October 14, 2012
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№ 3 (March 2012)

The Caspian Sea: Ports, Tankers and Shipments

   The Caspian Sea is gradually developing into a major area of through shipments of hydrocarbons, even while, purely in terms of its transportation volumes, it is a long shot from those of the Black Sea.

By Aider Kurtmulayev, Asia advertising and news agency

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There are several reasons why that is the case, the most significant among those being the fact that the coastal states in the region still remain locked within that inland water system, which has no direct outlet to the wider international hydrocarbons markets. And that is closely linked to the second reason, viz. the unresolved legal status of that sea/lake.
Furthermore, from an environmental viewpoint, given considerable ecological vulnerability, that landlocked water body is highly allergic to any pipeline activity there. What is left then is the tanker fleet, which again does not solve the problem because the Caspian Sea is a shallow water body, a factor that limits the tankers’ deadweight capacity. Moreover, for tanker shipments to be successful, special port facilities will have to be built there. Plus, measures will have to be put in place to allow the existing and planned pipelines to provide access to the European and Asian markets. And, finally, the volume of traffic in hydrocarbons should be sufficiently high so as to cover the production and transportation costs.
The Maritime Transport Development Program for 2006–2012 and other national transport development strategy documents adopted in the Republic of Kazakhstan provide for the following two methods of hydrocarbons export shipments by water: by tanker transport and by ferry-boats carrying rail tank cars. At this point in time, pipelines are considered for possible use only as a method of continued transportation of hydrocarbon materials beyond the Caspian Sea coast.
Experts indicate several main directions of hydrocarbons transportation on the Caspian Sea. First, the Iranian direction provides a direct link to the Islamic Republic of Iran where an oil trunk pipeline is planned to be built connecting the port of Neka on the Caspian Sea and the port of Jask on coast of the Gulf of Oman. The annual volume of crude to be handled by that pipeline is expected to approximate 1 million barrels per day.  
The Aktau – Baku – Nowshahr ferry service is already in operation between Kazakhstan and Iran. Speaking of the through transportation of crude oil and petroleum products via that country, however, it should be remembered that, while Iran has fairly well developed road transport and pipeline transportation systems, that country has few railway lines, while the development of its tanker fleet on the Caspian has proceeded at a very slow pace. Moreover, the existing UN embargo also affects the barter-trade shipments between the CIS countries and Iran.
Second, the Russian direction involves direct sea shipments to the port of Makhachkala (Russia). From then on, the products could be moved by the Russian Railways and by pipeline to the Black Sea or carried in-transit via the Volga-Don Ship Canal to the Sea of Azov. There is also the Northern option via the Volga-Don Ship Canal to the Baltic Sea. However, the constraints of the Russian inland waterways direction include limited navigation opportunities during the autumn and winter period.
And third, the Black Sea – Mediterranean direction provides for a mixed-type through transportation along the Aktau – Caspian – Baku – pipeline – Batumi – Black Sea – Europe route. Moreover, the use of the Baku option makes it possible to diversify the shipment modes with, for instance, the possibility of shipping crude oil to Novorossiysk or via the Baku – Tbilisi – Ceyhan oil trunk pipeline. Turkmenistan has similar transportation opportunities from Port Turmenbashi.
Just as a reminder, a single tanker with a 12,000-14,000-ton deadweight capacity operating on the Caspian (between the ports of Aktau and Baku) is capable of moving an annual total of 1 million tons of crude. At the present time, crude oil shipments are mostly delivered by tankers having a deadweight capacity of 3,000-5,000 tons. The sea ports on the Caspian are mostly shallow-water ports, with the ports of Aktau (Kazakhstan), Neka (Iran) and Turmenbashi (Turkmenistan) each having a depth of less than 10 meters and the port of Baku (Azerbaijan) having a depth of 12 meters. Again, only 5,000-ton deadweight-capacity tankers are capable of entering the abovementioned ports and passing through the Volga-Don Ship Canal and the Volga-Baltic Ship Canal systems. The traveling time from Port Aktau in Kazakhstan to Port Neka in Iran is seven days, while the travel from Port Turmenbashi to Port Neka takes five days.


The Joint Stock Company Kazmortransflot National Maritime Shipping Company (Kazmortransflot) was established in 1998 and is made up of the following subsidiary companies Kazmortransflot, Ltd., Mangistau Region Ship Repair Yard, Kazmortransflot UK, Ltd., Altai Shipping, Ltd. and Alatau Shipping, Ltd. It is expected that, by the end of this year, the fleet of ships owned by the company will include 20 tankers, five dry-cargo carriers and 150 support vessels.
The tanker fleet tonnage is to be increased based on the optimal parameters of the 60,000-ton deadweight capacity vessels. In accordance with the environmental protection requirements, the tankers will be built having a double hull. They will each have several chambers designed to move different types of hydrocarbon cargos. Given that such vessels are quite difficult to deliver to the Caspian Sea after construction, it is quite possible that a special shipyard will be built in the near-shore area to address that problem.
Another possible direction could be the development of port infrastructure facilities and construction of a deep-water port. The government has decided that such a port could be developed at Kuryk in Mangistau Region, complete with a crude-oil loading terminal with an annual cargo turnover of 20 million tons, a shipyard, a machine-building industrial estate, a shipping operations support base and a rescue-and-salvage operations center.
The country’s second biggest port of Aktau lies in the Eastern part of the Caspian Sea and is designed to handle international dry-cargo traffic and to ship crude oil and petroleum products. In 1999, the port underwent a major refurbishment and today it can handle loading and transshipment operations to a total volume of 1.5 million tons  per year and crude oil transfer operations to a total volume of 8 million tons per year.
The private-owned Mobilex Energy, Ltd. tanker shipping company controls one of the terminals at Port Aktau and operates several tankers.


