Friday, December 5, 2014

Shipping Chokepoint Strangles Ukraine Hopes for U.S. LNG - Businessweek

Ukraine’s plan to diminish its energy dependence on Russia is adrift in the Bosporus Strait.

The nation, which gets half its gas from Russia, wants to build a liquefied natural gas terminal on the Black Sea and held talks with Cheniere Energy Inc. (LNG:US) to import U.S. cargoes. The only path to the terminal is through Istanbul’s 17-mile waterway.

Turkey doesn’t allow LNG shipments through the Bosporus because of safety concerns and congestion. The strait is about half a mile wide at its narrowest point and classified as a maritime chokepoint, among the most difficult to navigate.

“If Turkey were to agree to LNG ships transiting the Bosporus to deliver fuel to Ukraine, other states in the Black Sea would also want to invest in their own terminals,” Michelle Berman, the head of shipping and freight research at Business Monitor International in London, wrote in an e-mail Nov. 27. “This would lead to a considerable ramp up in the volume of traffic passing through the already congested Bosporus.”

Ukraine’s LNG plans may be further complicated by Russia’s decision this week to scrap its $45 billion South Stream gas pipeline to Europe, favoring instead a Black Sea link to Turkey. Strengthening ties between Russia and Turkey may make it even less likely that the government in Ankara would open up the Bosporus to LNG tankers. Russia already supplies 59 percent of Turkey’s gas.

Complete story at - Shipping Chokepoint Strangles Ukraine Hopes for U.S. LNG - Businessweek

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