Is Turkey's new gas discovery a game changer?

The aim was not only to accelerate the search for natural resources in its Black Sea waters and Mediterranean continental shelf, but also to gain full independence and national control over the process.

For this purpose, Turkey possessed three drilling ships - Yavuz, Fatih, and Kanuni, and two seismic ships Oruc Reis and Barbaros Pasa. 

Fortunately, the effort was not in vein. On 21 August, 2020, Turkish President Recep Tayyip Erdogan announced the discovery of a new natural gas reserve off the Black Sea coast, claiming it as a great win for Turkey. 

Fatih set the precedent of making this discovery, which is the largest of its kind in Turkey's history, and the Black Sea region is considered "giant" in international terms. The gas reserve is located around 100 miles off the Black Sea coast, at a depth of 2,100 meters (6,890 feet) below the seabed in the Sakarya gas field.

Economic value

With a population of over 80 million and a developing economy, Turkey has become one of the fastest-growing energy consumers in the world over the past few years, surpassed only by the People's Republic of China in demand for energy.

With a population of over 80 million and a developing economy, Turkey has become one of the fastest-growing energy consumers in the world

Turkey imports around $41 billion worth of energy annually, which amounts to 99 percent of the country's gas needs or 45 billion cubic meters with a total value of 10 to 15 billion dollars per year. Depending on the quantity that will be extracted from the field, it is expected to meet a large proportion of Turkey's gas needs. If ten billion cubic meters are extracted annually, for example, the field can meet around a quarter of Turkey's gas needs over 32 years. 

According to Fatih Birol, the International Energy Agency's (IEA) head, Turkey's giant offshore natural gas discovery of 320 billion cubic meters (bcm) is worth $80 billion in line with current price trends. 

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This means that once utilised, the gas discovery is expected to reduce the burden of the energy bill, save hard currency for the country, and improve the trade balance deficit, which is a major problem for the Turkish economy, by about 3 billion dollars per 10 billion cubic meters of gas. The overall impact on the state of the economy will be positive. 

Energy security

The discovery is expected to strengthen the energy security of the country and give a great impetus to its diversification strategy, which is mainly based on diversifying the dependence on energy sources, reducing the consumption of coal, and increasing the proportion of renewable energy sources in its energy portfolio. 

Moreover, Turkey aims to reduce dependence on energy imports (oil and gas) from both Russia and Iran, not only because excessive dependence on them threatens the country's energy security, but also because it limits Turkey's ability to manoeuvre politically and militarily in regional issues that are related in one way or another to these countries. 

Taking this into consideration, Ankara is celebrating this new gas discovery because it also offers a unique possibility to reduce energy dependence on foreign states, which would in turn lessen energy security concerns and geopolitical risks.

The gas discovery offers a unique possibility to reduce energy dependence on foreign states, which would in turn lessen energy security concerns and geopolitical risks

In this sense, the Sakarya gas field is expected to enhance the status of gas in Turkey's energy profile, reduce dependency on Russian and Iranian gas, and give Ankara an advantage in terms of negotiating long-term gas supply contracts with its exporting countries, or even modifying existing agreements. 

Last year, Turkey succeeded in reducing gas imports from Russia and Iran and increased the amount imported from Azerbaijan, Qatar, Algeria, and the United States (US). The discovery will strengthen Ankara's negotiating position with several countries whose gas contracts are expected to expire soon. 

Three of Turkey's nine long-term contracts with suppliers end in 2021, including with Russia, Azerbaijan, and Nigeria, while contracts with Algeria end in 2024, and with Iran in 2026. As a result, Ankara is poised to save billions of dollars in the future.

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Political calculations

Regarding the timeline, Erdogan announced that production would commence in 2023. Obviously, the timing is no coincidence, considering that year marks the 100th anniversary of the foundation of the Republic of Turkey and is concurrently the year for the next Turkish elections. This means that it carries connotations of an internal political nature as well. The promise of a comfortable degree of energy independence, the reduction of electricity prices, and the feeling of energy security come as pleasing news for the Turkish people. 

If early elections are not held, the year 2023 is supposed to witness presidential, parliamentary, and local elections. There is no doubt that the introduction of gas into the equation will strengthen the position of the Justice and Development Party (AKP) in these elections after nearly five years of decline. 

Although the gas discovery remains important both economically and politically, it is not sufficient on its own to be a game changer

However, if Turkey discovered more gas in the Black Sea or the Eastern Mediterranean during the run-up to the elections it could certainly mean that the party would largely secure its place in the executive authority and strengthen its position in the legislative branch.

Not a game changer

Although important, this discovery may not be exactly what the Turkish government is conveying. For one thing, the announcement makes it sound like an immediate win for the country, but things might be much more complicated than they sound. According to Rystad Energy, a Norwegian independent energy research and business intelligence company, the production start date might not be until 2028, indicating at least a five-year gap in comparison with Turkish projections.

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The matter is closely related to the distance between Ankara's overambition and its capacity, and the list of challenges that might face Turkey in this regard is not short. Wells must be drilled to properly size the reservoir in question.

Studies must also be conducted to understand the feasibility and the most reliable way to extract the gas. Besides, the market for gas needs to be probed; supply needs demand, and if Turkey intends to export gas, it needs to find potential clients before the extraction work even begins.

Some experts tend to make a comparison between Turkey's newly discovered reservoir as a deep-water natural gas reserve and Romania's Neptune Deep project, which is permanently stalled. To complete the list of complexities, Turkey might not possess the technology to perform this type of extraction (deep-water projects) by itself, which means it will be dependent on a third party, most likely an international private company. 

Regardless, although the discovery remains highly significant both economically and politically, it is not sufficient on its own in either local or regional terms, meaning Ankara has to score more energy resource discoveries before it can truly be labelled as a game changer. 

Ali Bakeer is an Ankara based political analyst/researcher. He holds a PhD in political science and international relations. His interests include Middle East politics with a particular focus on Iran, GCC countries and Turkey.

Follow him on Twitter: @alibakeer

André Rodrigues Rocha is an intern at Gulf State Analytics (@GulfStateAnalyt), a Washington, DC-based geopolitical risk consultancy.