TRANSPORT INFRASTRUCTURE STRIVES FOR DEVELOPS
by Vagif Sharifov
Baku transit
Growing importance of the Caspian region as one of key energy suppliers to world markets is reflected in statistic reports. Transshipping of Kazakh and Turkmen oil via the territory of Azerbaijan gradually grows year by year. Since 1996 to present transit volume via the Baku port has grown over 5 times...
Transit of Kazakh and Turkmen oil via the territory of Azerb aijan:| year | mln ton total | Kazakh | Turkmen |
| 1996 | 0,086 | - * | - |
| 1997 | 1,200 | 0,79 | 0,11 |
| 1998 | 2,200 | 1,80 | 0,42 |
| 1999 | 3,000 | 2,50 | 0,50 |
| 2000 | 3,200 | 2,40 | 0,75 |
| 2001 | 4,500 | 3,00 | 1,50 |
| 2002 | 6,500** | 4,00 | 1,50-2,00 |
* - in 1996 Baku port handled mainly Kazakh oil.
Turkmenistan did not maintain records.
** - forecast
Caspian ports
Sea freight turnover first of all depends on technical capabilities of ports and pipelines of consignors and oil consignees. As it is known there are many ports on the Caspian Sea and each port has its own nuances. There are 11 shipyards. Most developed and technically equipped is the Russian shipyard on the Volga outlet. The administration of this shipyard declared it was going to build tankers of 100 000 deadweight while ship building yard of Nekka can build tankers of 60 000 tones deadweight. As noted Russian specialists, technical capabilities of this yard are similar to Finland but differ from Japanese or Korean technologies. Caspian ports are of less deep than Baltic. Depthes of all Caspian ports including Turkmenbashi, Aktau and Nekka are less than 10 meters, Baku port - is about 12 meters, Iranian Nekka port- the most shallow and needs to be deepened.
Lately, investors and shipping companies set sights on the Kazakhstan port, the potential large consignor. It is expected Kazakhstan’s oil export will amount to 37 mln tones/year, output - 46 mln tones, with later phases to boost production to 100 mln tones/year till 2010. And despite the well developed export pipeline grid of Kazakhstan with annual throughput of about 50 million tones the offshore infrastructure secures a key role in proportion with growth of oil output.
Export of prime petroleum products from Azerbaijan in January-October 2002 (thousand tones).
• The Commercial Sea Port of Aktau develops quite dynamically. The improvement and development of Kazakhstan’s only ice-free sea port was a decision by country’s authorities together with the European Bank of Reconstruction and Development. In past three years the port spent bank’s credits at the amount of $52,9 mln in terms of 25% co-financing by Kazakhstan.
• The Aktau Sea Port National state Enterprise went through critical and fast changes. After the first phase of reconstruction accomplished the volume of handled dry cargo grew from 300 000 tones to 1,5 mln tones, oil totaled 8 mln tones. Till 2010 the port is going to reimburse to the creditor $77,74 mln, including accumulated interests. The renewed network of port and spur rail tracks can secure efficient freight handling. The versality of its 12 cargo terminals along with their capacity to handle annually 8 mln tones of oil and 5 mln tones of a general cargo and large open-air warehouses allowing to receive large volumes of railroad cars to store goods and load ships provide for efficient freight handling, taking account of the emerging market conditions.
