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Cablegate: Bosphorus Delays Ease but Issues Remain

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ISTANBUL 000262

SIPDIS


SENSITIVE


STATE FOR E, EB, CBED, EB/IFD AND EUR/SE
DEPARTMENT PASS POIC, NSC FOR BRYZA
USDOC FOR 4212/ITA/MAC/OEURA/CPD/DDEFALCO
USDOE FOR CHARLES WASHINGTON
TREASURY FOR OASIA - MILLS AND LEICHTER


E.O. 12958: N/A
TAGS: ENRG EINV ECON PREL SENV EWWT TU
SUBJECT: BOSPHORUS DELAYS EASE BUT ISSUES REMAIN

REF: A. 2003 ANKARA 7113
B. 2003 ANKARA 3399


1. (U) Sensitive but unclassified. Not for internet
distribution.


2. (SBU) Summary: Shipping delays on the Bosphorus and
Dardanelles straits have eased in recent days but the war of
words surrounding the issue continues. Russia's oil pipeline
monopoly Transneft strongly criticized Turkish administration
of the waterways earlier this week, and indicated that it is
considering building a pipeline across Thrace that will
bypass the problem. For their part, Turkish officials
strongly defend themselves, ascribing the problems to this
winter's unusually bad weather (in the most recent storm last
week four ships sank or ran aground in the approaches to the
two straits) and to the doubling of oil exports via tanker
from the Black Sea over the past seven years. Both
government and industry sources stress that the new VTS
system is not a panacea and that traffic is at or near
capacity. End Summary.


3. (SBU) Winter of Discontent: Recent months have constituted
a winter of discontent for oil shippers using the Bosphorus
and Dardanelles. By some accounts, delays have averaged 20
days for tankers to transit the two straits, with the longest
waits in the approaches to the longer Dardanelles.
Chevron/Texaco advisor Captain Kjell Ljandin told Embassy
econoff that the worst moment occurred earlier this month
when 42 ships were waiting in the Marmara Sea to pass south
through the Dardanelles. With tanker rates in the
Mediterranean at extremely high levels, the delays have
translated into extra costs of 700,000 USD or more per
shipment. According to Transneft officials, they have also
led to serious backups at Russia's Novorossisk oil terminal.
Alper Aral, a manager at Ditas, the oil shipper owned by
Turkish refinery Tupras, told us that because the delays
cannot be predicted in advance, they have upset supply
schedules and put upward pressure on already high tanker
rates in the Mediterranean. The problem does not affect
Ditas' shipments to Tupras' Izmit refinery on the sea of
Marmara, he said, since such shipments can "jump the queue,"
but does affect shipments to refineries in Izmir. Aral
added, however, that blaming delays solely on the straits is
misleading, in that the Russian port is often closed by bad
weather as well. Nonetheless, the Bosphorus delays do impose
a significant cost on shippers, and according to Cem Koksal,
the Chief Financial Officer of the Zorlu Group, the Turkish
partner in Tatneft's winning bid for Tupras, the ability to
avoid them provided an additional incentive for the Russian
oil company's decision to bid on the Turkish refiner.


4. (SBU) Running at capacity: In press comments, Transneft
officials have suggested that in addition to technical issues
leading to shipping backlogs there are "political issues" as
well, a charge strongly disputed by Turkish authorities.
Instead, they point to the increase in oil volumes shipped
over the last decadeto what they describe as the straits'
capacity. Official figures document the dramatic increase.
he amount rose from 124 million tons in 2002 to 13 million
tons in 2003. Most tellingly, the lattr total is more than
twice 1997's total of 60 milion tons. With these volumes,
both government and industry sources describe the recent bad
weather in European Turkey as he "sraw tht broke the
camel's back." Indeed, n the most recent storm on February
13-15, four ships sank or ran agroundin the approaches to
th Bosphorus and Dardanelles, with the loss of 20 Cabodian
and Bulgarian seamen.


5. (SBU) Necessary Balance: Maritime Deput Undersecretary
Sitki Ustaoglu stressed to Embasy econoffs tht evenwhen
the new Vessel Traffic Syste (VTS)for te strats is fully
operational it wa turne over o Turkey on a provisional
bsis at the beginning of the year, though some unspcified
problems remain that should be resolved by April), it will
not solve the problem of shipping delays. This point was
echoed in Istanbul by Turkish Maritime Pilots Association
(TKKD) Secretary General Cavit Istikbal, who argues that if
the system is used to implement vessel spacing requirements,
which heretofore have often been observed mostly in the
breach, traffic could decline rather than increase. (In the
past, according to MFA officials, shippers often bribed
straits officials to get around the transit rules, but now
with electronic management this is no longer possible.) In
Istikbal's view, while the new system provides a useful
documentary record of incidents that occur, it does not
materially change the vessel transit system that has been in
place since 1994, and so will not lead to increased traffic.


6. (SBU) Upgrades: Istikbal said that planned implementation
of an automatic ship reporting system may permit some
increase in volume, since Maritime authorities will know
sooner about approaching ships and will be better able to
organize them. But Ustaoglu noted that such organization may
also require some unspecified changes in existing legislation
and will not be implemented in the near future. In essence,
Istikbal described the current system as a delicate balancing
act between safety requirements and traffic facilitation, in
that the daylight and one-way traffic requirements for large
(200 meter) tankers inevitably limit volumes (only six such
tankers can be accommodated each day on the Bosphorus; the
limit was raised to 7-8 on the Dardanelles at the end of
January), but reflect a reasonable tradeoff since any
accident in the straits could interrupt traffic for a
protracted period. Similarly, though Montreaux does not
allow Turkey to require use of tugboats, Turkey has been able
to encourage their use by allowing only one large tanker
through a day without a tug. The costs of waiting far
outstrip the modest cost of the tug, so most large vessels
acquiesce and employ one.


7. (SBU) Bypass pipelines: The delays in the straits have led
to renewed interest in pipeline projects to bypass them,
especially since in most experts' view the Baku-Tblisi-Ceyhan
pipeline will only provide limited relief when it comes
online next year (Istikbal estimated that BTC would only
replace one of the six large tankers that transit the straits
each day, and that new production would swiftly replace it).
In press comments this week, Transneft indicated its interest
in a pipeline across Thrace that would enable it to avoid
both straits. A source close to the Thrace bypass told us
that the rising cost to shippers (delays and insurance) has
convinced several oil companies that the Thrace bypass is an
economically viable/cost effective alternative. Zorlu's
Koksal judged that the most currently feasible project would
take oil to the Tupras refinery in Izmit from a point on
Turkey's Black Sea coast. He noted that this route could be
built for a relative pittance (150 million USD), and would
mostly parallel existing natural gas pipelines, so would have
less right-of-way difficulties.


8. (SBU) Comment: Turkish maritime officials have told the
Embassy that they are preparing a paper for the International
Maritime Organization (IMO) on the straits, to follow up on
their response last year to Russia's complaints (ref b).
They stress, however, that they have no plans to change the
Montreaux convention and that while legislative changes are
planned, this will take time so that "no quick fixes" are in
the works. From the perspective of our Istanbul contacts,
Turkey's measures to safeguard the straits strike a proper
balance between Turkey's responsibilities under the
convention and its responsibilities to its citizens,
particularly given the impact an accident would have on the
city and its inhabitants. End Comment.
ARNETT

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