Major gas finds to ease Turkey's heavy reliance on imports

• Date: 01 October 2020
• DOI: http://doi.org/10.1111/oet.12819
• Published date: 01 October 2020

GAS AND POWER

Major gas finds to ease Turkey's heavy reliance on imports

Turkey has had little in the way of domestic oil and gas

reserves or production, but does have growing energy

demand, a balance of payments problem and struggling

economy, so the recent discovery of a major offshore gas-

field in the Black Sea was particularly welcome news.

The size of the identified reserves, at 320 bn m

3

(11.3 tn

cft), means the field can meet a substantial part of the

country's gas demand for several years—which should

enable Turkey to reduce its heavy reliance on gas

imports, or at least negotiate better terms. Turkey's total

import bill in 2019 was $41 bn, with flows including pipe-

line supplies from Russia through the Blue Stream and

(new) South Stream pipelines, and from Azerbaijan/Iran,

as well as liquefied natural gas (LNG) deliveries to two

terminals.

Consultancy Wood Mackenzie said “this is Turkey's

biggest-ever find –by a wide margin –and one of the

largest global discoveries of 2020. What's more, it

reaffirms the deepwater Black Sea's hydrocarbon poten-

tial after several disappointing wells in Bulgaria.”There

could be more hydrocarbons nearby, according to Turk-

ish Energy Minister Fatih Donmez, who pointed to a pro-

spective deeper layer, around 2400 m below the seafloor.

The CEO of state producer TPAO, Melih Han Bilgin, said

that the company would immediately start acquiring 3D

seismic and appraise the area where the field, dubbed

Sakarya, was found, with the aim of producing first gas

by 2023.

However, it is not yet clear how much of the gas is

recoverable, and what production rates could be

achieved. There are also questions over the timetable,

given its tough dee pwater location—the d iscovery is in

waters 2100 m deep in the Tuna-1 zone, 150 km from

Turkey's northwest coast, and about 1400 m below the

seafloor. Wood Mackenzie said the 2023 start-date for

the new field was am bitious, and note d that a foreign

partner would prob ably be needed: “Deepwater pro jects

are complex in any env ironment, but the B lack Sea

poses additional logistical challenges that must be man-

aged. This is one of the factors that has stalled

Romania's [nearby] Neptun Deep project”(see below).

Some observers suggest it could take up to a decade for

Sakarya gas to come online, and in the meantime bil-

lions of dollars of investment will be required at a time

when internation al prices remain ver y weak.

Nevertheless, Turkey is expected to move ahead swiftly

with investment d ecisions.

The Sakarya field is close to an area where the mari-

time borders of Bulgaria and Romania converge and

about 100 km from Romania's deepwater Neptun Deep

find, which was discovered 8 years ago by local Petrom

and ExxonMobil, and had been the largest Black Sea

find until now. Romania has yet to develop the field,

although, unlike Turkey, it does have offshore produc-

tion from several shallow-water gas projects. Deepwater

in the area remains relatively unexplored, and further

large finds are possible. Rosneft has explored in the

Russian part of the Black Sea but so far without

success.

The find could have far-reaching implications for

future gas imports and upcoming import negotiations

with Russia, Azerbaijan and Iran—most term gas supply

to Turkey is oil price-linked, and Turkey wishes to switch

to European gas benchmarks and more generous/flexible

terms. Turkey still needs the gas—despite coronavirus,

Turkish gas demand has only fallen 3%, year-to-date at

45 bn m3/y, vs last year, which is a less severe drop than

for most other European markets, and the underlying

trend is sharply upwards.

1|TESTING SOUTHERN

BOUNDARIES

Turkey is also searching for oil and gas in Mediterranean

waters, where it remains in dispute with Greece and

Cyprus over maritime boundaries, while a similar row

with Egypt is brewing (see Figure 1). It is also attempting

to join up its maritime boundaries with Libya. After

intervention by Germany's chancellor, Angela Merkel,

Turkey's president Recep Erdogan agreed at the begin-

ning of August to pause offshore surveys south of the

Greek island of Kastellorizo, and to enter a dialogue with

Greece over the disputes. But, following the exclusive

economic zone (EEZ) delineation agreement signed

between Greece and Egypt on August 6th, Turkey pulled

out of preliminary discussions and returned to its original

offshore survey plans.

However, little gas has been found in Turkish claims,

and the prospects are poor with most resources thought

DOI: 10.1111/oet.12819

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