2019-02-08

Why Turkey blocks Russian oil tankers in the Straits?

By Sofia Sachivko

Around 55 Russian vessels, including 21 suezmax-class tankers and 26 aframax-class tankers, were stopped near the Turkish Straits, Bosphorus and Dardanelles. Most of them were transporting Russian and Kazakh oil. According to Interfax, citing data from the port operator Tribeca Shipping, there were 51 tankers on Tuesday. The ships, trapped in a kind of traffic jam, were transporting around 41 million barrels of oil destined for clients in Europe and Asia. The first reports of delays appeared in late January. Instead of the usual 5–6 days, tankers were forced to wait 16–17 days to pass to the Mediterranean Sea, and about two weeks to go to Black Sea.

Among the reasons for the current situation were named new, more stringent rules recently introduced by Turkey for the passage of vessels through the straits, which require mandatory participation in the towing of the tug. Tension creates and unfavorable weather in the region.

“If the situation with delays continues or aggravates, refineries in the Mediterranean will very soon begin to feel a shortage of raw materials,” said James Davis, director of consulting company Facts Global Energy . However, in his opinion, work on solving the problem is underway.

The Bosphorus and the Dardanelles are key points in the transit of cargo from the Black Sea ports, in particular, for the export of oil from Russia, Kazakhstan and Azerbaijan. Every year more than 120 million tons of oil and oil products are transported through them.

The status of the Turkish Straits is regulated by the Montreux Convention, which recognizes Turkish sovereignty over them. According to the international treaty, merchant ships of all countries are free to pass through the Straits, while restrictions are set for the military vessels alone. In this case, in the event of hostilities, Turkey may prohibit the passage of ships through the Straits.

Rustam Tankayev , General Director of CJSC Infotek-Terminal, a leading expert of the Union of Oil and Gas Industrialists of Russia, believes that there are many reasons for this delay, but this is unlikely to be seriously affected by the situation with Europe. "Oil supplies to European refineries come from all possible directions. The Black Sea direction is important, but far from the most important. There are other directions. Deficits, in particular, gasoline in Europe will not occur. But as for delays of 16 days, this is a very expensive thing. A simple tanker is not just a waste of time, it is a loss of money, because you have to pay for freight". Tankayev thinks that there will not be any problems with the supply of oil and gasoline, most likely, but it can affect the prices and lead to their raise.

Dmitry Abzalov, Vice-President of the Center for Strategic Communications, is not inclined to see malicious intent in what is happening, especially since not only Russian companies are working through the Novorossiysk port, overwhich Turkey hardly wants to quarrel. The expert also recalled that the recent negotiations with Turkish President Recep Tayyip Erdoğan were relatively unagitated and calm. 

"It is quite possible that this is an attempt to strengthen the position before the meeting, which will be held next Thursday (February 14 - ed.) in Sochi, where they will discuss Syria. Although, as practice shows, Erdoğan usually uses another tools. For example, restriction of access (for Russian companies) to the Turkish market, which is easier to limit on sanitary grounds and easier to open. In addition, it would be easier to limit the passage of warships. Although this process is governed by the Montreux Doctrine, in reality, for example, the question of its interpretation is on the side of the country through which the straits pass. There are many other tools.

Finally, Erdogan is not interested in seriously destabilizing Russian-Turkish relations. Moscow is actively building the Turkish Stream, the Akkuyu nuclear power plant, so against this background it would be rather strange to create problems with transshipment. Most likely, there was no specific intent here. Moreover, it is somewhat difficult to complicate the passage of tankers precisely on a national basis, since they line up consistently. It is not clear then why priority is given to one or another tanker?

In addition, I remind you that at one time it was precisely problems with traffic through the Straits that led to negotiations on the creation of alternative routes. We are talking, for example, about the Burgas-Alexandroupolis oil pipeline, which was supposed to bypass the Turkish straits from Bulgaria and end in Greece. The problems that may arise from Turkey because of these Straits may move this process".

There are fears that this situation could lead to problems with raw materials at European refineries. Will this lead to a shortage of fuel in the European market?

Abzalov thinks that this is unlikely: "As part of the energy goes directly through pipelines. The Caspian Pipeline Consortium, of course, works with the European Union, but usually quite good reserves. Finally, there are alternative energy supplies, additional volumes can always be purchased from other destinations, for example, from North Africa.

Now, if there are problems with the Libyan supplies, which will be imposed problems with supplies from the Black Sea basin, this may cause some complications and difficulties. But, as practice shows, this will not lead to fundamental problems, if only because there are alternative points of energy supply. Plus, oil is not going up in the spot market yet. If there was a fundamental problem with the straits, then we would see 65 oil. There would be some kind of increase. So far, nothing indicates this.

Finally, warm weather is an important factor. If it were colder, as in previous seasons, energy consumption would increase. It is about gas and oil. The weather is mild, and the flow rate does not increase much. So there is no reason for fear yet. In the long run, the deficit is not visible".

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