Commission staff working document accompanying the green paper : towards a secure, sustainable and competitive european energy network - Oil infrastructures : an assessment of the existing and planned oil infrastructures within and towards the EU {COM(2008) 782}
Date: 2008-11-13
Institutions: European Commission
Subjects: energy grid, energy policy, energy supply, environmental protection, oil pipeline, security of supply, trans-European network

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.11.2008 
SEC(2008) 2869 

COMMISSION STAFF WORKING DOCUMENT 

accompanying the 

GREEN PAPER 

TOWARDS A SECURE, SUSTAINABLE AND COMPETITIVE EUROPEAN 
ENERGY NETWORK 

OIL INFRASTRUCTURES 
An assessment of the existing and planned oil infrastructures within and 
towards the EU 

{COM(2008) 782} 

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COMMISSION STAFF WORKING DOCUMENT 

OIL INFRASTRUCTURES 

An assessment of the existing and planned oil infrastructures within and towards the EU 

Introduction  

In  the  next  decades,  due  to  the  depletion  of  European  indigenous  resources,  substantial 
quantities of crude oil will need to be imported into the EU through existing or new pipelines 
and/or via tankers. This situation raises concerns both in terms of security of supply and with 
regard to the environmental threat of tanker accidents in our seas.  

The purpose of this document is to analyse the current and future possibilities for supplying 
oil  to  the  European  Union.  This  document  provides  an  overview  of  the  existing  oil  supply 
infrastructures towards and within the EU. An assessment of the feasibility of new pipelines 
in  terms  of  their  economic  viability  and  their  contribution  to  our  objectives  of  security  of 
supply and sustainable development is also provided.  

The document is divided in the following five chapters: 

(1) 

The present and future contribution of oil to the EU energy mix 

(2) 

Internal oil market  

(3) 

(4) 

Supply infrastructures: ports, tankers, refineries and pipelines 

Chokepoints at world scale and in European waters (Baltic and Black seas) 

(5) 

Conclusions 

Crude oil pipelines are not included in the Guidelines for trans-European energy networks1 of 
6 September 2006. The Commission's Legal Service has indicated however that no obstacles 
exist  to  the  inclusion  of  oil  infrastructures  in  the  trans-European  energy  networks  and  the 
Council  has  previously  indicated  a  willingness  to  consider  Commission  proposals  in  this 
respect. 

In view of a revision of the Guidelines, a Green Paper on European energy networks will be 
adopted by the Commission in November 2008. The Green Paper assesses, inter alia, the need 
for  including  oil  infrastructure,  alongside  gas  and  electricity  networks,  in  the  European 
Energy Networks.  

1 

Decision  No 1364/2006/EC of  the  European  Parliament  end  the  Council  of  6  September  2006  laying 
down  guideline  for  trans-European  energy  networks  and  repealing  Decision  96/391/EC  and  Decision 
1229/2003/EC 

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1 

The present and future contribution of oil to the EU energy mix  

In  2006,  oil  and  petroleum  products  covered  37%  (673  million  toe)  of  the  EU27  primary 
energy demand of 1825 million toe (Mtoe)2. In the same year, our indigenous production of 
oil was 123 Mtoe, consequently 84% of our oil consumption was covered by imports. 

The  2007  PRIMES  Baseline  Scenario3,  which  takes  into  account  policy  initiatives 
implemented by the end of 2006 and assumes an oil price of 61$ per barrel in year 2005 $, 
indicates that by 2020 oil, with 702 Mtoe, will still represent more than 35% of our primary 
energy demand of 1968 Mtoe.  

Therefore according to this scenario, in the next decade, oil will remain the main element of 
our  energy  mix,  although  its  consumption  in  2020  will  exceed  the  current  level  only  by 
approximately 5%. The Baseline Scenario also indicates that due to the progressive depletion 
of EU27 indigenous resources, only 53 Mtoe of oil will be produced in the EU in 2020. As a 
consequence, by that time, more than 90% of our oil consumption will be imported.  

The  PRIMES  model  has  also  been  used  to  assess  the  impact  of  high  oil  prices  (100  $  per 
barrel  in  year  2005  $)  and  new  EU  energy  policy  initiatives  (beyond  2006)  on  our  future 
energy requirements.  

A  scenario  considering  the  effects  of  a  high  oil  price  (100  $  bbl  (barrel))  compared  to  the 
baseline scenario  has  been  produced. The impact of a high oil price in terms of oil demand 
and  import  is  outlined  in  table  1.  According  to  this  high  oil  price  scenario,  a  moderate 
decrease in oil demand (7.6%) in comparison with the baseline scenario could be expected by 
2020.  However,  due  to  the  progressive  depletion  of  EU  indigenous  oil  reserves,  oil  import 
requirements will increase in comparison to the 2005 level by more than 10%, to 651 Mtoe.  

A further scenario "Energy Policy", which includes the impact of the new EU energy policy, 
has also been developed. The "Energy policy" scenario includes for example the objective by 
2020 of:  

•  a 20% share of renewables in final energy demand including a sectoral objective of 10% of 

renewable energy in transport;  

•  a  reduction  in  greenhouse  gas  emissions  of  20%  below  the  1990  levels  through  energy 

policy measures; 

EU27 Mtoe 

2005  Baseline 

scenario,  oil 
price 61$/bbl 

Baseline 
scenario,  oil 
price 
100$/bbl  

Energy 
New 
Policy  scenario, 
oil 
price 
61$/bbl  

Energy 
New 
Policy  scenario, 
oil 
price 
100$/bbl 

1811  1968 

1903 

1712 

1672 

Primary 
Energy 
demand  

Oil demand  

666 

702 

648 

608 

 567 

2 
3 

Eurostat: "Energy – Yearly Statistics 2006 
http://ec.europa.eu/dgs/energy_transport/figures/trends_2030_update_2007/index_en.htm 

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EU 
production  

oil 

133 

53 

EU  net  oil 
import  

590 

707 

53  

651 

53 

610 

52 

 569 

Table 1 result of the PRIMES baseline and new energy policy scenario 

•  a  13%  to  15%  reduction  in  primary  energy  demand  in  2020,  compared  to  developments 
under a moderate oil price Baseline projection, which brings the EU a long way towards 
the  20%  savings  objective.  The  range  provided  for  the  reduction  in  the  primary  energy 
demand stems from the assumption regarding the oil price environment, with higher values 
corresponding to the "New Energy Policy" scenario with high oil prices. 

In  the  Energy  Policy  Scenario,  total  primary  energy  demand  will  be  reduced  to  1672-1712 
Mtoe by 2020, depending on the oil price. In particular, the demand for oil will be reduced to 
567-608 Mtoe, which corresponds to a 9% to 15% decrease from the current level. However, 
due to the considerable reduction in EU indigenous oil production, more than 90% of our oil 
needs will still need to be imported.  

Finally  it  should  be  remembered  that  modelling  and  scenario  analysis  involves  many 
assumptions in terms of: oil and energy prices, inflation, GDP growth, population growth etc. 
and  therefore  cannot  be  taken  as  predictions.  They  can  however  help  in  assessing  possible 
future developments of our energy needs and in deciding new policy initiatives.  

