Page 6 - EurOil Week 19 2021

EurOil COMMENTARY EurOil

Kanal Istanbul map
(Source: Wikimedia)

vessels, like aircraft carriers, in and out of the 15 years, while the tonnage of vessels passing
Black Sea, and for longer periods. through the Bosporus has risen by 30%, the
Just how sensitive such a change would be was number of vessels has fallen by 43%. The number
recently thrown into sharp relief by the height- of oil tankers has decreased by 31%.
ened tensions resulting from Russia massing At most of the fields that now produce crude
troops on the border of Ukraine and the United transported on the Black Sea, output is broadly
States announcing in response that it would send in decline. Only at two oil fields in Kazakhstan is
two warships into the Black Sea. output expected to rise significantly, while global
Although Washington subsequently back- demand for oil is generally projected to decline
tracked and did not deploy the vessels, and as more countries take steps to reduce carbon
Russia is pulling back its forces, the episode dioxide emissions to combat climate change.
illustrated the kind of leverage Ankara would Further, there are options other than Black
have with those two powers, along with other Sea pipelines to transit crude from east to west.
states, if it were no longer bound by the Mon- Much oil from the Caspian basin already goes
treux Convention. to refineries in Bulgaria, Romania, and Ukraine.
Ukraine President Volodymyr Zelensky Oil consumption in Bulgaria and Romania has
visited Istanbul amid the crisis on April 10. His been growing, a trend that could see more crude
meeting with Erdogan took three hours rather remaining in the Black Sea basin without need-
than the originally scheduled one, and Erdo- ing to be transited through the straits.
gan’s subsequent comments suggested that There are also pipelines that allow transit to
naval security was on the agenda: He called for a bypass the Bosporus.
peaceful, diplomatic resolution to the rising ten- Some Caspian oil arriving at the Black Sea
sions between Russia and Ukraine and declared goes to Belarus, via the southern section of the
that Turkey’s “primary goal is that the Black Druzhba pipeline network through Ukraine.
Sea continues to be a sea of peace, serenity and The line normally carries Russian crude south
cooperation.” to the Black Sea, but has been reengineered to
allow for reverse flow, and now periodically
“Crazy Project” sends crude from Azerbaijan to Belarus.
The public rationale for the project, though, has Also carrying Caspian oil away from the
little to do with security. Its ostensible logic is Black Sea is the Baku-Tbilisi-Ceyhan (BTC)
instead rooted in the Bosporus’s key role in inter- pipeline, which transits mainly crude from
national trade. Azerbaijan, direct from the Caspian to the Med-
Currently, crude oil from Russia, Azerbaijan iterranean. Commissioned just 16 years ago at a
and Kazakhstan arrives at the Black Sea via five cost of $3.9bn, it has an expected working life of
separate pipelines from central Russia and the 40 years. But since 2011, annual flows through
Caspian Sea, where it is loaded onto tankers. the pipeline have never averaged more than 72%
Turkish officials have argued that flow of its capacity of 1mn barrels a day. For the past
through these pipelines is going to rise, which year, it’s only been operating at 57% capacity.
would lead to increased tanker traffic through With only minor modifications, BTC’s capac-
the Bosporus. ity could be further increased, which with exist-
But it’s not clear that this is likely, or if so, for ing unused capacity would enable it to carry a
how long. significant part of any future increase in Caspian
Data produced by Turkey’s Directorate oil transit which would otherwise have passed
of Maritime Affairs shows that, over the past through the straits.

P6 www. NEWSBASE .com Week 19 13•May•2021