtransnafta, is to start construction on the 500-kilometer extension the second half of this year.

The project, expected to cost more than $500 million, is to be completed by the end of 2005.

Initially the pipeline is to extend from the Polish-Ukrainian border to the central town of Plock, 100 kilometers west of Warsaw.

Eventually organizers hope to continue the line to the Polish port city of Gdansk, where tankers could carry oil to western and northern Europe.

Polish Deputy Prime Minister and Infrastructure Minister Marek Pol told reporters Friday that the joint venture was open for investors from other countries, including U.S. firms.

"Natural partners for the project would be U.S. companies with access to Caspian oil fields as well as firms from countries which could benefit from supplies," Pol said.

Poland is heavily dependent on supplies of Russian oil and the pipeline would allow it to diversify supplies.

Ukraine built the 667-kilometer existing pipeline linking the Black Sea port of Odessa with Brody in western Ukraine in 2001, but it has remained largely idle amid bickering over whether it should carry Russian or Caspian oil.

Washington strongly opposes running Russian oil from Odessa to Brody, claiming it will increase Ukraine's dependence on Moscow and chances of a spill in Turkey's clogged Bosporus strait.

The Ukrainian government is expected to make a final decision on direction of the pipeline's flow by Feb. 1.

(The Moscow Times 19.i.04)