Figure 1 indicates the main countries providing EU oil import in 2006. Since oil is a global 
commodity traded on international markets it will be extremely difficult to identify which will 
be the major source countries for European oil imports by 2020. However, it can be assumed 
that,  considering  the  forecast  increased  contribution  of  OPEC  to  world  oil  consumption4,  a 
substantial amount of our additional requirements of oil would be met by increased supplies 
from OPEC countries. 

4 

IEA World Energy Outlook 2007 

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Others
18%

Norway 
16%

Saudi Arabia 
9%

Iran 
6%

Iraq 
3%

Russia 
32%

Nigeria 
4%

Libya 
9%

Algeria 
3%

Figure 1 EU 27 import of crude oil in 2006 

All  the  EU  countries  with  the  exception  of  Denmark  are  net  oil  importers.  The  UK,  which 
since the 1980s managed to cover its internal demand through its oil production in the North 
Sea, became in 2006 a net oil importer.  

Some analysts suggest that new Member States, such as Romania, which holds the largest oil 
and  gas  reserves  in  Central  Europe,  have  a  considerable  potential  for  additional  oil 
production. However, in 2005, oil production in Romania was only 6 Mtoe with an internal 
consumption  of  more  than  10  Mtoe5.  Therefore  with  its  current  oil  production,  Romania, 
which is also a mature oil region, is not in the position to alleviate EU oil import dependence.  

The North Sea, which is by far the major oil producing region in the EU, is a mature oil and 
gas area in which production is declining. However, its field still hold a considerable amount 
of reserves and the North Sea  production, including the  EU and Norway, makes this region 
still the fourth in the world in terms of total oil and gas output (figure 2). 

Notwithstanding  the  sovereignty  of  individual  Member  States  over  their  hydrocarbon 
resources, the EU as a whole has an interest in continuation of hydrocarbon exploration and 
production  in  the  North  Sea  and  other  EU  producing  areas,  for  security  of  supply  reasons, 
creation of employment and promotion of EU service industry and technology.  

The exploitation of indigenous oil resources in the EU is linked to technological progress and 
human resources expertise in Exploration and Production activities. The continuation of such 
technological progress and availability of human resources expertise in the EU would result in 
extending  the  lifetime  of  our  oil  fields  through  further  increases  in  recovery  rates  from 
existing producing areas and discovery of new hydrocarbon reservoirs.  

5 

EU energy and transport in figures Statistical Pocket Book 2007/2008 

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Figure 2 cumulative oil and gas production million barrels oil equivalent per day (Source 
BP Statistical Review 2007) 

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2 

Internal oil market  

The EU oil market has generally been considered as an open market where crude and refined 
products  move  smoothly  and  freely.  Nevertheless,  doubts  have  recently  been  raised  as  to 
whether  legal,  technical  and  logistic  obstacles  might  prevent  genuine  free  trade  and 
circulation of crude and oil products.  

For  example  one  issue  of  particular  concern  is  the  limited  connection  between  the  pipeline 
networks of eastern and western Europe since the two systems are currently connected only 
through the Ingolstadt-Kralupy-Litinov pipeline (see chapter 3.2.2 on EU internal pipelines).  

The  Directorate  General  for  Energy  and  Transport  has  launched  a  study  "Survey  of  the 
competitive  aspects  of  oil  and  oil  product  markets  in  the  EU".  The  study  is  expected  to  be 
completed during 2009 and will provide an in depth analysis of various aspects of the internal 
market for oil and oil products in the EU. 

The  oil  sector  differs  from  other  energy  sectors  in  terms  of  storage,  transmission  and 
distribution since oil and its products can be transported and stored more easily and cheaply 
than gas and electricity. 

In particular, transport and distribution of oil and refined products, both at a global scale and 
in  the  EU  internal  market,  can  be  assured  by  many  different  competing  infrastructures: 
pipelines, short-sea shipping, inland waterways, railways and road transportation. 

Due to this multiple choice of transport options, in contrast to the electricity and gas markets, 
the oil sector has not been regulated by specific EU legislation on third party access (TPA) for 
transport and distribution. General EU competition rules apply however and have been used 
in a number of cases. 

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3 

Supply infrastructures: ports, tankers, refineries and pipelines  

3.1 

Ports and tankers 

Most of our imported oil, approximately 80%, is brought into the EU territory by tankers and 
only the remaining part arrives through two pipelines Druzhba and Norpipe (see chapter 3.3 
on pipelines for details).  

Most  of  the  oil  imported  by  tankers  reaches  the  territory  of  the  EU  through  a  dozen  major 
ports.  Figure  3  indicates  the  major  EU  oil  terminals,  the  quantity  of  oil  imported  is 
proportional to the size of the anchor.  

The progressive depletion of EU indigenous oil reserves and the need for additional imports 
of  oil,  together  with  the  predicted  rise  in  international  oil  trade  sea  flows  will  generate  an 
increasing density of maritime traffic in European waters in the years to come. This situation 
raises concerns with regard to environment, for example the increased pollutant emissions in 
our seas and ports and also the risk of tanker accidents.  

Figure 3 major ports and oil terminals in the EU 

The Erika and Prestige accidents, and the environmental damage caused by the resulting oil 
spills  highlighted  the  importance  of  the  highest  safety  standards  in  maritime  transport.  The 
EU took robust action at European and international level through the accelerated phasing-out 
of  single  hull  tankers,  the  detection  and  prosecution  of  polluters  and  the  availability  of 
pollution  response  means.  The  third  maritime  safety  package6  currently  under  negotiation 
contains  seven  legislative  proposals  to  further  enhance  quality  shipping  and  combat  sub-
standard operators. 

6 

http://ec.europa.eu/transport/maritime/safety/2005_package_3_en.htm 

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Beside tanker transport, new pipelines can provide alternative routes for imports of crude into 
the EU in the years to come. Chapter 3.3 provides an overview of existing and newly planned 
oil pipelines which are likely to influence oil supply to the EU in the years to come. 

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3.2 

Refineries 

Beside  supply  of  crude  oil  from  third  countries,  the  EU  also  relies  on  international  trade  to 
balance  its  demand  in  refined  products  since  its  refining  industry  is  characterised  by 
overcapacity  in  production  of  gasoline  and  insufficient  supply  of  diesel  and  other  middle 
distillates.  At  the  same  time,  in  the  US  there  is  an  oversupply  of  diesel  and  a  shortage  of 
gasoline.  This  situation  makes  both  markets  complementary  and  has  generated  a  trade  in 
refined products between the EU and the US. However, most of our diesel needs, not satisfied 
by the EU local production, are imported from the Russian Federation7.  

Since  the  1980s  and  until  recently,  the  refining  industry  at  global  scale  has  experienced  a 
period  of  overcapacity  and  low  profitability  which  has  prevented  investment  in  new  plants. 
Therefore very limited new refinery capacity has been built in the US and the EU in the past 
twenty years.  

