Türkiye achieves energy breakthrough with Black Sea gas

Türkiye is to start the use the natural gas it discovered in the Black Sea as the energy sector reaches new heights while bringing the country closer to its energy independence journey.

The gas discovery was initially made in 2020, located 170 kilometers (105 miles) off the coast of northwestern Zonguldak province. With the additional discoveries made in the following years, the total natural gas reserves in the area have now reached 710 bcm.

The commissioning of the domestic gas is to start with the Black Sea Gas Commissioning Ceremony at the Filyos Gas Processing Facility with the participation of President Recep Tayyip Erdoğan later Thursday.

More than 8,000 personnel on land and over 2,000 personnel at sea have worked tirelessly in three shifts for the past two years to introduce domestic gas.

Domestic gas is expected to contribute billions of lira to the economy as it will cover a significant part of Türkiye’s energy needs and reduce its dependence on foreign sources while strengthening its hand in contracts with major gas-supplying countries.

The aim is to deliver domestic gas to homes in the first half of May.

Erdoğan is also expected to deliver “good news” at Thursday’s ceremony. Accordingly, the natural gas used in residences up to 25 cubic meters per month will likely be free of charge. This means TL 30.8 billion ($1.59 billion) in support for citizens’ budgets.

The process of extracting natural gas will proceed in phases. Some five of the 10 wells planned within the scope of Phase-1 will be commissioned after the ceremony on Thursday, and the remaining five wells will be commissioned at the end of September.

Phase-2 production is expected to start in 2026, and Phase-3 is scheduled to begin in 2028, including Amasra Field in production.

Daily gas production will be 10 million cubic meters (mcm) in Phase-1, 40 mcm in Phase-2 and 60 mcm in Phase-3.

As of Phase-2, all household natural gas needs in Türkiye will already be covered by domestic gas.

Satisfied buyer

Oğuzhan Akyener, head of the Türkiye Energy Strategies and Policy Research Center (TESPAM), expressed optimism about the contribution of Black Sea gas to the national economy in an interview with Anadolu Agency (AA). Akyener noted that 10 mcm of gas per day in Phase-1 from the gas field could meet 5%-6% of Türkiye’s annual consumption, significantly boosting the economy.

Akyener acknowledged that natural gas prices are dynamic and do not have a fixed mechanism. He referred to the fluctuating prices in the Energy Stock Exchange Istanbul (EPİAŞ), which rose to as high as TL 25 per cubic meter in winter and is currently around TL 9-TL 10.

He estimated that the first production phase would yield TL 100 million per day based on today’s average EPİAŞ spot sales price of TL 10 per cubic meter and daily production of 10 mcm.

He added that the income from the second phase could be about TL 400 million.

Expressing that the economic value will increase with the increase in natural gas production, Akyener said, “Assuming that we produce 3.5 bcm of natural gas per year and taking the spot market prices of EPİAŞ as an average of TL 10, the contribution of the first phase gas to the economy will be approximately TL 35 billion.

Regarding the possible contributions of Black Sea gas to Türkiye in the winter months, Akyener said, “When prices increase in winter, it becomes difficult to find gas. Therefore, we buy spot natural gas at high prices from outside. But from now on, we may not have to buy spot natural gas from outside during winter.”

The discovery will strengthen Türkiye’s hand in future trade deals, putting Ankara in a much more favorable position. Akyener said: “We will approach new natural gas contracts with a satisfied buyer’s eye. You renew the contracts as they expire. By saying, ‘I already have natural gas,’ you can cut prices on new contracts.”

Russia has always been the most significant natural gas exporter to Türkiye – a country highly dependent on imports via pipelines and liquified natural gas (LNG) – followed by Azerbaijan and Iran.

The country also met its energy needs with LNG purchases from various countries, including Algeria, Nigeria, Qatar, the U.S., Trinidad and Tobago, and Norway.

In recent years, several positive steps have been taken to diversify the country’s supply channels and improve deals with trading partners. With a focus on infrastructure and LNG investments in gas storage and transmission, Türkiye had already succeeded in reducing its share of oil-based pipeline gas contracts.

The country has started to reap the benefits of those investments this year, as it has benefited from lower LNG prices brought about by the pandemic by storing the cheaper purchases.

The discovery

The first steps of the natural gas exploration project were taken following the statements of then-Energy and Natural Resources Minister Berat Albayrak at the National Energy and Mining Policy Meeting held on April 6, 2017.

“For the first time in our history, I hope we will dig at least two wells in the Black Sea and two in the Mediterranean every year with the exploration drilling ship we will purchase this year,” he said.

Then on June 9, 2017, Albayrak visited the Barbaros Hayreddin Paşa seismic vessel, saying: “If we say Türkiye is now a great power, we have to be with our engineers, ships and exploration drilling platforms in this field as well. Hopefully, we will take important steps as a result of this.”

On July 9, 2017, at the World Oil Congress, Albayrak said, “We have focused on oil and natural gas activities in our seas on the axis of exploration and production activities. Our seismic research continues intensively in the Mediterranean and Black Seas.”

“There is now a Turkish Petroleum (TPAO) that will continue our drilling works at full speed in 2018 in the Mediterranean with our drilling ship, which we will add to our inventory before the end of this year,” he said at the 7th International Natural Gas Congress on Nov. 3, 2017.

TPAO made a natural gas discovery of 320 bcm in the Tuna-1 well in August 2020. When drilling in the Danube-1 well was completed in October 2020, the reserve amount in the well was updated to 405 bcm with a revision of 85 bcm.

In June 2021, a new reserve of 135 bcm was discovered in the Amasra-1 well. With the discoveries, the total natural gas reserve in the Black Sea has reached 540 bcm.

In December 2022, the reserve above was updated as 652 bcm due to the reassessment of the independent institution DeGolyer & MacNaughton. In addition, it was announced that a new 58 bcm of the reserve was discovered in the Çaycuma-1 well.

Thus, Black Sea reserves reached 710 bcm as of December 2022.