Expert: Growing number of tankers in the Caspian Sea strengthens competition

Baku. 14 November. REPORT.AZ/ Large number of tankers in the Caspian Sea ports for the transport of oil and oil products is increasing competition and decreasing carriage costs.

Zafar Valiyev, expert on energy issues told Report commenting on impact of the increase in the number of tankers on market.

Z. Valiyev noted, as Caspian Sea has no direct access to international waters, large number of tankers carrying oil are not acceptable there: "This is contrary to the interests of transport companies Because higher number of vessels in the Caspian basin leads to more competitive environment and of course, carriage costs are decreasing.

Currently, active physical volumes of crude oil is high in energy markets and daily production and global oil market imbalance has created a surplus of oil products in markets".

According to him, excess of oil products, as well as lower demand have negative impact on transport companies.

The expert said for that reason the more the number of transportation companies, active cargo, tankers carrying oil productsthe more the rates will drop: "It is a natural phenomenon. 2004-2010 years were "golden age" of International oil markets.Enough investments were made during this period. In return of these investments daily production of crude oil increased, petroleum refineries increased processing capabilities.

However, in response, transnational transport companies expanded assets.Thus, the number of active oil tankers increased.It is the problem. There are quite a lot of tankers, few buyers the buyers and very high competition ", the expert added.

Head of the Oil Research Center Ilham Shaban said this situation strengthens competition and will drive costs down. According to him, the average freight rate in Caspian Sea is around 30 USD / ton around: "But this is an expensive price. High number of tankers creates competition that can reduce the price." The expert also said the cargo in Caspian Sea said decreased compared to previous years. According to him, downward trend is due to the weakening of trade turnover between countries after the fall in energy prices in the world market since 2014.

"We are not only talking about Azerbaijan. If we look at transportation in non-oil sector we can see sharp decline in relations between Iran-Kazakhstan, Iran-Russia, Iran-Turkmenistan, Turkmenistan-Russia. Cargo transportation decreased by up to 30%. For example, transportation of grain from Kazakhstan to Iran by sea decreased by more than 20%. At the same time, shipments dropped between Turkmenistan and Iran", the expert stated.

The analyst added that transportation between Azerbaijan and Turkmenistan increases: "Thus, Azerbaijan buys 4 million tons of oil products. Transportation of oil products with Russia reduced. 1 mmln tons of oil products sent to Makhachkala from Turkmenistan is currently sent to Azerbaijan.That is, the route of transportation has changed".

Currently, a record number of tankers were involved under the shipment of oil and oil products from the Caspian ports. Report informs, besides the traditional Kazakh, Azerbaijani and Turkmen ship-owners that operate exclusively within the Caspian Sea, number of tankers with Russian flag has significantly increased in the region.

Before ending the river navigation Russian ship-owners typically leave the Caspian Sea, preferring to operate in areas with less risk of downtime and lack of cargo. However, this year many Russian shipowners declared their intentions to leave the fleet in the Caspian Sea. Among them are "MRP-Tanker" (7 tankers), "MT-Group" (2 tankers), Group of companies "Palmali" (about 10 tankers), also other owners, such as VF Tanker and Prime Shipping, that are ready to compete with traditional companies in the Caspian Sea (Azerbaijan Caspian Shipping company "Caspar" - more than 30 tankers of "KazMorTransFlot" - 8 tankers, Marine Trade Fleet of Turkmenistan - 6 tankers).