Cyprus Mail

Turkey’s Black Sea bonanza

Turkish Finance Minister Albayrak And Energy Minister Donmez Pose On The Deck Of Drilling Vessel Fatih In The Western Black Sea
Speaking during Friday’s announcement live from the Fatih were Turkish Finance Minister Berat Albayrak (right) and Energy Minister Fatih Donmez (left)
Analysts say there are reasons to be cautious

By Jonathan Gorvett, CM Regional Correspondent

AFTER two days of well-choreographed build-up, Turkish President Recep Tayyip Erdogan announced Friday that Turkey had made the “biggest gas find” in its history, out beneath the waters of the Black Sea.

Some 320 billion cubic metres of natural gas – more than twice as much as Cyprus’ Aphrodite gas field – have reportedly been found by Turkish surveyors in the Sea’s Tuna-1 block.

This lies close to the join between the Turkish, Bulgarian and Romanian maritime boundaries.

Speaking to the nation via a live TV broadcast from Ankara, Erdogan said, “We have emerged from the many struggles we have taken on into a very glorious moment.”

The announcement also included a live video link to the Turkish survey ship Fatih –  or “Conqueror”, named after Sultan Mehmet I, the vanquisher of Constantinople – to reinforce the sense of national triumph.

Yet, the discovery may not be the historic moment Erdogan was looking for – or the major triumph many of his supporters had expected.

“The find still needs to be verified by independent observers,” Serhat Guvenc, Professor of International Relations at Istanbul’s Kadir Has University, told Sunday Mail. “Indeed, opposition supporters are certainly taking all this with a large pinch of salt.”

The markets, too, seemed less than impressed.

While earlier in the week, speculation about the find – including claims that the deposit was as much as 800 billion cubic meters – gave the struggling Turkish lira a temporary boost. Yet on Friday, when the 320 billion cubic meter figure was announced, the currency continued its slide downwards.

Earlier speculation also saw a hike in the shares of Turkish petrochemical company Petkim and refiner Tupras – only for these to also tumble, on Friday’s announcement.

At the same time, Erdogan also announced that following this discovery, “We will be accelerating our activities in the Mediterranean, continuing our drilling there” – a statement likely to be far from welcome in Nicosia and Athens.

The new find reportedly lies some 168km offshore, at a total depth of 3,500 metres.

The 320 billion cubic metre estimated reserve was also described on Friday by Turkish Energy Minister Fatih Donmez as “high quality gas”, while “seismic data shows there is more – potentially – 1,000 metres further down”.

With BP World Energy Review figures showing Turkey’s gas consumption at around 43 billion cubic metres in 2019 – and Turkey possessing no significant reserves of its own, until now – the new gas could make a significant dent in the country’s energy bills.

Speaking during Friday’s announcement live from the Fatih, Turkish Finance Minister Berat Albayrak said these bills currently stood at around $40 billion a year.

“The potential here will hopefully remove the issue of the current account deficit from our agenda,” Albayrak said, referring to Turkey’s long-standing problem that its imports amount to more than its exports. “From this moment on,” he continued, “we’ll be talking about a current account surplus, not a deficit.”

That may be premature, however.

“There are reasons to be cautious,” says Jason Tuvey, Senior Emerging Markets Economist with Capital Economics in London. “For one thing, it will take time for the necessary infrastructure to be put in place before the gas can be extracted.”

For Albayrak – and Erdogan ­– time is in short supply, however. Both referred to the gas as coming online in 2023, a key year in Turkey’s history, as it marks the 100th anniversary of the founding of the Turkish Republic.

Yet, amongst sector professionals, “The talk is of a seven to ten-year timeframe to bring it onstream,” says Guvenc. “In the meantime, we have more pressing economic problems. This gas will not be a cure for exchange rate depreciation, unemployment and inflation.”

In contrast with the Eastern Mediterranean, however, in the Black Sea Turkey has much better relations with its neighbours, with no maritime disputes to resolve.

While all the countries of the Black Sea littoral except Turkey have signed up to the UN Convention on the Law of the Sea (UNCLOS), agreements on maritime zones have still been possible.

“Things are very clear now,” Cristian Pantazi, editor-in-chief of independent news source told Sunday Mail from Bucharest. “Turkey and Romania have a good relationship and are on the same page in NATO and the Black Sea.”

A maritime agreement was also signed between Bulgaria and Turkey back in 1997.

“Bulgaria is very careful when it comes to Turkey,” Ruslan Stefanov, Director of the Economy Programme at the Centre for the Study of Democracy in Sofia, told Sunday Mail. “Bulgaria is also looking to become a gas pipeline hub and would stand a good chance, I would think, of becoming this, if Turkey decides to export its gas.”

Yet, despite having also identified gas deposits in their respective maritime zones, neither Bulgaria nor Romania has so far exploited their Black Sea reserves.

In Romania’s case, this is largely thanks to domestic political issues, while in Bulgaria, “There will certainly now be a question why we invested so much money in pipelines to bring gas in when we might have had some right off our own shore,” says Stefanov.

For now though, Turkey has undoubtedly cause to celebrate a significant – if modest – find. Now too, there may well also be a shift in attention back to the Mediterranean, as Ankara’s oil and gas flotillas once again take up position in its glistening waters.

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