Regional Energy Projects for Georgia – Turkey – Russia Relations
In July 2011, Turkey hosted an international conference to discuss navigation security issues in the Bosphorus and Dardanelles Straits. Ankara has announced its intention of working with foreign oil companies to create a fund for protecting the Turkish Straits against accidents.
BY ZURAB GARAKANIDZE | June 2012
The cost of this plan may exceed US$30 billion, by some estimates. However, the Turkish government, pointing again to the massive spill in the Gulf of Mexico, says the proposed measures are well worth the price. Part of Turkey’s plan involves reorienting oil flows away from the straits and into an overland pipeline – specifically, the Samsun-Ceyhan Oil Pipeline, which will be built by a Russian-Italian-Turkish consortium along the Samsun-Ceyhan route. But construction Samsun-Ceyhan and Burgas-Alexandrupolis Oil Pipelines are stoped and increased volumes of Kazakh oil throught CPC need a new export route. That’s why we propose to revive Russian-Georgian-Turkish Novorossiysk – Supsa – Ceyhan Oil Pipeline project. This scheme, on the one hand, is designed to establish a crude transportation route to bypass the Bosphorus and Dardanelles. On the other hand, this project will help to open a deadlock in Georgian-Russian tense relations.
In his opening address at the conference, Turkish Energy Minister Taner Yildiz called for introducing emergency measures to protect the straits in light of swelling ship traffic. Over the last 15 years, he noted, some 115,000 tonnes of crude oil and petroleum products have been spilled in the Turkish Straits. He also noted that Istanbul, which is home to 15 million people, was located on the Bosphorus. Any accident involving an oil tanker in the area would have grave environmental consequences for the city, he said. Despite this threat of environmental catastrophe, Turkey does not have the option of closing or tightly restricting shipping traffic through the straits. Under the 1936 Montreux Convention, which regulates navigation in these waters, the Bosphorus and Dardanelles must remain open. Yildiz said at the conference that Ankara was committed to upholding its obligations. He also commented, though, that attitudes had changed because of the disaster that followed the collapse of the Deepwater Horizon drilling platform at BP’s Macondo field in the Gulf of Mexico in April 2010.
- Russian support for bypassing the straits
Ankara has actively lobbied for the construction of a pipeline from Samsun to Ceyhan for years. It has achieved some success on this front with the recent signing of a deal with the Russian energy giant Rosneft, which will join Italy’s Eni and Turkey’s Calik Enerji to build the pipeline. Russia’s state oil pipeline operator Transneft will also be involved in the project. Its participation, and that of Rosneft, will ensure that the Samsun-Ceyhan link is filled and therefore profitable. Russia had long resisted the pipeline project, in part because of its own plans for the establishment of another bypass route through Greece and Bulgaria. In the face of Turkey’s plans to introduce new environmental protection measures for the Bosphorus and Dardanelles, though, it seems to have decided to embrace Samsun-Ceyhan. This logic is sound; if the pipe were built by other investors and the straits somehow shut down, Russia would have a very difficult time finding an alternative route for oil exports through the Black Sea. Meanwhile, Russia has not given up on the other bypass line, which would run from Burgas on the Bulgarian Black Sea coast to Alexandroupolis, a Greek port on the northern Aegean coast.
If both of these pipelines were built, they would be able to accept most of the oil that is now transited through the straits. However, Nikolai Tokarev, the president of Transneft, has said that the cost of pumping oil through the Burgas-Alexandroupolis pipeline is likely to be nearly twice as high as the cost of tanker shipments through the Turkish Straits. He also estimated that the cost of using the Samsun-Ceyhan pipeline would be nearly three times as high. Nevertheless, Eni, Transneft and Rosneft have agreed to co-operate with the Turkish government on this pipeline venture. Meanwhile, reports from the conference in Istanbul state that US companies have suggested upgrading the straits rather than establishing transportation routes. A Chevron representative, for example, said that his company was not considering any new routes for fuel oil shipments. (BP, for its part, has prepared a special document on methods of bypassing the straits, according to an employee of the company’s Turkish office.) Turkey, however, has resisted the US proposals. Turkish Environment Minister Veysel Eroglu has said: “Freedom of passage through the [straits] should be controlled in the interests of ecology and for the people of Turkey.” However, there is no way to redirect oil flows immediately. Moreover, Turkey will probably have a difficult time convincing foreign energy giants to fork out the many billions of dollars needed to cover the costs of setting up the proposed environmental programme and of constructing the pipeline to Ceyhan.
- Neccesity for the CPC expansion
At the same time Central Asian energy is strategic, enabling Russia to expand its economic gains in the energy market. Russia’s gas and oil fields are aging and production is slowing. Bringing additional reserves online will take both significant time and investment.
The threat to Russian energy dominance originates in the Caucasus. The Western energy corridor through Azerbaijan, Georgia, and Turkey offers the opportunity for the West to break Russia’s grip on Caspian and Central Asian energy. While the BTC and BTE already allow Caspian oil and gas to flow west along this corridor, it might be expanded by trans-Caspian pipelines to tap Central Asia’s large deposits. Though such a pipeline route would be a feat of both engineering and politics, it is a possibility that Russia appears to view as a serious threat.