• The port’s origins date back to 1963. The history of Aktau Sea Port is closely linked with the construction and development of Aktau city, Mangishlak A-plant of fast neutrons (FN-350) and plants of chemical industry. The port was living on his own life: in the beginning of 80s oil transhipment amounted to 7 million tones, in hard 90s freight turnover drastically declined. Today’s pace of growth is specially noticeable. After reconstruction Aktau port can serve three oil-loading terminals simultaneously, receive three tankers of 12 thousand tones deadweight. But according to experts, along with growth of oil and gas output the main problem-the realization of swap transactions runs in on the Caspian Sea is the limited tanker fleet. Tankers of 3-7 thousand tones deadweight can touch at ports of all Caspian littoral states and pass through Volga-Don and Volga-Caspian Canals to Black and Baltic Seas. But these tankers are not suitable for swap transactions, because this rises transportation cost. Hence, pipelines find themselves to be in the center of attention. It is interesting to note that gale-strength wind rises waves on the Caspian Sea up to 6 meters, wave arch is up to 200 meters. This complicates sea shipping especially in winter seasons beginning from end-October till early-March. Presently Caspian tanker fleet ships 3-7 thousand tones of cargo. In addition to cargo shipments aboard feeder vessels, the Aktau port develops ferry connections too. Here is opened ferry lines along Aktau-Astrakhan and Aktau-Baku routs. Short before there was commissioned the ferry line to Iranian port. Such kind of transportation, noted the chief specialist of the marketing department Mr. Esetov, is one of most decisive factors during selection of a transport channel “Europe-Asia”.
In ten months 2002 the Baku International Commercial Port (BICP) handled 3977 thousand tones of cargo, this is about 106% compared with the similar period of 2001. 1445 thousand tones out of the total volume were handled on the oil terminal of the port, this is 61% against the same period of the last year. 442 thousand tones out of this volume are accounted by Kazakh oil and oil products (24%), 957 thousand tones (192%)- Turkmen oil and 42 thousand tones (135%) - Azerbaijani oil and oil products. In January-October the ferry terminal transhipped 2359 thousand tones of cargo - 179% compared with the last year, 172 thousand tones - on the dry cargo terminal, -298%. Volume of transhipped cargo in 2002 can be considered as successful, because in 2001 the volume of transhipment on the freight terminal leveled zero. In addition, 128 containers were handled on the container terminal, this is 54% lower than last year’s index. Three companies passed a tender selection to take part in the reconstruction of a ferry passage of the Baku International Commercial Port: Estefa (Turkey), Dyuvidag/Tepeinsaat (Germany/Turkey), Schtreycher/Azerkorpu (Germany/Azerbaijan). The tender selection will take a month and results to be sent for approval to the European Bank of Reconstruction and Development. In case of favorable reply of EBRD, construction of ferry passage will begin in February 2003. The project of reconstruction of ferry passage of the port is financed through credits granted by the EBRD. In 1999 the bank granted Azerbaijan 15-year credit at the amount of $16 million for, period of grace is 3 years, interest rate LIBOR+1%.
Terminals
Dubendi oil terminal that is a part of Baku port is situated on the Absheron peninsula, 47 km north of Baku. The terminal works for tanker unshipping, serves Kazakhstan and Turkmenistan tankers loaded with oil and oil products. In 60s the Dubendi terminal was originally projected to tranship Mangishlak oil from Kazakhstan. The terminal with projected capacity of 20 million tones a year is equipped with four moorings two of which passed to the state oil company of Azerbaijan (“Azneft” PA, under the Soviet Union), two other terminals - to the port.
But later on Mangishlak oil was shipped by another rout and, in fact, 2 moorings belonged to SOCAR have never been used. The whole volume of cargo was transhipped via mooring #3 projected to load oil and petroleum products and mooring #1 - for petroleum products. Today only these two moorings with total capacity about 7 million tones a year are in operation condition. Though the terminal is able to serve tankers up to 12 thousand tones deadweight.
Baku port’s turnover peaked in 1986 when Dubendi port saw 17 million tones of oil and petroleum products shipped from Iran, Turkmenistan and Kazakhstan, but then sharply declined. And only after commencement of TRACECA project the turnover of transited oil and oil products via Dubendi port grew.
