Turkey Finds Energy in Black Sea as Erdogan

Shafaq News / Two Turkish sources said that Turkey has found large gas resources in the Black Sea, in a disclosure that may help it reduce its dependence on energy imports if the discovered gas can be commercially extracted.

President Tayyip Erdogan told energy executives on Wednesday he will announce “good news” on Friday that will herald a “new period” for Turkey - comments which drove up shares in Turkish energy firms and lifted the lira from this week’s record low.

According to Reuters, He gave no details but the sources said he was referring to a gas discovery in the Black Sea, and one source said the scale of the reserves could potentially meet Turkey’s energy needs for 20 years.

Turkey’s drilling ship Fatih has been operating since late July in an exploration zone known as Tuna-1, about 100 nautical miles north of the Turkish coast in the western Black Sea.

“There is a natural gas finding in the Tuna 1 well,” the source said. “The expected reserve is 26 trillion cubic feet or 800 billion cubic meters, and it meets approximately 20 years of Turkey’s needs.”

However he cautioned that it could take seven to 10 years to start production, and estimated investment costs at between $2 billion and $3 billion.

Officials, including Energy Minister Fatih Donmez, have given no details of Friday’s announcement, saying Erdogan will spell out the “surprise” himself.

Turkey’s presidency and energy ministry were not immediately available to comment on the scale of the find.

Turkey, which is almost completely reliant on imports to meet its energy needs, has been exploring for hydrocarbons in the Black Sea and in the Mediterranean - where its survey operations in disputed waters have drawn protests from Greece and Cyprus.

If the scale of the Black Sea reserves are confirmed, they would constitute a major find given fields containing 1-2 trillion cubic feet are often developed. However analysts say Turkey could face extra infrastructure costs in breaking into the market.

“Even if there is a legitimate find that is developed, it would take four to six years to get to the production phase,” said John Bowlus, editor-in-chief of Energy Reporters.

“Gas demand and prices are historically low and few are investing in new production,” which could tighten supply in 3-4 years, he said. “If developed quickly, this gas could come on the market at an optimal time.”

Any reduction in Turkey’s energy import bill, which stood at $41 billion last year from suppliers such as Russia and Iran, would not only boost government finances but also help ease a chronic current account deficit which puts pressure on the lira.

Although this remains a remote and uncertain possibility, the lira rose on Wednesday after Erdogan's vague statements, as dealers expected a positive effect.

A banker said that the market reaction shows that the Turks, who have been selling the lira to buy foreign currencies in recent months, are looking for a reason to buy back the local currency, but they also want to be sure that it will not depreciate further.