Turkey’s natural gas find won’t solve all its problems
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President Recep Tayyip Erdogan last week announced that Turkey had discovered an offshore gas field of 320 billion cubic meters in the Black Sea, at a depth of 2,100 meters. The depth of the sea, which is 1,400 meters at that point, has to be added to this figure, so the field is 3,500 meters below the surface.
Treasury Minister Berat Albayrak, who is Erdogan’s son-in-law, presented the discovery as extremely important news that would be a “game changer” in the region. He added that two more layers were identified under the discovered field, but they needed to be confirmed by several checks in order to make it a proven reserve. Therefore, there is still the chance of an upward revision of this volume; but a downward revision cannot be entirely discarded either.
Of course, for a country like Turkey, which imports 98 percent of the gas it uses, this discovery is important. It consumes about 50 billion cubic meters of gas per year and pays about $13 billion dollars for it, so this field may alleviate Turkey’s energy problem to a certain degree, but considering it to be a game changer is not realistic.
Gas reserves are classified as small, medium, big or giant. Turkey’s new reserve is considered to be big, but a comparison with the world’s giants will give a clearer indication of its relative size. Russia’s reserves are estimated to total 62 trillion cubic meters, while Iran’s are 44 trillion and Qatar’s 32 trillion. This makes Turkey’s find a little more than 0.5 percent of Russia’s reserves, 0.7 percent of Iran’s and 1 percent of Qatar’s.
Supposing that the 320 billion cubic meters of gas is confirmed, this only corresponds to Turkey’s consumption for six years. It is also unclear how much investment will be required to make this gas reach the consumer.
The path for gas discoveries to reach the consumer has several stages. First is to complete the tests to turn it into a proven reserve with more accurate figures. Second is constructing the platforms to extract the gas. The Black Sea is notorious for its rough waves. Several platforms located closer to the shore in the same field have been destroyed, so we may expect that Turkey’s national petroleum company (TPAO) has learned the lessons from such bitter experience.
The depth of the field is another challenge. A floating platform will be needed to extract gas from a depth of 3,500 meters. Royal Dutch Shell’s floating platform Perdido is currently extracting gas in the Bay of Mexico from a 2,438-meter-deep field. It cost $3 billion. The world’s deepest operational platform is working at a depth of 2,600 meters. In other words, a platform that would be able to extract gas from 3,500 meters has yet to be manufactured.
This field may alleviate Turkey’s energy problem to a certain degree, but considering it to be a game changer is not realistic.
Yasar Yakis
If Turkey strikes another one or two layers of gas under the present field, it will be by far the deepest in the world, with all the unknowns that entails. The deeper the gas field, the greater the unpleasant surprises and the higher the costs.
A figure of between $5 billion and $6 billion is being mentioned as the potential cost of extracting gas from this newly discovered field. Even if Turkey cannot put aside such a large amount from its national budget, credits could be found in the international financial market for such a promising project.
Turkey has previously signed gas purchase contracts with several countries. Three of them (those with Russia, Algeria and Nigeria) will come to an end next year. They were negotiated when Turkey was in dire need of gas, so last week’s discovery will strengthen Ankara’s hand in the renegotiation of these deals.
Another aspect of the discovery is the promise Erdogan made to the public “to make this gas available to the Turkish consumer… by the centennial of the Turkish republic (Oct. 29, 2023).” Observers believe this is too optimistic. However, Israel and Egypt have been able to achieve similar goals in three years and Turkish subcontractors have a reputation of working hard to complete projects before their deadline. Furthermore, Erdogan will put all his weight behind the project before the next presidential election, which is scheduled for 2023. He has the means to force companies and exert pressure on the bureaucracy to obtain shortcuts around certain red tape.
The discovery may help alleviate Turkey’s hunger for energy, but it should not be regarded as a recipe for solving the country’s deep-rooted economic problems.
• Yasar Yakis is a former foreign minister of Turkey and founding member of the ruling AK Party. Twitter: @yakis_yasar
