Balkanalysis.com editor’s note: In Turkey, issues of public safety, disaster response and structural capabilities were brought to light again in the recent tragic earthquakes in the eastern Anatolian town of Van. However, these issues are also very relevant when it comes to maritime traffic in the heavily congested Bosporus and Dardenelles Straits. In the following detailed overview, Balkanalysis.com Energy Sector Editor Vlad Popovici discusses the problem and possible solutions to it, as well as the negative effect vessel congestion is having not only for safety and the environment, but for industry profit too.
When new restrictions concerning the nighttime vessel transit through the Turkish Straits were introduced by the Turkish authorities in late September 2011, a mini-crisis ensued. Because of transit delays apparently caused by the new regulations, the oil tanker rates in the Mediterranean soared and some shipping companies temporarily reduced their services in the region. This is just another crisis in a long list of similar recurrent events that point to an issue that is still looking for a long-term sustainable solution – the rapidly growing energy transit through the Straits that increases the environmental, public safety and economic risks for one of the busiest global shipping lanes. Although alternatives have been proposed, it looks like nothing will change for a while. But the clock is ticking.
A Strategic Location
The Black Sea’s only connection to the world’s oceans is through Turkey’s Bosporus Straits and the Sea of Marmara. The Black Sea is connected by the Bosporus – a 30 km strait, in places as narrow as 700 m – to the Sea of Marmara, which in turn is connected by the Dardanelles – almost 70 km long and as narrow as 1,200 m – to the Aegean Sea.
Istanbul, the most populous city in Turkey, straddles both sides of the Bosporus. The Turkish Straits are also considered the geographical border between Europe and Asia. Because of their strategic location, the Straits have historically been a critical trade route between Europe and Asia, but also the focal point for numerous conflicts since Antiquity.
The 1936 Montreux Convention Regarding the Regime of the Turkish Straits gave Turkey control over the Bosporus and the Dardanelles and guaranteed the free passage of civilian vessels during peacetime. The Convention remains in force today, although with amendments – for example, it was amended in 1982 to allow Turkey to close the Straits (in both peacetime and wartime). Subsequently, the Turkish authorities have adopted other regulations aimed at improving transit safety in the Straits, without touching the free passage principle of the Convention.
Restrictions in the Straits
At a time when the global shipping industry seems to be in the middle of a worse downturn than during the 2008 financial crisis, caused by an oversupply of vessels coupled with increased vessel operating costs and reduced global demand for goods as a consequence of the sluggish global economic growth, Energia.gr reported in mid-October 2011 that the tanker freight rates in the Mediterranean soared almost 30% in just one week.
The cause of the increased tanker freight rates was, according to a Platts report, the introduction by the Turkish secretariat for maritime affairs of new traffic regulations stipulating that vessels of over 200 meters carrying dangerous goods – including container and roll-on/roll-off ships – would only be allowed to pass through the Bosporus and the Dardanelles during daylight hours, which is when most crude tankers also travel through the straits.
The increased daylight traffic has caused average transit delays for oil tankers to go up from 1 day at the introduction of the new regulations in late September 2011 to 7 days two weeks later, delays that in turn caused the freight rates to soar.
Due to the traffic backlog created by the new rules, as well as to the strong pushback from the shipping industry and customers, the regulations were modified in mid-October to allow large vessels carrying certain dangerous goods to pass through the straits during the night in order to ease some of the congestion. As a result, the oil transit tanker delays dropped to 4-5 days and the tanker freight rates eased by as much as 16% only several days after the regulations’ reversal.
The mini-crisis in October 2011 is just another one in a long list of similar events that have either slowed down the Turkish Straits transit or completely shut it down. At about the same time that the above nighttime restrictions were announced, the Bosporus was closed to all transit passages during 28-29 September 2011 in order to carry out the largest emergency intervention exercise ever executed in the Turkish Straits, reported Turkish daily Hurriyet.
According to the exercise scenario, a 250-meter, 95,000-deadweight crude oil tanker collided with a passenger ship in the Bosporus and caused an oil spill. Going back in time, press reports talk about similar instances. For example, in the fall of 2002 other newly-introduced tanker transit regulations caused delays of up to three-and-a-half days.
The new procedures prohibited nighttime passage for ships more than 200 meters long and require vessels carrying dangerous cargoes – including crude and petroleum products – to request transit 48 hours in advance. Previously, night passage was only banned for ships longer than 250 meters and there was no requirement for advance notice. There was also a requirement for one-way only traffic while ships of 250-300 meters or vessels carrying liquefied natural gas or liquefied petroleum gas are passing through the Straits. The Straits can also be closed during periods of inclement weather, especially in winter, which can also cause significant delays and additional demurrage costs that run into $50-100,000 per day for an oil tanker.
