Transporting Central Asian Oil by rail
The Baku-Tbilisi-Kars railroad line that connects Azerbaijan, Georgia and Turkey began operating at the end of October 2017. The project connects Turkey to Georgia, Azerbaijan, Turkmenistan, Uzbekistan, Kyrgyzstan, Kazakhstan and China in the East. It also connects all these countries to Europe through Turkey.
However, to begin with, this project will deactivate thousands of tractor-trailers and lorries used in international road transport in Turkey and the region, but it’s only an “insignificant” start. That is because the value of the Baku-Tbilisi-Kars railroad line travels far beyond being a new logistic infrastructure. The Beijing-London line, also known as Iron Silk Road, will affect Turkey’s imports. When mentioning imports, the most important import thing, apart from high-tech goods, that leads to a foreign trade deficit is energy. But what does the railroad have to do with energy?
Oil and natural gas are two important areas in energy where Turkey is highly foreign-dependent. Their logistic expenses take up a large part of the country’s budget. Millions of dollars in international pipelines are being constructed – some of which passes through Turkey’s land. Sea ports are constructed to serve this purpose. Tankers are purchased. All these investment costs are paid by the ones buying the commodities, in other words, the oil and gas going through those pipelines, harbors and refineries. And oil and gas prices include transport and storage costs.
Thousands of road vehicles will be deactivated. Hundreds of thousands of long-haul lorry drivers will lose their jobs. But the Baku-Tbilisi-Kars railroad line, stretching thousands of kilometers, opens the door to an important opportunity for Turkey regarding energy transportation. I’m talking about drilled oil and gas in Kazakhstan and Turkmenistan coming to Turkey via the railroad line. It is obvious that this newly created gigantic transport capacity will significantly reduce the cost of energy.
Just think, the offshore refinery facilities of Turkey carried by giant tankers with wheels on the railroad bringing Central Asian Oil through it could change the significance of refineries in Kirikkale and Batman overnight. And it’s not just an issue of oil. Gasoline, diesel oil and other refined oil products will also travel to Turkey through the railroad and can be transported to storage facilities in Turkey or abroad. It’s the same for natural gas. In fact, it’s the same for all industries that use petroleum-based resources.