However,  in  the  past  few  years,  a  combination  of  demand  growth  and  refinery  capacity 
rationalisation  has  resulted  in  a  tighter  balance  between  refining  capacity  and  demand  for 
refined  products.  This  tighter  balance  coupled  with  lack  of  investment  in  the  past  decades 
raised some concerns on future availability of refining capacity both in the EU and at global 
scale.  This  prompted  the  Commission  to  launch  the  "Study  on  oil  refining  and  oil  markets" 
which has analysed in detail the current situation and the likely development of the refining 
sector as well as its possible impact on oil prices.  

The study was completed in November 20078 and its main outcomes were:  

•  until now the OECD countries accounted for most of the demand for refined products. The 
situation will change and in the future, developing countries will require massive amount 
of refined products. China for example is expected to increase its demand for oil products 
five fold by 2030; 

•  the structural deficit in diesel and excess production of gasoline in the EU will continue in 
the  next  years  and  will  be  exacerbated  by  the  increased  penetration  of  diesel  vehicles. 
Industry  will  try  to  compensate  with  increase  in  international  trade  of  refined  products 
rather  than  with  additional  investments  in  new  refining  capacity.  As  a  consequence,  EU 
imports  of  diesel  and  other  refined  products  from  Russia  and  other  areas  are  forecast  to 
increase; 

•  in  the  next  decades,  in  addition  to  increasing  demand  for  refined  products,  important 
drivers of the refining sector would be: tighter fuels specification, new emissions trading 
schemes and taxation regimes for different products; 

•  Approximately 200 new refining projects have been announced globally which should lead 
to  a  capacity  increase  of  5  million  barrels  (Mbbl)  per  day  by  2012.  This  amount  will 
roughly satisfy additional demand by that time. However, by 2020 much more additional 
capacity is needed than is currently planned. 

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In 2005, 28 Mton of diesel products were imported from Russia into the EU (source EUROPIA). 
Purvin 
http://ec.europa.eu/dgs/energy_transport/security/studies/index_en.htm  

Refining 

Study 

Gertz 

and 

Oil 

Oil 

Inc 

on 

& 

Markets 

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3.3 

Pipelines 

3.3.1  Existing pipelines from third countries  

As  indicated  earlier,  most  of  our  imported  oil,  approximately  80%,  is  brought  into  the  EU 
territory  by  tankers  and  only  the  remaining  part  arrives  through  two  pipelines:  Druzhba, 
which  connects  Russia  to  countries  of  Central  &  Eastern  Europe,  and  Norpipe,  an  offshore 
trunk line linking Norwegian and British oil fields to the Teeside facilities in the UK. 

Druzhba,  the  longest  pipeline  in  the  world  (4000  km),  was  put  in  operation  during  the 
1960s with the scope to supply oil to western regions of Former Soviet Union and countries of 
Central and Eastern Europe, members at that time of the Warsaw Pact.  

The Druzhba pipeline (figure 4) begins in Tatarstan, southeastern Russia, where it collects oil 
from western Siberia, the Urals, and the Caspian Sea. It runs to Mozyr in Belarus, where it 
splits into a northern and a southern branch.  

The  northern  branch  crosses  the  remaining  part  of  Belarus  across  Poland  and  Germany 
supplying  the  refineries  of  Płock,  Schwedt  and  Leuna.  In  Schwedt  the  Druzhba  pipeline  is 
connected through the MVL pipeline to the German port of Rostock. In Poland the northern 
branch is connected by the Płock-Gdansk pipeline with the Polish oil terminal in Gdansk.  

Figure 4 the Druzhba pipeline 

The  southern  branch  runs  south  through  Ukraine,  in  Uzhgorod  the  pipeline  splits  into  two 
lines  one  to  Slovakia,  Druzhba  1  and  another  to  Százhalombatta  in  Hungary,  Druzhba  2. 
Druzhba 2 is also connected through the Adria pipeline, from Százhalombatta in Hungary to 
the Adriatic port of Omisalj in Croatia. 

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In Brody, the Druzhba pipeline is also connected with the Odessa-Brody pipeline, (see later in 
the text) which is currently used to ship oil from the Druzhba pipeline to the port of Odessa in 
the Black Sea. 

Within the territory of the Russian Federation, the main trunk of Druzhba has a spur line to 
the  Mažeikiai  refinery  in  Lithuania.  From  Mažeikiai,  two  additional  branches  connect  with 
the oil terminals of Butinge in Lithuania and Ventspils in Latvia.  

In 1997, with the objective of diversifying its export routes, Transneft started the construction 
of the Baltic Pipeline System (BPS), see figure 10. The BPS was completed in 2001 and in 
2006  reached  a  capacity  of  65  Mtons  per  year  allowing  Russia  to  divert  oil,  originally  sent 
through the Druzhba and to the Mažeikiai refinery, to the Russian port of Primorsk.  

The delivery of Russian crude to the Latvian port of Ventspils ceased in 2003. In 2006, noting 
some  leaks  on  the  Druzhba  pipeline,  Transneft  stopped  also  the  delivery  of  crude  to  the 
Lithuanian port of Butinge. Russia did not accept several offers to jointly evaluate the extent 
of the damage and to collaborate in the repairs. These decisions allowed Transneft to stop the 
delivery of oil to the Mažeikiai refinery and to the Baltic ports as well as to avoid the transit 
of part of its exports through the territory of Belarus and Ukraine. As a consequence, the full 
capacity of Druzhba of 100 Mtons per year is not utilized and the current flow is reduced to 
approximately 65-70 Mtons per year. 

More recently, further to the January 2007 Russia-Belarus dispute on oil transit, the Russian 
Government approved in May 2007 the construction of the Baltic Pipeline System-2 (BPS-2) 
see figure 10. BPS-2 is a new pipeline with a transport capacity of 50-75 Mtons per year, to 
run from the Unecha junction of the Druzhba pipeline before the Russia-Belarus border to the 
Russian oil terminal of Ust-Luga (near Primorsk). The project also involves the enlargement 
of the Primorsk oil terminal to a capacity of 150 Mtons per year. 

If  implemented,  the  BPS-2  project9  will  divert  additional  quantities  of  oil  from  Druzhba  to 
Russian Baltic ports. This will lead to a big increase in tanker traffic in the environmentally 
sensitive Baltic area, which creates big concerns about the potential danger of accidents and 
oil  spills  (see  also  chapter  4  on  chokepoints).  In  2007,  171  Mtons  of  oil  were  transported 
through the Danish Straits, doubling the volume from 2000 (80 Mtons).  

An additional concern is that if more oil is diverted from Druzhba to Primorsk, through BPS-
2,  a  number  of  inland  refineries,  in  Eastern  Europe,  currently  fed  through  the  Druzhba 
pipeline, will need to seek alternative and probably more expensive supply routes. 

The 354 kilometres Norpipe oil pipeline starts in the Norwegian continental shelf, crosses 
British water and lands in Teeside in the UK (figure 5). 

The 34 inch Norpipe oil pipeline carries oil from different Norwegian fields (Ekofisk, Eldfisk, 
Embla,  Tor,  Valhall,  Hod,  Ule  Gyda  and  Tamber)  as  well  as  crude  production  from  other 
offshore British fields. 