All of these temporary or permanent restrictions are aimed at protecting the public safety and cultural heritage patrimony on the Straits’ shores and reducing the risks of major accidents in one of the most challenging maritime passageways in the world. In order to cope with the Turkish Straits’ many and abrupt course changes, narrow shipping lane, intense local cargo and passenger ferry cross-traffic (around 1,000 ferry crossings each day) the Turkish authorities have put in place an advanced Vessel Traffic Service that monitors and directs traffic through a radar network.
However, accidents continue to happen in the Straits – 141 since 2006 – and the risk of a major accident remains too high in the context of rapidly increasing transit traffic. The transit in the Turkish Straits increased ten-fold since the times of the Montreux Convention – in 2009, according to Turkish Coast Guard figures reported by SeaNews, over 50,000 ships, including more than 9,000 tankers, passed through the Bosporus.
An Energy Bottleneck
Increasing global trade has also dramatically increased the seaborne transportation of goods, creating at the same time several chokepoint or bottlenecks around the world. As a 2008 European Commission report notes, these chokepoints are narrow waterways used for transit of large volumes of international sea trade, including oil. The concerns related to chokepoints can be different: geopolitical in the case of transit through potentially unstable areas, security, in connection to possible terrorist attack, environmental, in particular in relation to damage from an accident, or economic if transit through a chokepoint requires long waiting times.
Both the above-mentioned Commission report and the February 2011 World Oil Transit Chokepoints report of the US Energy Information Administration (EIA) mentions the Turkish Straits (Bosporus and Dardanelles) as one of the global oil transit chokepoints, in the same category with other famous maritime transit bottlenecks such as the Strait of Hormuz, the Malacca Strait, the Suez Canal and the Danish Straits (connecting the Baltic Sea to the North Sea).
According to the EIA report, an estimated 2.5 million bbl/day (or 125 million tonnes/year) of crude oil transited through the Turkish Straits in 2009, in addition to another 0.4 million bbl/day (or 20 million tonnes/year) of oil products. This represents 3% of the annual global oil trade, compared to 18-20% that passes through the Strait of Hormuz.
Environmental and Public Safety Risks
Thousands of tankers transit the Turkish Straits annually, the vast majority of them headed southbound (from the Black Sea towards the Aegean Sea). The oil transit exponentially increased in the 1990s, when Russia began to open up new export markets for its oil, as well as export routes that bypass Ukraine, including mainly tanker exports through the Black Sea and Baltic Sea ports.
The increasing oil tanker transit creates significant environmental, public safety and economic risks for the city of Istanbul and the entire length of the shores of the Turkish Straits, as well as higher costs for the tanker owners and customers caused by transit restrictions during nighttime, weather and other factors.
The southbound crude oil transit from the Russian ports through the Turkish Straits peaked in 2004 at 3.1 million bbl/day (or 155 million tonnes/year), and has since decreased, in 2009 falling to the 2.5 million bbl/day (or 125 million tonnes/year) mark mentioned above. This was apparently caused by Black Sea Russian crude oil exports being shifted towards the Baltic port of Primorsk through the Baltic Pipeline System 1 that was inaugurated in 2001 and reached its 1.3 million bbl/day (or 65 million tonnes/year) capacity in 2006.
Oil tanker transit pressure in the Turkish Straits could further decrease in the near future, given that the 1-1.5 million bbl/day (or 50-75 million tonnes/year) Baltic Pipeline System 2 could be inaugurated during early 2012. The new pipeline will transport oil to the Baltic export terminal in Ust Luga, but will divert initially, according to press reports, only 100,000 bbl/day (or 5 million tonnes/year) of crude from the Black Sea export ports.
Indicators of a Future Increase in Maritime Transit
However, there are some drivers that could increase again both the southbound and northbound energy transit through the Turkish Straits during the next decade. Southbound, as Azerbaijan and Kazakhstan increase their oil production, the Black Sea and the Turkish Straits will be one of their export outlets to complement the Baku-Tbilisi-Ceyhan (BTC) pipeline.
For example, the Caspian Pipeline Consortium (CPC) carries Kazakh oil exports from the Tengiz oil field to the Russian port of Novorossiysk at the Black Sea. Earlier this year, Chevron officially launched its $5.4 billion project to double the capacity of the CPC oil route to 1.34 million bbl/day (or 67 million tonnes/year) by 2015.
Azerbaijan is also looking for alternative export routes for its natural gas, through pipelines or liquefied natural gas (LNG) exports from terminals on the east coast of the Black Sea. Although most of this LNG would be sent to re-gasification terminals in Ukraine, Romania or Bulgaria, some could find its way southbound through the Turkish Straits.
