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Turkey gas discovery:
Gamechanger
for the Black Sea Oil & Gas?

BLACK SEA
OIL & GAS

Turkey gas discovery:
Gamechanger
for the Black Sea Oil & Gas?

As Turkish President Tayyip Erdoğan announced recently the Turkish state oil company TPAO has discovered a potentially giant gas field in the deepwater Turkish sector of the Black Sea. What implications this discovery will have for the upstream industry?

As an energy imports-dependent country, Turkey has been focusing on strengthening its energy policy by diversifying its sources.  The country imported 45.3 billion cubic meters (bcm) of natural gas last year, at a cost of approximately $12 billion. Daily Sabah

The gas could transform Turkey’s dependence on Russia, Iran and Azerbaijan for energy imports, which cost the country $41 billion last year.

With the discovery, we expect a serious fall in imports. We have established the groundwork for our citizens to use natural gas at much more economic costs.

Fatih Dönmez, Turkey Energy and Natural Resources Minister 

The discovery is considered a “giant” find in international terms and by comparison is equal to all Norway's discoveries in the North Sea since 2010, Birol told Anadolu Agency (AA). Daily Sabah

Where is it?

According to Turkey’s President Tayyip Erdogan, the Tuna-1 find – drilled by the drillship Fatih-1 – holds potential resources of 320 bcm. Offshore Magazine

Tuna-1, some 150 kilometers from Turkey's coast, is close to an area where maritime borders of Bulgaria and Romania converge and not far from Romania's Neptun block, the largest gas find in the Black Sea in decades discovered eight years ago by Petrom and Exxon.

The Fatih has been carrying out drilling operations in Tuna-1 area since around mid-July according to a Turkish Navy website.

It’s early days, but any future development would cost billions of dollars. Deepwater projects are complex in any environment, but the Black Sea poses additional logistical challenges that must be managed.

Thomas Purdie, Analyst, Wood Mackenzie Upstream Research Team Offshore Mag

Turkey plans production start in 2023. According to the IEA head, this ambitious 2023 target is not impossible, as it has been done with other gas discoveries but only provided its investment is prioritized, and official procedures are dealt with promptly.

Currently, almost all Turkish gas blocks in the Black Sea are solely owned by TPAO, with the exception of the SASB gas field which is owned 49% by Trillion Energy, with TPAO owning the remaining 51%. Trillion’s SASB gas field license area is approximately 100 km south of the Tuna-1 well.

Now, Trillion Energy International, a Canada-based operator of the South Akcakoca Sub- Basin gas field in the Turkish Black Sea, hopes it can replicate TPAO's Tuna-1 success. Offshore Engineer

Implications for the industry across the Black Sea region

Despite the occasional setback – political and exploratory – the Black Sea continues to draw interest from international oil companies, including heavy hitters such as ExxonMobil, Total, Shell, and Repsol.

In efforts to counter a drop in onshore production while reducing their reliance on imports from Russia, countries that border the Black Sea have launched bid rounds and entered production-sharing agreements with operators.

The Turkish gas market is large, with 2019 demand of almost 45 bcm. Gas demand has fallen year-on-year since 2017: much of that is down to the weak Turkish economy and increased competition from coal-fired and renewable generation. However, despite coronavirus, Turkish gas demand has only fallen 3%, year-to-date, versus last year. That is a less severe fall than many other European markets.

Murray Douglas, Director, Europe Gas

Analysts responded to the announcement with caution but said the size of the provisional find would be significant if it proved to be commercially viable.

This is an estimate based on just a discovery well that will need to be confirmed by further drilling of appraisal wells.

Ashley Sherman, Wood Mackenzie Financial Times

If confirmed new gas reserves have potentially significant implications for Turkey’s energy supplies and could probably accelerate the development of offshore gas projects in other Black Sea countries, especially in Romania.

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