Upstream Oil and Gas Industry and the Future of the Bosporus Straits

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Sumit Dutta
08/06/2010

Oil production in Turkey has been in decline for the past two decades since it peaked at around 100,000 barrels a day in 1991.

Yet, despite this, the nation continues to be a major player within the global upstream oil industry thanks to the 30km-long Bosporus Straits that connect Asia with Europe.

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Approximately 1.85 million barrels of oil a day, the equivalent of 2 percent of global oil demand, pass through the straits, according to Salih Orakci, head of Turkey's directorate general of coastal safety.

An oil tanker passes through the straits every 53 minutes, according to the Ministry of Transportation.

In recent years concerns have been increasing over the safety of such high traffic volumes, and in particular the large number of oil tankers, as commercial ships are allowed to pass through the straits unrestricted during peacetime under the Montreaux Convention.

Restrictions

Minister of energy and natural resources Taner Yildiz has now highlighted that in the coming years Turkey will look to put measures in place that will make it more difficult for the upstream oil industry to use the Bosporus.

The country is using the current concerns surrounding the BP oil leak in the Gulf of Mexico to highlight the dangers that are caused by the volume of oil passing through the straits each day, much of which is carried on old ships.

Oil and Gas Production Content Series

It is estimated that 80 percent of the tankers using the strait are equipped with outdated technology and in the past 15 years 115,000 tonnes of oil have been spilled into the Bosporus' waters.

Proposals on the table include higher insurance fees, limits on the size of tankers allowed to travel through and enhanced safety requirements until alternative routes of passage can be found; however it is likely no significant changes will be seen by the upstream oil industry for three to four years.

Yildiz and environment minister Veysel Eroglu met with executives from major upstream oil companies, including BP, Exxon Mobil and Total in Istanbul recently to discuss the issue–the first of many meetings of its kind through which it is hoped that a "voluntary" consensus can be reached.

Reuters quotes Eroglu as telling a press conference: "The straits can no longer bear the risk of this tanker cargo, and we need to limit both the number of ships and the tonnage they carry.

"Outdated tankers must be replaced with new ships equipped with advanced technology."

Alternatives for the Upstream Oil Industry

Various countries are now putting their own plans in place that will allow them to bypass the Bosporus straits, including Turkey itself.

One alternative already in place is the Baku-Tbilisi-Ceyhan (BTC) Pipeline, which passes from the capital of Azerbaijan, through Georgia to the Turkish port of Ceyhan. Shareholders in the 1768km pipeline from the upstream oil industry include BP, AzBTC, Chevron, Statoil and TPAO.

The pipeline was first opened in 2006 and by December 2006 had supplied its 1000th tanker with oil. At the time the BTC had an average flow of around 850,000 barrels per day.

Running between Turkey and Iraq, the Kirkuk-Ceyhan pipeline is another that allows oil to bypass the straits, however it has been the subject of bombings, most recently from the Kurdistan Workers Party (PKK) in early July.

Bulgaria is now considering creating a similar pipeline in collaboration with Russia and Greece. The plans were first agreed upon in 2007; however, Bulgaria said that it is waiting until an environmental assessment is completed in February 2011 before making a final decision, Reuters reports.

If the plans go ahead the 285km pipeline will run from Burgas, a port on the Black Sea, to Alexandroupolis in the Aegean Sea and will be able to carry 35 million metric tons of oil a year.

The Bulgarian deputy prime minister Simeon Djankov was quoted by the news provider as saying: "The feasibility of this pipeline is questionable. The source of financing is still unclear and the oil supply for the pipeline has not been secured."