Standard & Poor’s talks Türkiye earthquake impact on oil supplies from Azerbaijan

Oil&Gas Materials 23 February 2023 16:31 (UTC +04:00)
Standard & Poor’s talks Türkiye earthquake impact on oil supplies from Azerbaijan
Kamran Gasimov
Kamran Gasimov
Read more

BAKU, Azerbaijan, February 23. Crude oil exports from Azerbaijan and Iraq via the Ceyhan oil terminal averaged about one million barrels per day in January 2023, Trend reports via Standard & Poor’s (S&P) Global Ratings agency.

“On Feb. 6, a pair of devastating earthquakes hit Türkiye and Syria. Beyond huge human losses, the earthquakes inflicted significant damage to critical infrastructure and disrupted domestic trade, mainly in Türkiye, with the potential for global impact,” the agency said.

According to the agency, global markets quickly responded to the quakes with a brief spike in oil prices, as the impact of the disaster triggered supply concerns.

S&P noted that due to power outage and tank damage in the immediate aftermath of the earthquakes, operations were halted at the Ceyhan oil terminal in Türkiye, a major export route for refiners based in the Mediterranean Sea, and as a result, certain crude exports from Azerbaijan and Iraq were suspended.

Crude loadings have since resumed in the Ceyhan oil terminal after damage to the Iraq-Türkiye oil pipeline, one of the pipelines that pass through the earthquake zone, was repaired, the agency reminded.

Citing a spokesperson for operator bp, the S&P Global Commodity Insights [a division of S&P Global] said that the Baku-Tbilisi-Ceyhan pipeline, meanwhile, remained intact, and crude oil was being stored at the oil tanks in the Ceyhan hub.

Global oil prices steadied a few days after the spike, and stock trading in Türkiye resumed Feb. 15 after a brief pause, the agency stressed.

“Due to Türkiye's important maritime position between the Mediterranean Sea and the Black Sea, the damage caused by the earthquakes is also impacting the shipping sector. Türkiye’s Iskenderun port, on the Mediterranean coast, suffered substantial damage from the quakes and a subsequent container fire, which brought operations to a standstill and affected shipments for global logistics companies such as Maersk,” S&P explained.

Referring to Maersk, the agency said that it's not yet known how long recovery efforts will take and when the port can undergo a full inspection of the damage.

“At this time, we are not accepting any new bookings to and from Iskenderun," the agency noted citing Maersk.

Steel production also halted in Türkiye's earthquake-ravaged areas, given highway and port damage as well as electricity and natural gas flow cuts, the agency further said.

According to the S&P, steel mills in the affected locations discontinued output and shipments following the quakes to conduct damage assessments and rescue efforts, with plans to restart production soon.

Quoting General Secretary of the Turkish Steel Producers' Association Veysel Yayan, the S&P Global Commodity Insights noted that more than 30 percent of Türkiye's steel production originates from large steel manufacturers in the earthquake zone.

As the mills are likely to remain shut for a while, scrap and steel pricing could be affected. However, reconstruction activities should lift steel demand and prices, added the S&P Global Commodity Insights.

A 7.7-magnitude earthquake hit southeastern Türkiye on Feb. 6, 2023. The earthquake occurred at a depth of seven kilometers in the Pazarcik region of Kahramanmaras Province. The provinces of Hatay, Gaziantep, Kilis, Osmaniye, Malatya, Adiyaman, Sanliurfa, Diyarbakir, Adana, and Kahramanmaras were subjected to severe destruction.

As a result of the earthquake that hit Türkiye, strong tremors were also felt in Syria, Lebanon, Egypt, and Cyprus.

On February 21, 6.4-magnitude and 5.4-magnitude tremors were felt in the Turkish Hatay province, which had already been damaged by the deadly earthquake of Feb. 6. The earthquakes caused heavy destruction and personal injuries.