Rahmi Kopar holds a Ph.D. from the Center for Energy, Petroleum and Mineral Law and Policy, University of Dundee, and an LLM from the University of Vienna.
While everyone in Turkey was looking forward to a gas discovery from the Eastern Mediterranean, the good news came from the Black Sea. On Friday, Turkish President Recep Tayyip Erdogan announced that a huge natural gas reserve had been found in the Tuna-1 well off the coast of the Eregli district in the Black Sea. The reserve is estimated to be near 320 billion cubic meters (bcm), which is the largest that has been discovered in the Black Sea so far. This development has created much rejoicing among Turkish people, but now the question is whether this could be the jackpot for Turkey that everyone anticipates.
Before analyzing the significance of newly found gas reserves, it is appropriate to discuss Turkey’s natural gas reliance and trade. According to the statistics provided by the Turkish Energy Market Regulatory Authority, Turkey imported 45.2 bcm of natural gas in 2019, 33% of which came directly from Russia. LNG comprises 28% of the total natural gas imports amounting to 12.6 bcm. Turkey’s annual energy import bill is around US$41 billion out of which natural gas imports account for around $12 billion – a substantial part of the country’s overall energy budget. If the reserve estimations are on target, this would mean that Turkey may well become self-sufficient in natural gas for 8 years based on the current consumption level.
This latest discovery is critical for Turkey for several reasons. The most important is the know-how that Turkey has acquired during the exploration process and will acquire during the development phase. This know-how gained could cause a domino effect and lead to several more discoveries in the Black Sea and in the Eastern Mediterranean. After developing its own resources and acquiring expertise, Turkish companies could easily become part of the global energy arena to conduct similar operations all over the world, which might eventually lead to Turkey’s emergence as one of the biggest players in the sector. While Turkey already has gained the necessary expertise on gas sales and transport as a buyer for years, now it will bolster its position on the production side as well.
Energy security is one of the top priority issues for all policymakers worldwide. Decreasing dependency on imported resources has always been at the forefront of energy security policies. Since energy security is intrinsically linked with foreign policy and national security, by achieving a certain level of energy independence, Turkey will benefit from more elbow room to achieve its goals both nationally and internationally. Turkey has done much in the last number of years through the introduction of its Renewable Energy Resources Area (YEKA) scheme to diversify its energy sources and increase the share of renewables in its energy mix.
Another significant effect of this discovery could be in attracting international investments. This exploration could increase the appetite of foreign investors in the region, to fulfill the country’s recent goal of boosting such investments. If Turkey continues drilling and finds new promising reserves, this development would surely draw the eyes of international investors to the region.
Having another gas source from this discovery, Turkey will have more flexibility in its new long-term gas supply contracts, and combined with the competitiveness of LNG, lower gas import prices would naturally follow. Turkey has already started to diversify its gas sources, with an inclination towards LNG. The share of Russian gas imports dropped from over 50% to 33% within a few years. Now, Turkey will be less reliant on Russian gas and benefit economically from the more flexible alternatives.
Nonetheless, a reserve of 320 bcm will definitely not lead to a bonanza, especially when compared with the annual consumption of around 45 bcm. Considering that production per year will possibly be around 10 bcm from this reserve, this exploration will only lower imports and hence the current account deficit. However, this latest discovery is manifesting a positive mindset change. Through its governing bodies and institutions, Turkey is ready to try all avenues open to it to decrease its dependency on imported energy resources and exploit its own conventional resources. This might be a small discovery when compared to Russia or Qatar’s reserves, but nonetheless, it is the largest discovery in Turkey’s history.
The psychological impact of this discovery should not be underestimated, as it gives confidence to Turkey’s energy actors to further pursue their goals and it also engenders public confidence in the country’s aim towards self-sufficiency. This discovery marks the beginning of the road for Turkey in its exploration to find better and larger reserves.
*Opinions expressed in this article are the author’s own and do not necessarily reflect the editorial policy of Anadolu Agency.