"Crazy Project" Can Accelerate The LNG Revolution
Speaking in a session entitled “Development of the Small Scale LNG Market in the CIS Countries and New Diversification Opportunities It Provides” at the CIS Oil and Gas Transportation 14th Annual Meeting in Istanbul, Turkey, energy expert Okan Yardımcı stated his views on LNG projects around the Black Sea.
“The Bosphorus is the busiest and most dangerous chokepoints in the world with more than 50,000 ships pass through every year. Even if we put aside safety and environmental concerns, the economic restrictions are the most important barrier for the LNG projects around the Black Sea. The cost of hiring LNG vessels is increasing and the demurrage costs will be of great value in the sense of competition in the future. In tough winters, when we require more gas, sea and weather conditions slow down and even interrupt the passage of ships in the Bosphorus. With the current vessel rental prices, the effect of a 3-day delay causes a significant hike in the CIF price. Its effect is much more in the small-scale vessels than the conventional ones. If the cost of accident risk in the Bosphorus is taken into consideration, projects become economically impossible.”
Some LNG projects are ongoing in the Black Sea. AGRI is the first one, aiming the transport of LNG from Caspian region to Europe. Projects in Odessa-Ukraine and Russia follow it. Russian President Putin has also said that South Stream pipeline could be replaced with an LNG project.
In 2008, Turkish Prime Minister Recep Tayyip Erdoğan stated that he had a “crazy project” in mind for Istanbul. In April 2011, he declared the crazy project as constructing a new water passage through western Istanbul. The 45-50 km long, 150 meter wide channel is being planned to connect the Marmara Sea to the Black Sea. The project is aimed at reducing the amount of ships passing Bosphorus. Turkish media have reported that the estimated construction cost may reach $20 billion. The preliminary study is planned to last for two years.
Yardımcı, an energy expert for the Energy Market Regulatory Authority, Turkey, commented “LNG trade in the Black Sea may be an alternative way but being locked into Black Sea is inefficient for the LNG vessels. AGRI and the other projects can actually be made profitable with a new gate to Black Sea.”
The new water artery for Marmara Sea-Black Sea connection was first stated by the former Prime Minister in January 1994. Izmit-Karasu channel was the other alternative for the Marmara Sea-Black Sea connection, however both of which were not feasible at that time.
Mr. Yardımcı estimates that the project will be energy-oriented and can accelerate the LNG revolution. According to him, there will be no problems in obtaining required financing. On the other hand, environmental, maritime, water resource, flora and fauna issues are much more important to handle in the framework of the project. Accordingly, the Izmit alternative should also be taken into consideration during the technical studies.