Restrictions of passage, accidents and oil transportation: norms impact on supply security. CEPS Working Document No. 354, 17 June 2011

Luciani, Giacomo. (2011) Restrictions of passage, accidents and oil transportation: norms impact on supply security. CEPS Working Document No. 354, 17 June 2011. [Working Paper]

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Abstract

This paper looks at restrictions of passage, accidents and oil transportation norms as causes of interruption in oil supplies. The key ‘chokepoints’ are discussed in detail: the Straits of Hormuz, Malacca, Bab el-Mandeb, the Canals of Suez and Panama, the Turkish Straits and the entrance to the Baltic Sea. It is concluded that in most cases the danger of closure can only be temporary; nevertheless, investment in bypasses and alternatives is highly desirable, and in the case of the Turkish Straits, has not been forthcoming. The discussion then turns to threats to navigation outside the chokepoints, such as piracy and oil spills in enclosed seas, particularly the Mediterranean. The final section looks at changing international norms, especially the entry into force of the requirement of double hulls for oil tankers. The paper’s main conclusion is that there is no scenario of interruption of maritime oil and gas transportation that may cause a severe physical shortage of oil, in general or specifically for Europe. In almost all cases potential tensions could be easily allayed if responsible governments took the necessary steps to create alternatives (notably pipeline bypasses) or to curb illegal activities. The main factor preventing the required investment in transportation alternatives is the lack of a well-functioning market mechanism for burden sharing. Where passage must be paid for, the resulting income stream supports investment to increase capacity and accommodate growing demand.

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