Bulgaria and Romania have also been in contact with LNG exporters outside the Black Sea, such as Qatar, to discuss potential LNG imports, which would create northbound LNG traffic through the Bosporus and the Dardanelles.
Finally, increased northbound crude oil transit is also possible, as some Black Sea countries are trying to shift their oil imports away from Russia – according to a recent online note by Ukrainian Journal, Ukraine will make a test-run shipment of Venezuelan crude through the Odessa-Brody pipeline to Belarus sometime in November 2011. The crude will definitely have to transit the Turkish Straits to get to the Black Sea port of Odessa. All these drivers point to a sustained and potentially increased oil and gas transit through the Turkish Straits for the foreseeable future.
Alternatives- Pipeline Projects
The Turkish authorities have expressed many times their concern regarding the significant risks created by the energy transit through the Bosporus and the Dardanelles and have taken, whenever possible, measures to increase the transit safety. Some alternatives, aimed at diverting a sizeable part of the energy transit from the Turkish Straits have been proposed.
Pipelines are a natural alternative to tanker transportation, especially over a relatively short distance and in regions with a challenging maritime navigation configuration, like the Turkish Straits. As discussed above, the Baltic Pipeline System 1 and 2 have already diverted part of the Russian crude transit through the Turkish Straits, but have only switched the problem to another oil bottleneck and environmentally-sensitive region – the Baltic Sea.
Several other Straits-bypassing pipeline routes have been promoted during the last decade. Two such projects would be built in Turkey. The Trans-Anatolia pipeline is a 560 km project that would carry 1-1.4 million bbl/day (50-70 million tonnes/year) of Russian crude from the Black Sea port of Samsun to the Mediterranean port of Ceyhan. Initially promoted by the Italian energy group ENI and the Turkish Calik Holding, the project got a boost in October 2009, when Russia signed a MoU with Italy and Turkey for the construction of the pipeline and the supply of crude that would involve the Russian companies Rosneft and Transneft.
However, as reported by the Energy in the Balkans – the Balkanalysis.com 2010 Annual Review, the discussions around the Samsun-Ceyhan pipeline project stalled in September 2010 and there have been no major progress news during 2011.
The other pipeline proposed to bypass the Bosporus and the Dardanelles through the Turkish territory, the Trans-Thrace project would transport up to 1.4 million bbl/day (70 million tonnes/year) of crude on a 280 km route from Saray on the Black Sea coast through the Marmara Sea port of Ambarli to Saros Bay at the Aegean Sea. This project, promoted by a Turkish oil and oil product storage and distribution company, has been dormant for several years now.
Two other pipeline projects are aimed at transporting Caspian crude oil to the European markets while bypassing the Turkish Straits. The AMBO pipeline (or Burgas-Vlore) oil pipeline project, would carry 0.75 million bbl/day (or 37.5 million tonnes/year) for 890 km, from the Bulgarian Black Sea coast through Macedonia to the Albanian port of Vlore.
The project is supported by the Bulgarian, Macedonian and Albanian governments, and though there were no major updates regarding the project in 2011, Platts notes in a recent interview with some of the AMBO promoters that the project team is currently focused on defining the financing sources in preparation for new crude oil export volumes expected to be shipped from the existing and new Caspian oilfields.
The Pan-European Oil Pipeline (PEOP) is the other pipeline project aimed at carrying Caspian oil to the European markets while also avoiding the Turkish Straits. The 1,856 km pipeline would carry 1.2-1.8 million bbl/day (or 60-90 million tonnes/year) of oil from the Romanian port of Constanţa at the Black Sea through Serbia and Croatia to the Italian port of Trieste.
Although the project has been supported by the European Union, it was postponed sine die in September 2009 as Croatia shifted its focus to other priority energy projects along the Adriatic Coast.
Finally, the only pipeline project aimed at bypassing the Turkish Straits that has moved forward during 2011 is the Trans-Balkan or Burgas-Alexandroupoli pipeline. The 279 km pipeline is mainly promoted by the Russian pipeline monopoly Transneft – with the Bulgarian and Greek governments as minority shareholders – and would carry 0.7 million bbl/day (35 million tonnes/year) of Russian crude from the Bulgarian Black Sea port of Burgas to the Greek port of Alexandroupoli at the Aegean Sea.
