Samsun-Ceyhan Pipeline Project to Turn Turkey into Energy Corridor

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Researched by Industrial Info Resources (Sugar Land, Texas)--A joint agreement recently was signed for the construction of the 550-kilometer Samsun-Ceyhan oil pipeline across Turkey, stretching between the port of Samsun on the Black Sea coast and the port of Ceyhan on the Mediterranean Sea coast. The signatories were Claudio Scajola, Italy's Minister for Economic Development; Igor Ivanovich Sechin, Russia's Vice Prime Minister; Sergei Shmatko, Russia's Minister of Energy; and Taner Yildiz, Turkey's Minister of Energy.

The purpose of the crude oil pipeline is to transport Russian and Kazakh oil across Turkey without having to ship it across the congested Bosphorus Strait, also known as the Istanbul Strait. According to Scajola, the pipeline will reduce the number of ships crossing the strait and effectively reduce pollution of the sea. The initial capacity of the pipeline will be 1 million barrels per day (BBL/d), which will be expanded to 1.5 million BBL/d in the future.

The companies to be involved in the project are oil and power company Eni S.p.A (NYSE:E) (Rome, Italy); integrated petroleum company OAO Rosneft Oil Company (Moscow, Russia); oil pipeline company JSC Transneft (Moscow, Russia); and energy company Çalik Enerji, a business arm of Turkish conglomerate Çalik Holding AS (Istanbul, Turkey).

The three nations also signed a memorandum of understanding that set out the conditions of the project, focusing largely on the quantity of Russian crude oil that will be required to ensure the profitability of the pipeline project. The three governments have agreed to guarantee the stable and balanced regulatory framework necessary for implementing the project. The project is part of the efforts to increase energy security across the nations, improve cooperation and protect the environment. The agreement underlines the commitment of the three governments to improve energy security in their countries and in the markets of Europe. According to Eni, Russia's participation in the project is an assurance for the security of oil supply. The project also will transform Turkey into an international energy corridor.

Eni has been an integral part of the pipeline project since 2003 and will continue to be during the implementation. Eni has a 50% stake in the Trans Anadolu Pipeline Company (TAPCO), which will implement and manage the Samsun-Ceyhan pipeline project. Çalik Enerji is the other owner of TAPCO. In 2003, Eni conducted a study to evaluate several oil transport routes from the North Caspian region. Based on that study, the Samsun-Ceyhan route was selected in 2004. Çalik Enerji conducted the commercial and technical evaluation of the project. The feasibility study and front-end engineering design phase of the project were completed in 2006 and 2007, respectively. The pipeline is scheduled to be operational from 2010, and the estimated cost of the project is $2 billion.

The pipeline project will be implemented so that the processes comply with strict international safety standards. The project will be developed along existing pipelines so that minimal disturbance is caused to the existing infrastructure as well as to the environment. The pipeline will ensure the safe transport of oil across the Turkish straits of Dardanelles and Bosphorus and cause minimal effect on the area's complex and fragile ecosystem. The Bosphorus Strait is the narrowest strait in the world that is used for international navigation. It connects the Black Sea with the Sea of Marmara, which in turn is connected with the Aegean Sea and thereby the Mediterranean Sea via the Dardanelles Strait, another international waterway.

Ships currently carry about 120 million barrels of oil annually across the Turkish Straits, a figure that is expected to reach 250 million barrels within a decade. The Samsun-Ceyhan pipeline is expected to reduce that traffic by 50%.

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