The Caspian region presents challenging operating conditions for OSVs. Due to the region’s geography, there are significant physical barriers to entry, which make it difficult and costly to mobilise equipment into the region. OSVs can only access the Caspian via the Volga Baltic or Volga Don rivers and their respective canal systems, both of which present the restrictions and requirements described below.

Seasonal restrictions:
Each river and canal system typically freezes over and closes from November to March. 

Dimensional restrictions: Costly, technically challenging and time-consuming modifications may be required to allow vessels to pass through the river and canal systems because of restrictions imposed by the canals’ water depth, locks and bridges.

Towage contracts: Vessels modified or flagged in any state other than Russia are required to be towed, which incurs significant costs, depending on the route and availability of towage vessels.

Regulatory requirements: Customs and other governmental agencies’ inspections, authorisations and approvals are required to be completed and all required fees paid. These restrictions represent high logistical and financial barriers to entry and have led to the OSV market in the Caspian region becoming highly concentrated with only nine OSV suppliers. Topaz is the largest operator with four times as many vessels as the second largest operator and with almost 50% of the total Caspian OSV fleet.

In 2014, Topaz’s Caspian business did not grow materially, reflecting the mature nature of the dominant Azerbaijan market. However, Topaz deployed US$135.5 million to convert the purchase options of four vessel already operating in the Caspian on bareboat leases, thereby growing EBITDA considerably.

Topaz has had a presence in the Caspian Sea since 1990, through its acquisition of the BUE Marine fleet in 2005.

Photo of the Caspian Protector, an ERRV ensuring the safety of oil workers in the Caspian

Caspian Protector, an ERRV ensuring the safety of oil workers in the Caspian