9 

The BPS-2 project has a construction cost estimated at $ 2-2.5 billion and there are indications that the 
cost of oil transportation through the new pipeline would be considerably higher than the cost through 
the existing Druzhba. However, recent declarations from the Russian Government indicated that Russia 
intends to proceed with the project.  

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The design capacity of the pipeline is 45 Mtons per year; however its flow rate is limited by 
the capacity of the receiving facilities in Teeside in the UK of 40 Mtons per year. 

3.3.2 Existing pipelines within the territory of the European Union  

Figure 5 Norpipe Pipeline  

Beside pipelines which supply oil from third countries, the EU has a network which ensures 
transport and distribution of crude and oil products in its internal market.  

Figure 6 is a map of the major pipelines in the central part of the territory of the EU. A full 
map  is  provided  in  annex  1.  Owners  of  such  pipelines  are  generally  joint  ventures  of 
companies  from  the  countries  crossed  by  the  infrastructure.  For  example,  the  Trans  Alpine 
Pipeline  (TAL)10,  bringing  oil  from  the  Italian  port  of  Trieste  to  Austria  and  Germany  is 
owned by a consortium of companies11 from the three countries crossed by the pipelines.  

Two other major internal oil pipelines are SPSE12 connecting the French port of Fos sur Mer 
to  the  French  refinery  of  Feyzin  and  further  up  to  the  German  refineries  of  Karlsruhe  and 

10 
11 

12 

In 2007 TAL transported approximately 34 Mtons of oil. 
Deutsche  Transalpine  Oelleitung  GmbH  (DE),  Transalpine  Ölleitung  Ges.m.b.H  (AT)  and  Societá 
Italiana per l'Oleodotto Transalpino S.p.A (IT) 
the 
SPSE  Société  du  Pipeline  Sud-Européen  http://www.spse.fr/en/accueil/index.html  supplies 
refineries and petrochemical plants from Fos to Karlsruhe through France, Switzerland and Germany. 
The current level of transport is 23 Mtons per year.  

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Reichstett)  and  RAPL13  which  connects  Rotterdam,  the  biggest  European  oil  terminal  with 
Antwerpen and also to the German refinery of Wilhelmshaven.  

Figure 6 Pipelines in territory of the EU and neighbouring countries  

A  major  feature  of  EU  internal  pipeline  networks  is  the  limited  connections  between  the 
western European pipeline network and the eastern infrastructures. This is a consequence of 
the  fact  that  the  eastern  European  pipeline  network  (an  extension  of  the  final  part  of  the 
Druzhba pipeline) was conceived and built during the Cold War period and had, at that time, 
no pipeline link with the western network.  

Currently the only pipeline connection between the eastern and the western EU oil networks 
is  the  Ingolstadt-Kralupy-Litinov  (IKL)  pipeline  built  in  early  90s14.  An  additional  link 
between the eastern and the western part of the EU oil network, which has been discussed in 
the past few years, is the connection between the Bratislava and Schwechat near Vienna. This 
pipeline is only 60 kilometres long but faces major hurdles since it crosses environmentally 
sensitive areas and the Danube River.  

13 
14 

EN 

Rotterdam Antwerpen Pijpleiding http://www.rapl.nl/ 
Ingolstadt-Kralupy-Litinov has a length of 349 km (Vohburg and der Donau – Central Crude Oil Tank 
Farm 
capacity  of  10  Mtons  of  oil  per  year 
transport 
http://www.mero.cz/en/ikl_technicke_udaje.html) 

in  Nelahozeves) 

and 

a 

14 

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An  additional  important  feature  of  the  internal  EU  oil  network  is  that  the  western  part  is 
connected via pipeline to major European ports while most of the Central and Eastern Europe 
refineries are supplied through the Druzhba pipelines. If the Russian policy of redirecting its 
oil  export  from  the  Druzhba  to  Primorsk  continues,  Central  European  countries  might  face 
difficulties  and  increased  costs  for  their  supply  of  oil  and  oil  products  through  alternative 
routes.  

Another  important  network  of  pipelines  is  also  managed  by  NATO  which  has  operated  its 
own  pipeline  systems  since  1950.  The  NATO  pipeline  network  comprises  nine  separate 
military storage, transport and distribution systems for oil products. 

The biggest of the nine NATO systems is the Central Europe Pipeline System (CEPS) which 
manages 5.200 km of pipeline, 84 pump stations and 36 storage facilities with a capacity of 
1.100.000 cubic meters of oil products. 

3.3.3  New Pipelines and additional supply from the Caspian region  

The  Caspian  region  holds  considerable  amounts  of  oil  reserves  estimated  to  be  in  the  same 
order  of  magnitude  as  the  North  Sea.  Production  from  the  Caspian  countries  will  increase 
substantially in the next decades15; Kazakhstan for example, plans to triple its oil production, 
from the current 75 Mtons per year, to 200 Mtons by 2030. This additional oil production will 
allow diversifying global and EU oil supply portfolio avoiding excessive dependence from a 
restricted number of suppliers.  

However,  due  to  the  landlocked  nature  of  the  Caspian  areas,  its  reserves  are  not  easily 
accessible and transportation of crude to the international market will require construction of 
new oil pipeline(s) as the Turkish straits16 and the Baku-Tbilisi-Ceyhan (figure 7) will not be 
able to transit the future additional oil. If such pipelines are not built, Caspian oil producing 
countries will look for alternatives oil routes for example towards eastern markets. Swaps of 
Caspian oil are already taking place with Iran. 

15 

16 

Oil production will come primarily from Kazakhstan and Azerbaijan fields: Tengiz and Karachaganak 
in Kazakhstan and Azeri, Chirag and Guneshli in Azerbaijan. Substantial additional production is also 
expected from the Kazak Kashagan field currently being developed by a consortium of international oil 
companies. 
The Turkish straits currently transit some 2.4 Mbbl of oil per day (120 Mtons per year). 

EN 

15 

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Figure 7 Samsun CeyhanPipeline 

A  number  of  pipeline  projects  have  been  proposed  for  bringing  additional  Caspian  oil 
production  to  the  international  market:  the  Samsun-Ceyhan  (figure  7),  the  Burgas-
Alexandropoulos,  the  Burgas-Vlore,  the  Constanta-Trieste  and  the  Odessa-Brody-Plock 
(figure 8). 

Beside  the  advantage  of  bypassing  the  Turkish  Straits,  all  these  projects  would  permit  a 
geographical  diversification  of  routes  as  well  as  sources  to  the  EU  and  to  the  international 
market. Of the following projects, the Constanta-Trieste (PEOP) and the Odessa-Brody-Plock 
pipelines  offer  the  advantage  of  being  directly  connected  to  the  EU’s  internal  oil  network. 

EN 

16 

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Figure 8 Planned pipelines  

Samsun-Ceyhan:  also  known  as  Trans-Anatolian  Pipeline  (TAP),  is  a  crude  oil  pipeline 
between  Samsun  in  the  Black  Sea  and  the  Mediterranean  oil  terminal  of  Ceyhan  in  Turkey 
(figure  7).  In  its  final  part,  the  pipeline  will  follow  the  existing  Baku-Tbilisi-Ceyhan 
pipeline’s route17.  

