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Large natural gas reserve found in Turkey: gas market conditions to be changed

The volume of natural gas imported by Turkey is expected to decrease as the result of recent discovery of domestic sources of it. It was announced by Turkish President Recep Tayyip Erdogan last week. According to Mr. Erdogan, “Turkey has discovered the largest-ever natural gas reserve in its history in the Black Sea. The Fatih, our drilling vessel, has discovered 320 billion cubic meters of natural gas reserve”.

It worth mentioning that discovered volume of natural gas can satisfy not only the need of Turkish market, but also bring the opportunity for Turkey to become a gas exporter.

Noting that energy is not only a fundamental element of development but also plays a crucial role in achieving national independence to the fullest, President Erdogan said: “Realization of the visions set out by countries is in proportionate to the stability in the energy industry. There has been no turmoil, chaos, war, conflict or confrontation in the last century not caused one way or another by energy calculations. A brutal order has been established in which even millions of lives are at times disregarded for the control and security of oil and natural gas fields. This inhumane global order, which sees a drop of oil more valuable than a flood of blood, still prevails.”

Independent experts were less convinced of that claim. Ulrich Leuchtmann, head of foreign exchange research at Commerzbank, said the discovery is positive news for Turkey, “but it’s not the game changer that some were expecting” after earlier reports suggested that Turkey may become exporter of natural gaz in the next decades.

We also have to take into account that the process of research and industrial launch of gaz production is long-time and expensive project, which cannot give immediate result.

However Erdogan’s statement has not only economic, but also political aspect. Turkey has had some significant disputes with Russia in regards of Russian gas pipeline “Turkstream” which was the instrument for Russia to influence Turkish external policy by the gas supplies.

Erdogan believed such dependence to be highly undesirable and Turkish government made efforts to downsize the supplies of Russian gas – by establishing supplies from Azerbaijan, which is not only business partner but also regarded as the closest ally of Turkey in region of Transcaucasia. According to the Turkish Natural Gas Market Report 2019, Russian pipeline gas imports fell from 51.9 percent of total Turkish imports in 2017 to 47 percent in 2018 and 34 percent in 2019. This trend will continue in 2020 and beyond, as Turkish demand continues to fall.

Azerbaijan gas is not the only source of Turkish import, its strategy includes business relations with United States, Qatar, Algeria, Nigeria, and others, which gaz are now cheaper than contracted pipeline gas from Gazprom. Turkey is now Europe’s third largest importer of U.S. liquefied natural gas behind Spain and France.

The ongoing negotiations between Turkey and Russia have the prime aim to change the terms of contract and to cancel take-or-pay scheme of supplying Russian gas. In the current situation Turkey has no critical need of Russian gas, therefore it is high time to diversify sources of gaz supplies.

It appears that President Erdogan’s recent statement was based on careful and clearly elaborated analysis of gas market, prepared by international experts. Sinem Adar, a researcher at the German Institute for International and Security Affairs in Berlin, said that Turkey’s leadership was deeply committed to efforts to make the country less reliant on energy imports.

“I believe we as a country, which has suffered from external dependency in energy for years, will now look to the future in a more confident manner,” President Erdogan underlined.

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