• 50 mins India Exempts State Oil Firms Mergers From Competition Approval
  • 3 hours Turkey Targets $5B Investment In Wind Energy By End-2017
  • 5 hours Weatherford Looks To Sell Assets To Ease Some Of $8B Debt
  • 6 hours OPEC Set To Move Fast On Cut Extension Decision
  • 8 hours Nigeria Makes First Step Away From Oil
  • 20 hours Russia Approves Profit-Based Oil Tax For 2019
  • 24 hours French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 1 day Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 1 day Oil Production Cuts Taking A Toll On Russia’s Economy
  • 1 day Aramco In Talks With Chinese Petrochemical Producers
  • 1 day Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 1 day Maduro Names Chavez’ Cousin As Citgo Boss
  • 2 days Bidding Action Heats Up In UK’s Continental Shelf
  • 2 days Keystone Pipeline Restart Still Unknown
  • 2 days UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 2 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 2 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 2 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 2 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 2 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 3 days Oil Prices Rise After API Reports Major Crude Draw
  • 3 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 3 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 3 days Statoil Looks To Lighter Oil To Boost Profitability
  • 3 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 3 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 3 days Whitefish Energy Suspends Work In Puerto Rico
  • 3 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 4 days Thanksgiving Gas Prices At 3-Year High
  • 4 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 4 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 4 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 4 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 4 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 4 days ConocoPhillips Sets Price Ceiling For New Projects
  • 7 days Shell Oil Trading Head Steps Down After 29 Years
  • 7 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 7 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 7 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 7 days Venezuela Officially In Default
Alt Text

The 10 Most Influential Oil Countries

The world’s largest oil-exporting countries…

Alt Text

Oil Tycoon Hamm Slams EIA’s Overoptimistic Shale Forecasts

Shale billionaire and chief executive…

Alt Text

Tesla To Spike, Then Crash

Electric car giant Tesla is…

John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

Bosporus Bypass Canal - An Idea Whose Time Has Come?

Bosporus Bypass Canal - An Idea Whose Time Has Come?

The implosion of the USSR suddenly opened up the former Soviet Union’s energy assets to western investment. Of these, the most important was the Caspian basin, whose 143,244 square miles and attendant coastline are estimated to contain as much as 250 billion barrels of recoverable oil, boosted by more than 200 billion barrels of potential reserves, quite aside from up to 328 trillion cubic feet of recoverable natural gas. Conservative estimate Caspian reserves at over $12 trillion and in 1998, Vice President Dick Cheney remarked, "I can't think of a time when we've had a region emerge as suddenly to become as strategically significant as the Caspian."

The immediate question then was how to shift this largesse to Western markets, in the absence of westward flowing pipelines. Accordingly, the immediate solution was tankers, which turned Turkey’s Bosporus into a shipping freeway, much to Ankara’s distress, a situation that continues to the present day.

Now the government of Prime Minister Recep Tayyip Erdogan has proposed a visionary solution to the problem of tanker congestion in the Bosporus – a 30-mile, $12 billion canal across Thrace to the west of Istanbul.

It is not a new idea, as a canal connecting the Black Sea to the Sea of Marmara was first proposed in the 16th century in the reign of Sultan Suleiman the Magnificent, while in 1994 then Prime Minister Bulent Ecevit announced a similar plan for a “second Bosporus.”

The idea has merit for the Turks on two points. First is the fact that the 19-mile Bosporus bisects the city of Istanbul, a city of 12 million, and it is a notoriously difficult channel to navigate, narrowing in places to less than a mile, with a convoluted morphological structure that requires ships to change course at least twelve times. Not surprisingly, municipal authorities are concerned about the possibility of accidents to ships with highly volatile cargoes. In the Bosporus’s worst accident, on 14 March 1994, the 66,822-ton Cypriot tanker Nassia, laden with Russian Novorossiisk oil, collided with the Cypriot Ship Broker at the Black Sea entrance to the Bosporus. In the conflagration that followed, 29 of the Nassia’s crew died, the vessel’s port and center tanks containing 19 million gallons of crude ruptured and polluted the Bosporus. Both ships were total losses and the channel was closed to shipping for a week and the accident caused $1 billion in damages.

Turkey’s other concern is economic. Under the terms of the 1936 Montreux Convention, which ensured Turkish sovereignty over the Turkish Straits, prohibited Turkey from even collecting tolls on merchantmen transiting the Straits; commercial vessels are not even required to engage the services of a pilot to navigate the tricky passage.

A tanker now navigates the Bosporus about every 15 minutes, around the clock, with nearly 850,000 barrels of crude leaving Russia’s Novorossiisk port each day. In April alone, 1,933 vessels sailed the Bosporus.

Despite the significant construction costs, Turkey could recoup its investment fairly quickly. As a point of comparison, Egypt collected $4.345 billion in tolls from ship passages in the period January-November 2010. While ship owners will doubtless protest about paying for such a service, they will in fact benefit from an economy of scale, as Erdogan says that the new channel will be designed to handle the world’s biggest tankers, very large crude carriers (VLCCs), which the Bosporus can’t handle, as they can draw up to 75 feet of water when fully laden.

Will the canal be built? The Turkish economy is dynamic, the government is confident and assertive, and for the past two decades it has seen Azeri, Kazakh and Russian hydrocarbon wealth sail through the heart of its largest city for free while putting Europe’s largest metropolis at risk. Place your bets.

By. John C.K. Daly of OilPrice.com




Back to homepage


Leave a comment
  • Anonymous on July 21 2011 said:
    You say nearly 850,000 barrels of crude leave Russia’s Novorossiisk port each day, but Trend Daily News reported on July 16, 2011 that Novorossiysk shipped 55.7 million tons of crude oil in Jan-Jun 2011. Using some rough estimates that puts exports at about 2.2 million bpd, not 0.85.850 kbpd seems more inline with the CPC terminal near Novorossiysk. Is that what you meant?

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News