The  project  was  conceived  in  2003,  when  Italy’s  energy  company  Eni  studied  different  oil 
export routes from the  Caspian  area.  On 26 September 2005, Eni and Çalık Enerji  signed a 
Memorandum  of  Understanding  for  the  project.  On  June  2008  the  promoters  completed  the 
Front End Engineering and Design (FEED) of the project.  

The  planned  cost  of  the  pipeline  is  $1.5  -  2  billion.  The  555  km  pipeline  will  be  built  by 
TAPCO,  a  company  owned  by  Eni  and  Çalik.  It  will  initially  transport  50  Mtons  of  oil  per 
year (1 Mbpd) with the possibility of expansion to 75 Mtons at a later stage. 

The project includes a new terminal close to Samsun, a pipeline from Samsun to Ceyhan, and 
additional storage capacity in Ceyhan. When completed, the pipeline will give Turkey, and its 
Ceyhan terminal, a strategic role in the export of oil from the Caspian area to the international 
market.  

Burgas-Alexandropoulis  Pipeline  (BAP):  the  project  to  build  a  280  kilometre  oil  pipeline 
linking  the  Bulgarian  Black  Sea  port  of  Burgas  with  Alexandroupolis  on  the  Mediterranean 
coast of Greece was first considered in 1994. The project has been discussed for many years: 
on 12 April 2005, Russia, Greece, and Bulgaria signed a memorandum of understanding, on 
15  March  2007  the  agreement  on  the  construction  of  the  oil  pipeline  was  signed  and  in 
December 2007, Russian President Putin and Greek premier Karamanlis signed the agreement 
to form a company for the development of the BAP pipeline. 

The annual capacity should initially be some 35 Mtons and later should grow to 50 Mtons per 
year 

The main advantages of BAP compared to other proposed projects in the area is that it is the 
shortest and cheapest route to bypass the Turkish Straits and its construction does not seem to 
raise major environmental concerns. Moreover with the recent increases in oil tanker fees and 
possible long waiting times in the Turkish Straits, the financial viability of this pipeline seems 
to  be  guaranteed.  Like  the  Samsun-Ceyhan  pipeline,  it  would  be  designed  to  serve  the 
international market. 

The  ownership  of  the  pipeline  involves  three  Russian  companies  (Transneft,  Rosneft  and 
Gazprom Neft) which will together have a 51% stake in the project, with Bulgarian and Greek 
companies each holding 24.5% stakes. If the pipeline is completed, it will represent the first 
transport pipeline in the territory of the EU controlled by a Russian consortium18.  

17 

18 

The Baku-Tbilisi-Ceyhan pipeline is a crude oil pipeline which connects Baku, Tbilisi, to the Turkish 
port of Ceyhan. Oil is produced in the Azeri-Chirag-Guneshli oil field in the Caspian Sea. The pipeline 
is  the  only  export  line  for  Caspian  oil  which  bypasses  both  the  Russian  network  and  the  Bosphorus 
Straits.  
The  third  country  clause  included  in  the  third  package  on  internal  energy  market  adopted  by  the 
Commission  on  September  2007  covers  only  electricity  and  gas  networks,  oil  pipelines  are  therefore 
excluded 

EN 

17 

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Albania-Macedonia-Bulgaria  pipeline  (AMBO):  this  planned,  900  kilometres  (35  Mtons 
per year) pipeline connects the Bulgarian Black Sea port of Burgas with the Albanian Adriatic 
port  of  Vlore,  allowing  exports  of  Russian  and  Caspian  oil  via  the  Adriatic  Sea  to  the 
international market.  

The  AMBO  pipeline  would  be  longer  and  more  expensive  than  BAP.  Its  promoters  have 
however indicated that with a throughput tariff of $1.33 per barrel, it would be economically 
viable19.  Such  a  tariff  is  competitive  with  current  tanker  transport  fees,  particularly 
considering the risk of waiting time in the Turkish Straits. Unlikely the BAP, the consortium 
for the construction of AMBO is a US registered company owned by private investors.  

An  important  advantage  is  that  this  pipeline will  reduce  tanker  traffic  and  the  possibility  of 
related accidents, not only in the Turkish Straits but also in the Aegean Sea.  

Constanta-Trieste (PEOP): the Constanta - Trieste oil pipeline also called Pan European Oil 
Pipeline (PEOP) would run from the Black Sea port of Constanta to the oil hub of Trieste in 
Italy, through Romania, Serbia, Croatia, Slovenia and Italy20. On 3 April 2007, a ministerial 
declaration  on  next  steps  to  build  the  pipeline  was  signed  by  Ministers  of  the  concerned 
countries and Commissioner Piebalgs in Zagreb.  

The capacity of the 1.400 km pipeline is expected to be approximately 60 Mtons per year (1.2 
Mbbl per day). Besides creating an alternative route for exporting oil from the Caspian basin, 
a major advantage of this pipeline for EU security of supply is that, it will be connected at its 
end  to  the  Trans  Alpine  Pipeline  feeding  oil  to  Italy,  Austria,  Germany  and  the  Czech 
Republic.  

A further advantage is that this pipeline could substantially reduce tanker traffic not only in 
the Turkish Straits and the Mediterranean but also in the environmentally sensitive Adriatic 
Sea. 

While  Serbia,  Romania  and  Croatia  strongly  support  the  project,  the  position  of  Slovenia 
remains to be confirmed since part of the pipeline route would cross environmentally sensitive 
karst  areas  in  this  country.  In  addition,  Slovenia  has  limited  interest  in  additional  oil 
supply/transit as the country has no refinery. An option to circumvent Slovenia (subsea) has 
been mentioned as more costly but feasible.  

An Interstate Committee for PEOP, in which the Commission participates, has been created 
and meets regularly. On 22 April 2007 in Bucharest, the companies involved in the creation of 
a "Project Development Company" signed a shareholders' agreement.  

Odessa-Brody-Plock: In 2001, Ukraine built the Odessa-Brody pipeline with the purpose of 
supplying oil from the Caspian region countries to the EU. However, so far, the pipeline has 
been used "in reverse mode" to transport Russian oil to the Black Sea port of Odessa. During 
2007, approximately 9 Mtons of oil were transported from Brody to Odessa21.  

19 
20 

21 

Balkan & Black Sea Conference Bucharest April 2007 
A  PHARE  study,  limited  to  the  Romanian  part  of  the  pipeline,  was  completed  in  2005  indicated  a 
construction cost of € 3Bn for a construction of a pipeline able to transport 90 Mtons per year.  
see http://www.tnk-bp.com.ua/en/operations/projects/brodyodessa/ 

EN 

18 

   EN 

 
                                                 
If  reversed  and  extended  from  Brody  to  Plock  (the  main  Polish  refinery),  this  pipeline  will 
enhance the EU’s energy security by facilitating Caspian oil supplies to the EU (particularly 
to  Poland,  the  Baltic  States,  Slovakia  and  the  Czech  Republic)  through  Ukraine  bypassing 
both  the  congested  Turkish  Straits  and  the  Russian  pipeline  network.  It  would  also  further 
promote the integration of Ukraine into the EU’s internal energy market. 

