Page 7 - MEOG Week 19 2021

MEOG PIPELINES & TRANSPORT MEOG

“Crazy Project” and internationally. But even as the contracting
The public rationale for the project, though, has and construction of the canal is set to start, the
little to do with security. Its ostensible logic is basic business case for it is not clear: Why would
instead rooted in the Bosporus’s key role in inter- shippers opt to pay a transit fee to use a canal
national trade. when the Bosporus is free?
Currently, crude oil from Russia, Azerbaijan Turkish officials insist that the canal will offer
and Kazakhstan arrives at the Black Sea via five a safer option for transit than the Bosporus, and
separate pipelines from central Russia and the have suggested that the canal would allow ship-
Caspian Sea, where it is loaded onto tankers. pers to avoid the delays from which Bosporus
Turkish officials have argued that flow traffic occasionally suffers.
through these pipelines is going to rise, which While it’s true that navigation through the
would lead to increased tanker traffic through planned canal will not entail the same tricky
the Bosporus. But it’s not clear that this is likely, 90-degree turns that the Bosporus requires, acci-
or if so, for how long. Data produced by Turkey’s dents in the straits are nevertheless extremely
Directorate of Maritime Affairs shows that, over rare. The last major incident involving a tanker
the past 15 years, while the tonnage of vessels – a Russian fuel oil tanker, not a super tanker car-
passing through the Bosporus has risen by 30%, rying crude oil – was back in 1999, before a radar
the number of vessels has fallen by 43%. The vessel transit system (VTS) was installed to track
number of oil tankers has decreased by 31%. vessels and help aid safer navigation.
At most of the fields that now produce crude In the 19 years that the VTS has been in oper-
transported on the Black Sea, output is broadly ation there have been no major incidents involv-
in decline. Only at two oil fields in Kazakhstan is ing tankers and no oil spills at all.
output expected to rise significantly, while global Delays are not uncommon on the Bosporus,
demand for oil is generally projected to decline which can be closed due to bad weather or the
as more countries take steps to reduce carbon passage of unusually large vessels which require
dioxide emissions to combat climate change. traffic to be restricted to one direction only. But
Further, there are options other than Black they rarely last more than a few hours and the
Sea pipelines to transit crude from east to west. canal, if built, would likely face similar limita-
Much oil from the Caspian basin already goes tions. And the recent incident on the Suez Canal,
to refineries in Bulgaria, Romania, and Ukraine. which was blocked for six days after a container
Oil consumption in Bulgaria and Romania has vessel ran aground, demonstrates that even
been growing, a trend that could see more crude the best managed canals are not immune from
remaining in the Black Sea basin without need- accidents.
ing to be transited through the straits. The canal will thus offer little advantage
There are also pipelines that allow transit to to vessels travelling in either direction and it
bypass the Bosporus. appears increasingly likely that, to encourage
Some Caspian oil arriving at the Black Sea ships to use it, Ankara will have to direct traffic
goes to Belarus, via the southern section of the there one way or another.
Druzhba pipeline network through Ukraine. It could revoke the Montreux Convention
The line normally carries Russian crude south entirely, or more likely introduce new restric-
to the Black Sea, but has been reengineered to tions on Bosphorus traffic that would have the
allow for reverse flow, and now periodically practical effect of reducing traffic through the
sends crude from Azerbaijan to Belarus. straits without altering the convention.
Also carrying Caspian oil away from the Black Such a move wouldn’t be unprecedented. In
Sea is the Baku-Tbilisi-Ceyhan (BTC) pipeline, the mid-1990s, Turkey required all vessels pass-
which transits mainly crude from Azerbaijan, ing through the Bosporus en route to or from a
direct from the Caspian to the Mediterranean. Turkish port to employ a Turkish pilot for the
Commissioned just 16 years ago at a cost traverse.
of $3.9bn, it has an expected working life of 40 While large tankers do opt to use pilots, most
years. But since 2011, annual flows through the other vessels transiting the Bosphorus choose
pipeline have never averaged more than 72% not to incur the expense.
of its capacity of 1mn barrels a day. For the past Ankara also says it will not allow tankers car-
year, it’s only been operating at 57% capacity. rying liquified natural gas (LNG) to transit the
With only minor modifications, BTC’s capac- Bosporus, a stance that technically violates the
ity could be further increased, which with exist- Montreux Convention but which has never been
ing unused capacity would enable it to carry a tested given that no Black Sea littoral state has an
significant part of any future increase in Caspian LNG import or export terminal. But it’s also not
oil transit which would otherwise have passed clear that it would allow LNG tankers to use the
through the straits. canal, given that it will be narrower and poten-
tially just as dangerous as the Bosphorus.
To what end? In any case, the government may come up
Erdogan has made no secret of the fact that he with new rules designed to nudge shippers
views Kanal Istanbul as a project of great per- toward the Kanal, whether they like it or not.
sonal importance that he intends to see com- Erdogan may see the canal as helping ensure
pleted despite mounting criticism over the the Black Sea “continues to be a sea of peace,
potential political, military, commercial and serenity and cooperation.” But his neighbours
environmental impact, both from within Turkey may take more convincing.™

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