After three rejections, as noted by Novinite.com, Bulgaria’s Environment Ministry issued on 4 November 2011 a positive ruling on the Environmental Impact Assessment (EIA) documents submitted for the Trans-Balkan Pipeline. Although received with excitement in both Bulgaria and Greece, the decision is not a final approval for the construction of the pipeline, but instead allows the evaluation process to advance to the public consultation stage. The project has been slowed several times to the heated opposition of municipal leaders and citizens along the Black Sea coast, who fear that the presence of such a pipeline would destroy their livelihoods- the tourism industry. It is clear however that even this project will take years before becoming a real alternative to the oil tankers transiting the Turkish Straits.
A Turkish Canal?
Another interesting alternative for diverting part of the Turkish Straits traffic was presented early this year. As reported by SeaNews, at the end of April 2011 the Turkish Prime Minister Recep Tayyip Erdoğan presented for the first time the idea of a new shipping canal west of Istanbul that would take over part of the Bosporus traffic.
Although the exact location and costs have not been mentioned, the Istanbul Canal would be 45-50 km long, 150 m wide and 25 m deep, and would connect the Black Sea to the Marmara Sea. The tentative completion date that was announced is 2023 to coincide with the Republic of Turkey’s 100th anniversary.
It is still too early to make an assessment of the proposed canal project; however, it is clear that the costs and the engineering challenges will be huge. Initial public reactions noted by online sources express reservations about the huge project: the environmental impact of building a new canal, it is being argued, could nullify the positive impact of reducing Bosporus traffic; it could be difficult to divert traffic from the Bosporus – where there are no transit fees – to a canal that charges a transit fee; as the Turkish Straits are the only maritime outlet towards the world’s oceans of the Black Sea countries, all of them will have to be consulted on the new canal project; finally, the status of the new canal vis-à-vis the Montreux Convention will have to be clarified.
Is There a Definitive Solution?
The easiest way to assess the best options for diverting part of the Turkish Straits energy traffic may be to look at what has been done to ease the pressure on other global energy transit chokepoints.
In the Persian Gulf, the Abu Dhabi Crude Oil Pipeline (or Habshan-Fujeirah pipeline) was finalized in March 2011. The main objective of the 360 km long pipeline that crosses the United Arab Emirates is to move 1.5 million bbl/day (or 75 million tonnes/year) to the Gulf of Oman by avoiding the busy Strait of Hormuz. Although the pipeline’s current capacity is small compared to the 15.5 million bbl/day (or 775 million tonnes/year) of crude that transited the Strait of Hormuz in 2009, the new pipeline is a viable alternative to tanker transportation and its capacity can be increased in the future. The SUMED pipeline (or Suez-Mediterranean pipeline) runs for 320 km in Egypt from Ain Sukhna at the Red Sea to Sidi Kerir on the Mediterranean Sea, and its 2.3 million bbl/day (115 million tonnes/year) capacity provides an alternative to transiting the crude oil through the Suez Canal, especially appealing for vessels larger than the so-called Suezmax size (i.e. larger than 200,000 deadweight tonnes).
The SUMED oil transit alternative could become even more useful in the future, as the LNG traffic through the Suez Canal has increased from 430 tankers in 2008 to almost 800 in 2010, and is expected to grow significantly in the future as Oman and Qatar increase their LNG export capacity.
Finally, the Panama Canal, though a relatively minor energy transit bottleneck at the global scale (just 800,000 bbl/day (or 40 million tonnes/year) of oil and refined products transited the Canal in 2009) has a pipeline alternative as well. The Trans-Panama oil pipeline was built in 1982 and runs 130 km from the Atlantic to the Pacific with a maximum capacity of 600,000 bbl/day (or 30 million tonnes/year). Although the pipeline has in general been underused because of the relatively low oil transit volume it still provides a viable alternative to the Panama Canal tanker transit, especially for new Latin American oil producers, such as Colombia, that might wish to send their crude oil to be refined on the US Gulf of Mexico coast. All these examples show that pipelines can indeed be realistic alternatives to tanker transit.
Conclusion: A Problem Likely To Linger
As we have seen above, the Turkish Straits are and will probably remain one of the bottlenecks of the global energy trade, along other hot spots such as the Strait of Hormuz or the Malacca Strait, with the unfortunate distinction of being the only one that has a flourishing metropolis right on its shores – Istanbul – while being extremely narrow and treacherous to navigate.
Thus, the unique local realities of the Bosporus and the Dardanelles are creating a sense of urgency for easing the straits’ energy transit that is more acute than for the other global transit chokepoints.
However, though some alternatives for diverting some of the energy transit away from the Turkish Straits have been proposed and look feasible, it looks like for the time being, at least, the status quo is still the preferred option, with all the significant environmental, public safety and economic risks that it entails and the recurrent crises caused by increased traffic, bad weather or various temporary and permanent restrictions.