The  EU  support  for  the  pipeline  has  included:  a  €2  million  TACIS  technical  assistance 
project,  including  the  completion  of  a  Framework  Business  Plan  for  the  extension  of  the 
Odessa-Brody  pipeline  to  Plock  in  Poland.  The  Business  Plan,  which  was  presented  on  12 
January 2007, demonstrated a business case for the project.  

On 10 October 2007 in Vilnius, Poland, Ukraine, Lithuania, Georgia and Azerbaijan signed 
an  inter-governmental  agreement  to  create  a  new  joint  venture  "Sarmatia  LTD"22  for  the 
implementation  of  the  pipeline  extension.  The  Samartia  joint  venture  launched  a  new 
feasibility study for the implementation of the Odessa-Brody-Plock-Gdansk pipeline.  
A follow-up Energy Security Summit was held on 22-23 May 2008 in Kiev. The participants 
reiterated their political support for the practical implementation of the Odessa-Brody-Plock-
Gdansk project by the signing of a Joint Statement. The need to modernise the under-utilised 
Ukrainian refinery system in order to be able to process the Caspian oil and make the Odessa-
Brody-Plock-Gdansk project profitable was also discussed23. Discussions will continue at the 
Summit planned at the end of 2008 in Azerbaijan. 

One  specific  problem  concerning  transit  of  Caspian  oil  through  the  Odessa-Brody  pipeline 
and then into the Druzhba pipeline to the EU is the need to avoid the mixing of different oil 
qualities  as  for  example  Caspian  light  oil  and  Russian  export  blend.  In  order  to  avoid  such 
mixing, it is proposed to alternate the pumping of either type of oil. Discussions are ongoing 
with the Slovakian pipeline operator Transpetrol24 to perform pumping tests.  

22 
23 

24 

The Samartia LTD consortium includes companies from the 5 countries involved in the project.  
The Ukrainian refineries have been designed and built to process Ural crude produced in Russia in order 
to refine Caspian light oil they will be need to be refurbished and modified.  
Transpetrol is 49% owned by Yukos Finance BV 

EN 

19 

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4 

Chokepoints at world scale and in European waters (Baltic and Black seas) 

Chokepoints are narrow channels used for transit of large volumes of international sea trade 
including oil. The concerns related to chokepoints can be different: geopolitical in the case of 
transit  through  potentially  unstable  areas,  environmental  and  in  particular  in  relation  to 
damage  from  an  accident,  economic  if  transit  through  a  chokepoint  requires  long  waiting 
times, security in connection to possible terrorist attack etc...  

Chokepoints (figure 9) therefore represent critical bottlenecks in the energy transport network 
since they transit high volumes of crude and products and the impact of interruptions of transit 
through them would affect severely the global oil market.  

The Strait of Hormuz leading out of the Persian Gulf, the Strait of Malacca linking the Indian 
and  the  Pacific  Oceans  are  the  world’s  most  strategically  important  chokepoints.  Other 
important  passages  are:  Bab  el-Mandab  which  connects  the  Arabian  and  the  Red  Sea,  the 
Panama  Canal  connecting  the  Pacific  and  Atlantic  Oceans,  the  Suez  Canal  and  the  Sumed 
Pipeline  linking  the  Mediterranean  with  the  Red  Sea,  the  Baltic  Sea  and  the  Turkish  Straits 
joining the Black Sea to the Mediterranean.  

Figure 9 World chokepoints 

In  2007,  approximately  half  of  the  total  world  oil  production  of  86  Mbpd  was  moved  by 
tankers  on  maritime  routes.  As  the  global  oil  market  is  dependent  upon  secure  and  reliable 
transport, the blockage of a chokepoint, even temporary, will result in supply disruptions with 
consequence  including  substantial  increases  in  oil  prices.  A  shipping  accident  through  a 
chokepoint,  besides  the  negative  effect  on  oil  supply  and  prices,  can  also  have  a  disastrous 
environmental impact in case of oil spills or ship wrecks.  

In  conclusion,  problems  at  chokepoints  even  in  remote  areas  such  as  the  Persian  Gulf  will 
have  an  impact  on  oil  supply  to  the  EU  since  oil  is  a  commodity  which  is  traded  and 
exchanged on global market.  

EN 

20 

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A  description  of  the  major  chokepoints,  on  a  global  scale,  is  in  annex  2.  Two  chokepoints 
located along the border of the EU, the Baltic Sea and the Turkish Straits, are described in the 
following chapters. 

Baltic Sea 

The Baltic Sea today is one of the busiest seas in the world, accounting for more than 15% of 
the world’s cargo transportation. Each month 3,500-5,000 ships cross the waters of the Baltic 
Sea. Approximately 17-25% of these ships are tankers transporting approximately 170 million 
tonnes of oil a year.  

With the expansion of the transport capacity of the Baltic Pipeline System (BTS in figue 10) 
to  65  Mtons  per  year  in  2006  and  the  planned  construction  of  the  Baltic  Pipeline  System  2 
(BTS-2  in  figure  10),  tanker  traffic  in  the  environmentally  sensitive  Baltic  area  is  going  to 
increase  substantially.  It  is  expected  that  by  building  the  Baltic  Pipelines  System  2,  Russia 
will be able to increase its export capacity from the Primorsk and Ust-Luga oil terminals to 
approximately 150 Mtons per year.  

Through the construction of the proposed Baltic Pipeline System 2, Russia will divert oil from 
the Druzhba pipeline to its Baltic ports. Doing that, Russia will have the opportunity to bypass 
a number of transit countries and to deliver oil cargo from its Baltic ports (Primorsk and Ust-
Luga) not only to European clients but also to the wider international market. 

All  the  Baltic  littoral  states,  except  Russia,  have  expressed  on  various  occasions  and  in 
different  fora  their  concerns  about  the  Baltic  Pipeline  System  2  as  an  oil  spill  or  a  tanker 
accident  in  the  area  will  have  severe,  some  experts  argue  irrecoverable,  environmental 
repercussions. 

EN 

21 

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e 

Figure 10 Baltic Pipeline System (BTS) and proposed Baltic Pipeline System 2 (BTS-2) 

Turkish Straits (Bosphorus and Dardanelles)  

The  Turkish  Straits  comprise  the  Bosphorus  and  Dardanelles  and  divide  Asia  from  Europe. 
The Bosphorus connects the Black Sea with the Sea of Marmara, and the Dardanelles link the 
Sea of Marmara with the Aegean Sea.  

Less than a kilometre wide at their narrowest point, the Turkish Straits are one of the world's 
most  difficult  waterways  to  navigate,  due  to  their  sinuous  geography.  With  50,000  vessels, 
including 5,500 oil tankers, passing through the straits annually, they are one of the world’s 
busiest and most dangerous chokepoints. 

In  2006,  oil  shipments  through  the  Turkish  Straits  were  2.4  Mbbl  per  day  (120  Mtons  per 
year).  In  2007,  some  1,200  tankers,  totalling  135  m  deadweight  tons,  of  Panamax  size  and 
larger,  along  with  a  large  number  of  smaller  tankers,  passed  through  the  Turkish  Straits. 
Unless  alternative  pipeline  routes  are  built  (see  chapter  3.3),  traffic  through  the  Straits  is 
expected to increase to an unsustainable level as Azerbaijan and Kazakhstan plan to increase 
substantially their crude production and exports in the future.  