Constant growth of transit of oil and oil products is being observed since 1997 with domination of crude oil. However, experts note that the terminal tranships mainly so-called “complicated” oil from Kazakhstan, this oil is rich in wax and sulfur and causes coastal reservoirs and tankers. Perspectives of development of the terminal in the Baku port are related with growth of supplies with Kazakh oil. At that, Dubendi terminal is currently able to meet fewer than 5,5-6 million tones of oil, while Kazakhstan itself can guarantee 10 million tones of oil a year to be moved by Baku-Ceyhan. In October transit of oil tankers through Dubendi terminal averaged 137 thousand tones, this is less 20 thousand tones against September figures. October transit of Kazakhstan oil via Dubendi remained at the previous level and amounted to 14 thousand tones, crude supplies from Turkmenistan fell 18 thousand tones compared with September and amounted to 121 thousand tones. Another 2 thousand tones SOCAR moved to the Dubendi port in October, the company reduced volume of transhipping by 2 thousand tones compared with the last month. Since the beginning of the year transit of oil tanlers via Dubendi amounted to 1,445 million tones, this 39% less compared with the similar period of the last year. Terminal operator is UAE’s Middle East Petrol (MEP). In 2002 the terminal passed to MEP from Azpetrol Holding. Development of the terminal began from Caspian TransCo who in the beginning of 2002 went broke (the company owes to ChevronTexaco $14 million), and rolled up its activity in the Caspian region, hence the terminal passed into Azpetrol. Recently the terminal operator accomplished construction of the oil pipeline in Dubendi from the oil loading terminal to a new oil loading rack to move light petroleum products. This pipeline is projected to transport Turkmen benzene. The construction goals to rise transmission of oil and oil products transported by the company.
Presently, transportation cost of oil and oil products from Dubendi to Batumi terminals amounts to $28-29 per tone.
• On October 15 of the last year Azerbaijani private company Azpetrol launched the first turn of its oil terminal situated on the first cargo unloading post of Lesnoy gavan in Baku port, this oil terminal was built under the Soviet Union.
Projected capacity of the terminal is 10 million tones of oil and petroleum products a year. Construction began in February 2000 on the area of 10 ga, which is now 2,5 meters above sea level.
In addition, Azpetrol built a pier lengthened at 210 meters capable to receive two tankers simultaneously, the reservoir park of total capacity 50 thousand tones, water-purifying complex, up-to-date chemical laboratory equipped with ITS’ technologies, 4-stripe railroad overpass, (for 40 tanks) and fire safety equipment, railroad mating with the terminal lengthened at 1400 meters.
Construction-and-assembling operations were carried by “Azerkorpu”, “Kavkazenergomontaj”, “Vneshstroy-montaj”, “Prom-stroymontaj” and construction department of Azerbaijan State Railway Department. During construction works there were employed equipment of German’s “Borneman”, “KCB”, French “Simex”, American “Fisher-Rosermount” and Azerbaijan Construction Design Office of Aerodynamic Agency. In the future the terminal will daily receive tankers loaded with 20-28 thousand tones of oil and oil products.
In September transit of oil and petroleum products via the Baku terminal of the private Azerbaijan company Azpetrol will rise 23,4 thousand tones against August to reach 367,2 thousand tones. Growth of transhipping was provided at the expense of additional freights from Kazakhstan and Turkmenistan.
In January-September transit of oil-tankers via the terminal amounted to 2,99 million tones, 892,3 thousand tones more against the similar period of the last year. Till the yearend the Azerbaijani company plans to tranship about 5 million tones of oil and petroleum products. Projected capacity of the terminal amounts to 10 million tones a year.
At the end of the year the company is going to accomplish construction of the terminal in Sangachal, 40 km south of Baku. Construction works began in April 2002. Projected capacity of the new terminal will amount to 10 million tones of oil a year. The terminal is equipped with 10 reservoirs of capacity 200 thousand cu m total. There will be built railroad rack on the terminal, load front is 40 railroad cars. Originally the terminal will be equipped with 2 moorings of 10-12 thousand tones deadweight to provide simultaneouse serving of 2 tankers. In the future Azpetrol is going to construct buoy mooring to unload heavy lift vessels.
Black Sea
New terminals in Poti
In October Channel Energy, the company registered in Gibraltar and established by Turkish Delta Petroleum and administration of Poty port, held the ceremony of opening of the new petroleum products terminal in Poty in presence of the president of Georgia Eduard Shevardnadze.
The capacity of the first phase of the new terminal allows handling 1,8 million tones of petroleum products. Launch of the terminal allows transhiping of oil while in past the vessel-storage Poti Star was used to load diesel fuel only. Firs and foremost, the port is projected to rise transit of oil loaded vessels from Azerbaijan and Turkmenistan.
