The new natural gas discovery of 405 billion cubic meters (bcm) in the Sakarya field in the Black Sea will enable Turkey to have a better bargaining position when its long-term gas contracts are up for renewal in 2021, many experts concur.
Professor Jonathan Stern, a distinguished research fellow and founder of the Natural Gas Research Program at Oxford Institute for Energy Studies, said the latest and biggest discovery in the country’s history would help Turkey in negotiations in 2021 with major suppliers like Russia’s Gazprom.
"My understanding is that production from the field will only be 6 billion cubic meters per year, so it will help but there will still have to be a renegotiation of long-term contracts with Gazprom and others," Stern said.
In total, 18.3 bcm of gas contracts per year will expire before the end of 2021 with 11.6 bcm up for renegotiation, as imports from Azerbaijan have already been replaced gas via the Trans-Anatolian gas pipeline (TANAP). Nonetheless, further volumes will be up for negotiations up to the end of 2026.
BOTAS and Turkish private companies Avrasya Gaz, Bosphorus Gaz, Enerco Enerji and Shell Enerji's gas supply contracts will expire at the end of 2021.
Out of 11.6 bcm of supplies, the majority of 8.25 bcm comes from Russia, while the remaining volume is in the form of LNG contracts with Qatar and Nigeria.
Turkey plans to start natural gas production by 2023, at an annual rate of between 5-10 bcm. The field is expected to reach plateau production of around 15 bcm by 2026
Stern maintained that this start date is possible but the field complexity and depth need to be taken into consideration in determining how long it will take to develop. He was also optimistic that other discoveries could be made in the region.
He conveyed that if Turkish companies plan to develop the field without outside help, it could take longer. He cited the example of Eni’s giant Zohr field in the Egyptian sector of the Mediterranean Sea, which saw a quick turnaround because it experienced no problems with either technology or financing.
Robin Mills, founder and the CEO of Dubai-based consulting firm Qamar Energy also agreed that the discovery would strengthen Turkey’s hand in negotiations
He took the view that Turkey would need full supplies in the intermediate period given that the discovery will take several years to develop.
Mills also concurred on the possibility of more discoveries in the area, as the geophysical traits of the field extend from offshore Romania and Bulgaria to Turkish waters.
He drew on the differences to the Zohr field in the East Mediterranean, which has been active for decades.
He described the three years to develop the Zohr field using existing infrastructure as “very quick”.
However, he said the logistics of operating in the Black Sea would be different, as the area has little infrastructure in place and the Turkish Petroleum Corporation (TPAO), which would lead in the development, does not have experience in deepwater gas development.
By Murat Temizer