On  different  occasions,  Turkey  has  raised  concerns  over  the  navigational  safety  and 
environmental  threats  to  the  Straits.  Commercial  shipping  has  the  right  of  free  passage 
through the Turkish Straits but Turkey claims the right to impose regulations for safety and 
environmental reasons.  

EN 

22 

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5 

Conclusions 

The PRIMES Baseline scenario as well alternative energy policy scenarios which include the 
impact of high oil prices and the implementation of the new EU energy policy indicate that oil 
will still be the main element of our energy mix in 2020.  

Moreover  by  2020,  due  to  the  decline  in  North  Sea  oil  production,  approximately  90%  of 
EU27 oil consumption will be imported from third countries. However, if planned energy and 
climate policies are successfully implemented (energy policy scenario), by 2020 oil imports in 
absolute quantity would be only slightly above levels of 2005. If oil prices were to return to 
100 $ per barrel, in addition to assuming the implementation of the new Energy Policy, the 
net imports would be slightly lower than in 2005. 

This note has analysed the existing and planned oil infrastructures within and towards the EU. 
Currently  most  oil  arrives  in  the  EU  via  ports  and  tankers.  Due  to  the  depletion  of  EU 
indigenous resources and the expected increase in international oil sea trade, increased tanker 
traffic is expected in European waters in the next decades. Such an increase raises concerns 
for the environment in relation to greenhouse gas emissions, air quality, oil spills and possible 
accidents;  particularly  in  environmentally  sensitive  areas  such  as  the  Baltic  and  Black  seas. 
Additional concerns exist about the risk of supply disruption should one of these transit routes 
be blocked.  

Construction  of  new  pipelines  can  provide  environmentally  viable  alternatives  to  increased 
tanker transportation as  well as a contribution to security of supply  through new diversified 
routes.  While  the  construction  of  new  pipelines  should  be  left  to  the  private  sector, 
consideration  should  be  given  as  to  whether  complementary  initiatives  can  help  the 
development  of  such  new  infrastructures  where  they  are  of  specific  interest  for  the  EU’s 
security of energy supplies.  

A number of initiatives at different stage of advancement are listed hereafter:  

•  Assessment  of  the  results  of  the  study  "Survey  of  the  competitive  aspects  of  oil  and  oil 
product  markets  in  the  EU"  which  are  expected  during  2009.  The  study  will  provide  a 
thorough  analysis  of  the  functioning  of  the  internal  market  for  oil  and  oil  products  and 
should indicate whether new policy measures are required.  

•  While different pipeline options to bring oil to the EU have been individually assessed by 
promoters,  an  overall  comparison  of  the  pros  and  cons  of  different  pipeline  options  is 
missing. A study to enable an independent comparison of the different options should be 
therefore  considered,  including  the  comparison  with  possible  new  ship  routes  and 
corresponding infrastructure. The study should pay attention not only to security of supply 
issues  but  also  to  all  environmental  threats  for  both  –  maritime  and  pipeline  transport. 
Particular  attention  should  be  given  to  EU  waters  and  particularly  the  Baltic,  Black  and 
Mediterranean seas. The study should make it possible to prioritise the projects, as it seems 
that at least some of them would compete for the same oil.  

EN 

23 

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•  To develop an oil dimension in the Energy Community25. This proposal was on the agenda 
of Energy Community Ministerial Council in June 2008. This issue is highly relevant given 
that Contracting Parties of the Energy Community are supplied for most of their oil via the 
Adriatic  Sea  and  the  Danube  River,  supply  routes  which  represent  in  some  cases  a  high 
cost  associated  to  an  environmental  risk.  The  Meeting  Conclusions  of  the  Energy 
Community  Ministerial  Council26  of  27  June  2008  included  a  specific  point  on  the 
development  of  an  oil  dimension  within  the  Community,  including  a  request  to  the 
Secretariat  to  prepare  a  draft  in  view  of  a  possible  decision  at  the  following  Ministerial 
Council Meeting on December 2008.  

•  The  possibility  of  inclusion  of  oil  infrastructure  in  the  Trans-European  Energy  network 
should be considered.27 Even if the limited budget provision available for trans-European 
Energy Network (TEN-E) projects is not likely to have a financial impact on the execution 
of new projects, the inclusion of strategic projects in the guidelines will encourage political 
support for such projects.  

•  The  assessment  of  the  effectiveness  of  environmental  policy  tools  in  taking  into  full 
account  the  impact  of  oil  transport  infrastructure  on  the  environment,  in  relation  to 
maritime  transport  (including  ports  and  terminals)  as  well  as  the  pipeline  transport 
(including construction of new pipelines).  

•  The  issue  of  oil  transportation  and  supply  should  be  kept  under  review  in  relevant 
Committees and bodies, as for example the Berlin Fossil Fuel Forum and the Oil Supply 
Group.  

•  Energy  Dialogues  with  major  oil  suppliers  (OPEC,  Gulf  Cooperation  Council, 
Mediterranean countries, Norway, EU-Russia Energy Dialogue etc...) should pay attention 
to the issue of oil transportation and supply. 

25 

26 

27 

The Treaty establishing the Energy Community relates to electricity and gas. However, from the outset 
the Parties envisaged its extension at a later stage to "other energy products and carriers", including oil 
products  and  infrastructures.  At  its  Article  100  (iii),  the  Treaty  establishing  the  Energy  Community, 
even foresees a simplified procedure allowing its Ministerial Council to decide by unanimity to extend 
it  "to  other  energy  products  and  carriers  or  to  other  essential  network  infrastructures".  In  particular, 
Croatia,  Serbia,  Slovenia,  Italy  and  Romania  signed  in  Zagreb  on  3  April  2007  a  "Ministerial 
declaration  on  the  development  of  the  hydrocarbons  dimension  of  the  Energy  Community"  in  which 
they call for the establishment of an Oil Forum. 
http://www.energy-
community.org/portal/page/portal/ENC_HOME/INST_AND_MEETINGS/Ministerial_Council/2008/2
7_Jun 
The  inclusion  of  oil  infrastructures  in  existing  guidelines  was  considered  but  eventually  dropped  in 
2003.  To  be  noted  also  that  in  2003,  some  of  the  countries  crossed  by  planned  pipelines  as  BAP, 
AMBO, PEOP and Odessa Brody Plock were not yet part of the EU. 

EN 

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Annex 1 

EN 

25 

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Annex 2 

Chokepoints 

Strait of Hormuz  

The Strait of Hormuz (figure 11) is by far the world’s most important chokepoint with an oil 
flow of approximately 17 Mbbl per day (850 Mtons per year) in 2006. It connects the Persian 
Gulf with the Gulf of Oman and the Arabian Sea.  

At  its  narrowest  point  the  Strait  is  34  kilometres  wide,  and  consists  of  two  1.6  km  wide 
channels for inbound and outbound tanker traffic.  