In October the new terminal that has one mooring dispatched two bulks of petroleum products of 50 thousand tones comprising oil and diesel fuel loaded in two tankers. Main customers of the terminal are Sweden trader Glencore and French TotalFinaElf.
The new terminal in Poti is equipped with two-sided rack, the loading front amounts to 24 tanks, average speed of tanker loading is about 25 hours. Tank farm of the terminal is projected to store 36 000 of light oil products. The mooring is able to receive 2 tankers simultaneously at deadweight 25 thousand tones. However, the port is not going to stop transhipping through the tanker-storage, this will provide direct loading of one vessel only.
Simultaneously there began works on expansion of terminal’s capacity. The second phase envisages expansion of the reservoir park up to 80 thousand tones, construction of 2 new moorings to serve 60 thousand tankers and expansion of transhipping capacity to 4 million tones a year.
The second phase will complete in autumn 2003, to handle black products. There are several companies which expressed interest to oil handling via Poti terminals, among them Kazakhstan’s oil majors. According to traders, Azerbaijani oil producers also show interest to gas condense supplies via the Poti port.
Total volume of investments granted by the EBRD and Channel Energy to construction of the terminal will amount to $31 million. Till the time $12 million have been allotted to terminal’s construction.
Transhipping of petroleum products via another Poti terminal by the Georgian company PotiTransEnergy began in late October. Now PTE has a park made up of two reservoirs each at 5 thousand cu m capacity and three at 2 thousand cu m, and also railroad rack with loading front of 10 railroad cars. The terminal created on the base of bunkering infrastructure of the former Soviet Navy Base will also be specialized to transhhip light petroleum products and high-gravity oil which do not require heating in winter seasons. On the first phase the capacity of the terminal will amount to 500-600 thousand tones of oil loading vessels a year.
Baku-Novorossiysk
In 2002 oil output on Azerbaijani fields amounted to 12,686 million tones of which 7,444 million tones are recovered by the State Oil Company of Azerbaijan Republic (SOCAR), 5,242 million tones of crude - by Azerbaijan International Operating Company (AIOC) that develops offshore Azeri-Chirag-Guneshli fields.
Azerbaijani oil is transported by two pipelines Baku-Novorossiysk (moved by SOCAR) and Baku-Supsa (moved by AIOC).
The northern export pipeline Baku-Novorossiysk:
Length-1147 km
Diameter-720 km
Capacity-7 million tomes of oil a year (can be expanded to 18 million tones a year).
Transit tariff - $15,67 per tone.
Pipeline operator -
on the territory of the Russian Federation - “Transneft”;
on the territory of Azerbaijan - AIOC.
In nine months of 2002 the foreign economic relations department of SOCAR exported by Baku-Novorossiysk oil pipeline 2,257 million tons of oil. In October the pipe moved 275,5 thousand tones of oil, this is 57,6 tones more than in September. In November SOCAR is going to drive 225 thousand tones.
This oil was bought by Israeli trader Sanol and America’s ChevronTexaco.
In the current year schedule of SOCAR’s export sales in Novorossiysk is as following:
January - Api Oil - 250 thousand tones
February - Middle East - 250 thousand tones
March - Taurus Petroleum - 250 thousand tones
April - Rompetrol - 245 thousand tones
May- Arcadia - 225 thousand tones
June - Arcadia - 140 thousand tones
July - Taurus Petroleum - 135 thousand tones
August - Glencore - 135 thousand tones
September - Rompetrol - 85 thousand tones and Western Petroleum - 135 thousand tones
October - Glencore - 140 thousand tones and Trafigura - 135 thousand tones
November - Sanol - 140 thousand tones and ChevronTexaco - 85 thousand tones
Total volume of oil Azerbaijan exported this year via Novorossiysk amounts to 2,540 million tones of oil.
Baku-Supsa
The western export pipeline Baku-Supsa
Length - over 827km
Diameter - 24 inches
Throughput - over 5 million tones of oil a year (can be expanded to 10-12 million tones a year).
