Turkey, which currently imports about 90 percent of its oil consumption of its daily 724,400 barrel per day requirements, primarily from Saudi Arabia, Iran, Iraq, Syria and Russia, not only is competing fiercely for a share of the imminent Iraq oil piece, but also is making every effort to position itself as the region's pre-eminent energy transport hub.
For the energy-hungry world market, Turkey is already a key player as an important energy hub, for two reasons -- the Turkish Straits (Bosporus and Dardanelles), currently the world's busiest maritime strait, whose volume of traffic is exceeded only by the Straits of Malacca, and the $3.6 billion, 1,092-mile Baku-Tbilisi-Ceyhan pipeline.
The Turkish Straits now carry three times the traffic of the Suez Canal; according to Turkish maritime authorities, tankers of 200,000 tons or more transit the Bosporus every 10 to 20 minutes around the clock. In 2006 more than 36,000 vessels transited the Turkish Straits, with tankers carrying over 140 million tons of oil. The passage poses significant environmental and safety risks to Istanbul, whose population makes it one of Europe's largest cities, and unique in that no other European city has volatile cargo transiting the city each day.
Ankara is hardly happy about this, especially as under the terms of the 1936 Montreaux Convention, the straits are an international waterway and Turkey is unable to collect transit revenues.
Turkey's other contribution to global energy security is the BTC pipeline, which has a projected lifespan of 40 years. BTC currently carries about 700,000 bpd, and next year, when it begins flowing at normal capacity, it will transport 1 million bpd. BTC has provided a cash bonanza for Turkey in transit fees, as the pipeline traverses 669 miles of Turkish territory. Last month Energy and Natural Resources Minister Hilmi Guler stated BTC transit revenues had earned Turkey $2 billion from transporting 378 million barrels of Azeri oil, an amount certain to increase next year when BTC achieves full capacity and its annual projected throughput is slated to rise to 200 million tons of crude.
But Turkey has another pipeline project closer to its heart, which will pump an equivalent amount of crude to Ceyhan entirely across Turkish territory. The 340-mile, $1.5 billion Samsun-Ceyhan pipeline (SCP), also known as the Trans-Anatolian Pipeline, was first proposed in 2004. As envisaged, SCP will ship an initial 1 million bpd to Ceyhan, with plans eventually to raise its capacity to 1.5 million bpd by 2010.
Where would the crude for Samsun-Ceyhan come from? The short answer is Kazakhstan, which is currently forced to use the Caspian Pipeline Consortium, terminating at Russia's Novorossiisk port on the Sea of Azov, for the bulk of its exports. Turkey already has a toehold in Almaty, as its Calik Enerji is a partner with Italy's ENI, a major investor in Kazakhstan's massive Kashagan offshore Caspian development. Four years ago Calik Enerji began promoting the Samsun-Ceyhan pipeline. While Ankara is actively soliciting Kazakh crude, Russia, faced with its own transportation bottlenecks, might be persuaded to use the line as well.
For Turkey, Samsun-Ceyhan would be a double blessing. Turkey would be the sole collector of transit fees, unlike BTC, where it shares revenue with Azerbaijan and Georgia. Furthermore, Samsun-Ceyhan could alleviate a significant portion of the Bosporus-Dardanelles tanker traffic.
The Samsun-Ceyhan could also have geostrategic implications far beyond Turkey. On Oct. 24, 2007, Guler said an undersea Mediterranean extension of the Samsun-Ceyhan pipeline could be used for oil shipments to Israel.
One of Turkey's major problems in the past for major energy projects has been finding international partners and funding. This will not be the case with the Samsun-Ceyhan oil pipeline, as next month Royal Dutch Shell will sign an agreement to become a partner by buying shares of the Trans-Anatolian Pipeline Co. (TAPCO), a 50/50 joint venture established by Turkey's Calik Enerji and Italy's ENI S.p.A. to build, own and operate the pipeline.
SCP will have the full support of Ankara for two reasons. First is the revenue stream generated by transit fees.
More important for the Turkish government, however, is the impact SCP will have on tanker traffic through the Bosporus and Dardanelles, known collectively as the Turkish Straits, the sole maritime channel between the Mediterranean and Black Sea. Tankers transiting the Turkish Straits now carry 120 million barrels of crude oil annually. As the Bosporus bisects Istanbul, one of Europe's largest cities with a population of 11.8 million, and narrows in places to less than a half-mile, municipal authorities are aghast at the potential consequences of a tanker conflagration. Without SCP, tanker traffic is expected to exceed 250 million barrels in the next decade, while analysts predict tanker traffic in the Turkish Straits would drop by 50 percent when SCP becomes operational.
The United States is also backing SCP, which it sees as diminishing Russia's importance in European politics. In a rare instance of U.S.-Russian comity, as SCP can be used for Russian exports, the Kremlin's opposition to the project is likely to be less pronounced than on other projects. While Russia is loath to relinquish its grip on Kazakh exports, use of SCP would still allow Russia to collect its transit fees from the Caspian Pipeline Consortium's trunk line to Novorossiisk, from where Kazakh crude could be loaded on tankers for its voyage to Samsun.
In short, SCP is a win-win project for all concerned, a rarity in its part of the world.