The majority of oil exported from the Strait of Hormuz is shipped to Asia, the United States, 
and Western Europe. Most of the crude exported through the strait travels long distances by 
Very Large Crude Carriers (VLCC) which can carry over 200.000 tons of oil.  

Closure of the Strait of Hormuz would require use of longer alternate routes with increased 
times  and  transportation  costs.  Alternate  routes  include  the  1200  km  long  Petroline,  also 
known  as  the  East-West  Pipeline,  across  Saudi  Arabia  which  has  a  capacity  to  move  250 
Mtons per year. Other alternate routes could include the deactivated 82 Mtons per year Iraqi 
Pipeline  across  Saudi  Arabia  (IPSA),  and  the  25  Mtons  per  year  Tapline  to  Lebanon.  Oil 
could also be pumped north from Iraq to the Ceyhan oil terminal in Turkey.  

Figure 11 Strait of Hormuz  

EN 

26 

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Strait of Malacca 

The Strait of Malacca (figure 12), located between Indonesia, Malaysia, and Singapore, links 
the Indian Ocean to the South China Sea and Pacific Ocean. Malacca is the shortest sea route 
between Persian Gulf suppliers and the Asian consumers. It is the key chokepoint in Asia with 
an estimated flow of 750 Mtons during 2006.  

At its narrowest point in the Phillips Channel of the Singapore Strait, Malacca is only 2.7 km 
wide creating a natural bottleneck, as well as potential for collisions, grounding, or oil spills.  

Over  50,000  vessels  transit  the  Strait  of  Malacca  per  year.  If  the  Strait  were  blocked, 
transiting  tankers  would  be  required  to  reroute  around  the  Indonesian  archipelago  through 
Lombok Strait, located between the islands of Bali and Lombok, or the Sunda Strait, located 
between  Java  and  Sumatra.  In  2007,  Malaysian,  Indonesian  and  Saudi  companies  signed  a 
contract  to  build  a  $7  billion  pipeline  across  the  north  of  Malaysia  and  southern  border  of 
of  Malacca. 
traffic 
Thailand 

through 

reduce 

tanker 

Strait 

the 

the 

to 

Suez Canal  

Figure 12 Strait of Malacca  

The Suez Canal (figure 13) is located in Egypt, and connects the Red Sea and Gulf of Suez 
with  the  Mediterranean  Sea.  Oil  shipments  from  the  Persian  Gulf  travel  through  the  Canal 
primarily to European ports, but also to the United States. In 2006, an estimated 200 Mtons 
per  year  of  oil  flowed  northbound  through  the  Suez  Canal  to  the  Mediterranean,  while  30 
Mtons travelled southbound into the Red Sea.  

Over 3,000 oil tankers pass through the Suez Canal annually, and represent around 25% of the 
Canal’s  total  revenues.  With  only  300  meters  at  its  narrowest  point,  the  Canal  is  unable  to 

EN 

27 

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handle  large  tankers.  The  Suez  Canal  Authority  has  discussed  widening  and  deepening  the 
Canal to accommodate VLCCs and Ultra Large Crude Carriers (ULCC).  

The  320  km  long  Sumed  Pipeline,  or  Suez-Mediterranean  Pipeline,  also  provides  a  route 
between the Red and Mediterranean Seas by crossing the northern region of Egypt from the 
Ain Sukhna to the Sidi Kerir Terminal. The pipeline provides an alternative to the Suez Canal, 
and can transport 155 Mtons of oil per year. In 2006, nearly all of Saudi Arabia’s northbound 
shipments (approximately 115 Mtons per year of crude) were transported through the Sumed 
pipeline.  The  pipeline  is  owned  by  Arab  Petroleum  Pipeline  Co.,  a  joint  venture  between 
EGPC, Saudi Aramco, Abu Dhabi’s ADNOC, and Kuwaiti companies.  

Closure of the Suez Canal and the Sumed Pipeline would divert tankers around the Cape of 
route. 
Good 

kilometres 

adding 

transit 

Hope, 

9600 

the 

to 

Strait of Bab el-Mandab  

Figure 13 Suez Canal  

The Strait of Bab el-Mandab (figure 14) is a chokepoint between the horn of Africa and the 
Middle  East,  and  a  strategic  link  between  the  Mediterranean  Sea  and  Indian  Ocean.  It  is 
located  between  Yemen,  Djibouti,  and  Eritrea,  and  connects  the  Red  Sea  with  the  Gulf  of 
Aden and the Arabian Sea.  

Bab  el-Mandab  is  30  km  wide  at  its  narrowest  point,  making  tanker  traffic  difficult  and 
limited to two 3 km-wide channels for inbound and outbound shipments. Closure of the Strait 
could keep tankers from the Persian Gulf from reaching the Suez Canal or Sumed Pipeline, 
diverting them around the southern tip of Africa adding transit time and cost.  

The  Strait  of  Bab  el-Mandab  could  be  bypassed  through  the  East-West  oil  pipeline,  which 
crosses  Saudi  Arabia  and  has  a  capacity  of  250  Mtons  per  year  capacity.  However, 
southbound  oil  traffic  would  still  be  blocked.  Security  remains  a  concern  of  foreign  firms 

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doing  business  in  the  region,  after  a  French  tanker  was  attacked  off  the  coast  of  Yemen  by 
2002. 
terrorists 

October 

in 

Panama Canal  

Figure 14 Bab el-Mandab 

The Panama Canal is an important route connecting the Pacific Ocean with the Caribbean Sea 
and Atlantic  Ocean. According to the Panama Canal Authority, 25 Mtons per year of crude 
and petroleum products were transported through the canal in 2006. However, the relevance 
of the Panama Canal to the global oil trade has diminished, as many modern tankers are too 
large to travel through the canal. Some oil tankers, such as ultra-large crude carriers (ULCC), 
are nearly five times larger than the maximum capacity of the canal. The largest vessel that 
can  transit  the  Panama  Canal  is  known  as  a  PANAMAX-size  vessel  (ships  ranging  from 
50,000 – 80,000 dead weight tons.  

The  Canal  is  80  km  long  and  only  30  meters  wide  at  its  narrowest  point.  Around  14,000 
vessels  transit  the  Canal  annually  of  which  around  half  account  for  traffic  to  and  from  the 
United  States.  However,  the  Panama  Canal  is  not  a  significant  route  for  US  petroleum 
imports.  

In  September  of  2007,  the  Government  of  Panama  began  work  on  a  $  5  billion  project  to 
expand the Canal. The expansion will add a third lane of traffic that will handle wider loads 
and  new  locks  that  will  be  50  meters  wide  (compared  to  the  current  30  meters)  as  well  as 
deeper and wider access canals that will allow for larger modern ships to pass. However, it is 
unlikely  that  oil  flows  would  increase  dramatically,  as  biggest  oil  tankers  would  still  be 
unable to use the canal. On the other hand, the expansion would open the new possibility of 
using the canal to transport liquefied natural gas (LNG), as almost all existing LNG tankers 
are too large to use the canal as it now stands.  

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Closure of the Panama Canal would increase transit times and costs adding over 13.000 km of 
travel since vessels would have to reroute around the Straights of Magellan and Cape Horn. 

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