Transit tariff - $2,7 per tone
Pipeline operator - ÀÌÎÊ.
In ten months of 2002 AIOC dispatched 5,158 million tones of oil.
In the last month AIOC moved by Baku-Supsa oil pipeline 478,902 thousand tones of oil. Daily transport volume by Baku-Supsa amounted to 15,963 thousand tones, this is 1.577 thousand tones less than in September.
In the last month British-American BP (operator of AIOC) dispatched from Supsa 2 tanker consignments of crude, this is 2 batches less than in September. Present cost of oil production from Chirag -1 platform amounts to $1 per barrel.
Petroleum products
Constant oil output and gas import from the International Group of Companies ITERA allows Azerbaijan to drive to export more volumes of petroleum products. ITERA’s gas is used on power stations to generate electric energy, at the same time export of mazut which in past fueled power stations has grown. Azerbaijan exports petroleum products through two departments of SOCAR - foreign economic relations department of SOCAR and “Azneftyag” PA, SOCAR.
Hence, in October SOCAR exported to world markets 226,566 thousand tones of petroleum products, this is 12.534 thousand tones less than in September. 72,638 thousand tones out export are accounted by the foreign economic relations department of SOCAR, 15,928 thousand tones by “Azneftyag” PA. In ten months SOCAR put up for sale on world markets 2,230 million tones of petroleum products against 1,830 million tons in the last year. 746,01 thousand tones out of this volume are accounted by the foreign economic relations department of SOCAR, 1,483,928 million - “Azneftyag” PA.
Azerbaijani diesel fuel and kerosene are transhipped via Georgian terminals in Batumi and Poti, benzene and bitumen SOCAR exports to Georgia, mazut is sold through the trader company Intersun (UAE). In 2002 SOCAR is going to export over 2,4 million tones of petroleum products, most part of which will be accounted by diesel fuel and mazut.
In October prices on some Azerbaijani petroleum products changed against September prices. Car benzene is sold by SOCAR at $264,61 (-$7,31 against September price), kerosene - $249,57 (+$20,62), diesel fuel $226,28 (-$5,33), mazut - $160,74 (-$5,24).
In 2003 SOCAR is not going to expand its export geography for Azerbaijani benzene and sell it to European countries, Alshan Nasirov, the head of the foreign economic relations department of SOCAR commented on rise of export potential of this petroleum product in the next year.
According to him, benzene now is sold to Georgia only and export volumes of this fuel are not large enough. “The benzene sold to Georgia does not meet the whole need of the country in this fuel, therefore there is no need to sell benzene to European states at lower prices. In addition, the quality of our benzene, unlike to our diesel fuel, does not meet European standards. “
As the way out from the situation with benzene export E. Nasirov supposed, in the event if the benzene is sold to long distances in FOB terms (crude delivery to ship) on Black Sea ports most likelihood higher prices would be offered by African countries rather than European.
As far as expansion of export geography of another petroleum product- cock is concerned, the head of Foreign Relations department told that cock was exported directly to aluminum plants of Russia - Bratsk and Krasnoyarsk, Tajikistan aluminum plant, sometimes to the slate plant of St. Petersburg.
“Presently it is difficult to say how much export volume and its geography will extend in 2003. Most likelihood the volumes would not change because the sales market of cock is limited and peculiar”. The problem Azerbaijani cock faces is competition with Chine cock. “The Chine cock is cheaper, however, we succeeded to sell our cock directly to aluminum plants”, he said.
In conclusion there should be emphasized the dynamic of development of Caspian-Black sea infrastructure, especially-Aktau and Baku ports, which in past 5 years expanded their capacities and ranges of transhipped goods. However, from the technical point of view - not deep ports, need in heavy investments, sea transport are unlikely able to fully replace pipelines which allow fully realizing export ambitions of Caspian oil producers. Nevertheless, very sea transportation is able to help development of export infrastructure for future Trans-Caspian pipeline projects which will rise role of the Caspian region as one of key players on the oil market.