In addition to its older vessels and a Turkish-built 5,000-ton deadweight-capacity tanker, Turkmenistan has ordered two Russian-built river-sea-type 7000-ton deadweight-capacity tankers to move six types of petroleum products. Several more tankers are under construction.
Port Turmenbashi operates a ferry landing stage handling liquefied gas shipments to Makhachkala (Russia), a dry-cargo transshipment terminal and a crude oil transfer terminal with a capacity of some 12 million tons per year. In addition to that, the country has several waterfront crude oil loading stations located mostly close to the operating hydrocarbons fields.


Several private-owned Russian shipping companies play an active role on the Caspian Sea, including Safinat Investment Group, Palmali Shipping Company and Volgotanker. Moscow River Shipping Company is another operator expected to join them in the future.
Safinat Investment Group owns six tankers and a liquefied-gas carrier. It also owns a liquefied-gas processing terminal at the port of Temryuk. Palmali Shipping Company owns 25 tankers of varying cargo carrying capacity which are actively used by Lukoil for various types of shipping operation. Today Volgotanker is the biggest Caspian single owner of the 5,000-ton deadweight-capacity river-sea-type tankers. The company’s fleet includes more than 300 crude oil carrying vessels. Volgotanker moves crude and petroleum products from the ports in Turkmenistan and Kazakhstan to Port Makhachkala.
The principal Russian ports on the Caspian are the ports of Astrakhan, Makhachkala and Olya. The port of Makhachkala is the biggest crude-oil transfer port. It has its own tanker basin capable of harboring tankers having 10,000-ton deadweight capacity, with draft of up to 10 meters. The port is home to an oil delivery terminal connected to the Novorossiysk oil trunk pipeline. The year-long ice-free port of Makhachkala is expected to be used for commercial-scale crude oil transportation to the Iranian port of Neka. The combined capacity of the two crude-loading jetties stands at 7 million tons per year. Ferry-boats have been used to move liquefied gas between the ports of Makhachkala and Turmenbashi since 2006. The gas is shipped in rail tank cars.


Azerbaijan has the biggest sea port and the largest tanker fleet on the Caspian. In addition, it has seven ferry-boats each capable of moving 28 rail tank cars at a time. Until very recently, Azerbaijan’s Kaspar state-owned Caspian Shipping Company had remained a virtual monopolist operating crude oil shipments on the Caspian Sea. Kaspar owns some fifty tankers with deadweight capacities ranging between 6,000 tons and 13,000 tons. Its tanker fleet is renovated on a regular basis.
The government recently made public its plans to have a ship-building yard constructed to manufacture the Caspian Max type tankers with the cargo carrying capacity of 60,000-70,000 tons to move crude from Tengiz and Kashagan fields (in Kazakhstan), with subsequent shipment via the Baku – Tbilisi – Ceyhan pipeline. The tankers are expected to ply the routes of Aktau (Kuryk) – Baku and Aktau (Kuryk) – Turmenbashi – Makhachkala. Azerbaijan has further plans to build up its tanker fleet on the Black Sea to serve its own development needs.
As far as the Baku Port’s infrastructure is concerned, it includes the terminal at Dyubendy with a design capacity of 12 million tons per year and the terminal at Sangachal of 34 million tons per year (to serve the Baku – Tbilisi – Ceyhan pipeline). At the moment, both terminals operate at less than their full capacity.


Iran’s principal hydrocarbons deposits lie near its border with Iraq or in the Gulf area. As a result, to supply the needs of its northern provinces, Iran prefers to use oil deliveries from Azerbaijan, Kazakhstan and Turkmenistan, using the Gulf area deliveries for location exchange with the crude oil volumes received in the north. Nearly 1million barrels of crude is lifted from the south to the north of the country annually.
Iran did not join the competition for crude oil shipments on the Caspian until 2003 when it launched its first tanker. To address the shallow water problem, a deep-water offshore mooring projecting several kilometers into the sea was built at the port of Neka with an oil pipeline running to the shore.


Using the region’s current annual hydrocarbons production figures as a departure point and making a longer-term forecast, a conclusion can be made which suggests that there is little point in either increasing the crude-oil tanker traffic or, consequently, expanding the existing tanker fleet.
Last year, for instance, Azerbaijan produced 46 million tons of crude oil and 16.5 billion cubic meters of natural gas. The actual drop in production as against the previous year was 10 percent and 6 percent respectively. The expected new developments there include no more than geological explorations as part of the second phase of Shah-Deniz field development program and exploration of mineral deposits at Apsheron, Umid, Shafag and Asiman.
In Kazakhstan, production volumes reached 80 million tons of oil and 39 billion cubic meters of natural gas, an improvement on the 2010 figures. Kashagan has reported high proven reserves’ figures (1.5 billion tons of crude and 1 trillion cubic meters of natural gas according to North Caspian Operating Company B.V.). It now has 21 producing wells ready for production.
Last year, Turkmenistan produced a total of 50 billion cubic meters of natural gas. The republic’s in-place reserves keep growing on the strength of its own forecasts only. At the moment, Turkmenistan forecasts its in-place reserves to reach 12,000 billion tons of crude and 6,500 trillion cubic meters of natural gas. Even though the Malaysian corporation Petronas has put into service a gas processing plant and a raw-materials handling terminal designed to receive and process 5 billion cubic meters of natural gas, with possible expansion up to 10 billion cubic meters, it may take them a few  years to get there.
In the meantime, Iran has announced the discovery of a major gas field in southern Caspian with estimated in-place reserves of 1,5 trillion cubic meters of natural gas. Thus adding a further territorial dispute and conflict of interests.
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