Maritime motorway fuels environmental concerns

Financial Times (UK) Wednesday, October 17, 2012
Special Report : Istanbul: Business & Finance, p. 3

By John Roberts

Pipeline politics. Halting the flow of 100m tonnes of crude oil is a priority, says John Roberts

When you look out on the Bosphorus you look out on one of the world’s great highways. From the voyage of the Argo and its Argonauts to the Suezmax tankers that carry crude oil from Russia and the Caspian to global markets, it has always been one of the world’s most important trade routes. But this comes at a price.

Every year, ships transitting between the Mediterranean and the Black Sea make 50,000 journeys up and down the Bosphorus. In addition, every day thousands of vessels criss-cross the strait from side to side, ferrying Istanbulites and their goods between Europe and Asia.

Both the Turkish authorities and environmentalists want to halt the flow of close to 100 million tonnes a year of crude oil – equivalent to one-sixth of Europe’s oil imports – through this maritime motorway in the heart of Istanbul.

Concerns are fuelled by accidents. These include the 1979 collision between the Romanian-registered Independenta and the Greek tanker Evriali, in which 43 crew died while 70,000 tonnes of oil were spilled into the Bosphorus, and the 1994 fire on board the Greek-registered Nassia in which 27 people were killed and 20,000 tonnes of crude were spilled.

Since then, a further 115,000 tonnes of oil (about 840,000 barrels) have been spilled into the strait.

For at least 20 years, there has been serious talk of building one or more Bosphorus bypasses, pipelines that would link the Black Sea to open-water ports in the eastern Mediterranean, the Adriatic or the Baltic.

Two years ago, Turkish prime minister Recep Tayyip Erdogan even proposed the construction of a massive canal to link the Black Sea with the Sea of Marmara, thus avoiding the Bosphorus.

But, though the Turkish premier voiced his hope that the Kanal (as it is known in Turkey) might be completed in time for the 100th anniversary of the Turkish Republic in 2023, it seems unlikely such a massive project will be built soon.

Yet the Kanal concept has contributed significantly to a key element of the dilemma: it could serve to carry other hazardous goods such as chemical products and liquid petroleum gas, stuff that could not go into a « Bosphorus bypass » pipeline.

The Turkish government would particularly like to see the construction of a 550km crude oil bypass from the Black Sea port of Unye, near Samsun, to the great Turkish Mediterranean oil terminal at Ceyhan.

The problem is that the 1936 Montreux Treaty, which governs transit through the strait, gives Turkey no power either to restrict traffic in the strait or to charge vessels for its use, let alone to compel shippers to put their oil into a bypass.

The Turkish Foreign Ministry has pushed for oil companies to adopt voluntary principles under which they would split their oil shipments between a bypass pipeline and continued use of conventional tankers. This would help eliminate the « free rider » effect: continued use of the strait by some shippers, who would pay only minimal sanitation charges, while others paid commercial tariffs to use a bypass.

The full equation is not quite as simple as that since most tankers take on pilots and they do not come cheap.

And shipping costs rise when heavy traffic in winter routinely delays transits by several days. But, overall, it is still hard to make a case that a Bosphorus by-pass can compete commercially with continued use of the strait.

Yet the prospect that the Bosphorus might have to carry an extra 20 mt/y (400,000 b/d) by 2025 as the Caspian Pipeline Consortium doubles the size of its pipeline carrying crude from Kazakhstan to Black Sea ports will ensure a re-newed focus – both on transit through the strait and how to avoid it.

Shippers note just one pair of daily transits (one in, one out) by a Suezmax tanker would handle this extra crude, since Suezmax ships can each carry as much as 1m barrels.

Many economists might argue this means it does not make sense to construct a bypass just to remove a single pair of daily transits. However, environmentalists, the Foreign Ministry and many of Istanbul’s 15m citizens argue that the issue is not whether it requires only a single ship to carry the extra crude.

A single accident could be one too many.