Turkey started natural gas production from its own massive Black Sea gasfield Sakarya on 20 April, less than three years after discovery. Sakarya is estimated to hold 710 billion cubic metres (bcm) gas and, when it reaches production at full capacity in 2027, it is expected to supply close to 30 per cent of Turkey’s gas needs.
Initial production is at 10 million cubic metres per day (mcm/d) and will ramp-up to 40 mcm/d by 2028. Not only this will contribute to the country’s energy security, but it will also improve Turkey foreign exchange position. Turkey currently imports about 99 per cent of its gas needs. In 2022 its total energy imports totalled 54bcm costing $ 80 billion, double the cost in 2021.
Turkey is highly dependent on pipeline imports from Russia, Azerbaijan and Iran, as well as liquefied natural gas imports from Qatar, the US, Nigeria and Algeria, and the spot-market.
Even though Sakarya is of major strategic importance to the country, it is not expected to lessen or stop Turkey’s aggressive actions in the Mediterranean and particularly in Cyprus EEZ. Nor is the result of the May elections expected to change this position.
In fact, if the opposition wins the elections -currently ahead in polls- it will probably concentrate on internal issues and Turkey’s dire economic situation and on reinstating democratic freedoms during the first part of its tenure. Cyprus is not expected to be high on its list of priorities, with the risk that the status quo will continue for a while.
The ray of hope is that Kemal Kilicdaroglu, the opposition’s presidential candidate, will also prioritize normalization of relations with the Europe, as he seeks help to shore-up Turkey’s economy – its main creditors are European banks. Such a development may also eventually help bring Cyprus into the equation.
Should President Erdogan win the elections, he would probably tone down his rhetoric, but his foreign policy may not change considerably. He is likely to continue his ambivalent position towards the West and Russia, playing up his mediating role with Russia.
The forthcoming elections represent the biggest electoral challenge for Erdogan, after two-decades in power, and after a cost-of-living and economic crisis and his mishandling of February’s massive earthquake, that eroded his support.
Development of Sakarya
The Sakarya gasfield was discovered in August 2020 by Turkey’s state oil and gas company TPAO at a water–depth of 2,115m. It is located in Turkey’s EEZ in the Black Sea, in the east, about 165km offshore the port of Filyos and it is biggest gasfield discovered in Turkey and the Black Sea ever.
The development was carried out by a consortium of Schlumberger and Subsea7, with UK’s Wood providing project management. It is based on producing the gas through subsea production facilities and transporting it through subsea pipelines for processing onshore at Filyos, from where it is connected to the country’s national gas distribution network.
With its economy in tatters and energy prices sky-rocketing, the start of gas deliveries from Sakarya cannot come too soon and will be much-welcomed by Turkey’s energy consumers.
Using the discovered gas to offset imports and cover domestic demand will eventually bring energy prices down, improve Turkey’s energy security, diversify its energy sources, improve its foreign currency balances and help shore-up its economy.
Another option is to export some of this gas – likely to Europe – reaping political benefits, as well as profiting from the foreign currency revenues Turkey would receive.
Unquestionably, the development of Sarkaya is set to go a long way toward contributing to Turkey’s energy diversification.
Election boost
The original plan was to bring Sarkaya gas onshore in March, but the April timing appears to have been deliberately chosen for maximum impact, coming just 3 weeks before Turkey’s presidential elections on 14 May.
In a move linked to the elections, Erdogan said that the government would provide some free gas to its citizens “to celebrate the occasion” and cut gas bills for consumers and businesses as part of a push to ease cost pressures.
The commissioning ceremony on 20 April was Erdogan’s latest attempt to showcase large energy, infrastructure and defence projects in the run-up to the election. On 27 April, in a virtual ceremony with Putin, Erdogan inaugurated Turkey’s first nuclear power reactor at Akkuyu, built by Russia’s state nuclear energy company Rosatom. He is using every means to attract more votes and reverse the gap with Kilicdaroglu.
In October last year, Presidents Putin and Erdogan proposed that Turkey be turned into an energy hub to connect European markets with gas exporters. The TurkStream and BlueSream pipelines are already delivering Russian gas to Turkey through the Black Sea. Having its own gas production would boost Turkey’s position, especially with Balkan countries.
However, even though this is a major development for Turkey, so far, the election is on a knife-edge, with Kilicdaroglu just ahead. With two weeks to go, all options are still open.
Impact on the East Med and Cyprus
To a certain extent, since the Black Sea gas discoveries Turkey has toned down -but has not abandoned- its aggressiveness in the East Med, especially directed against Greece and Cyprus. But it is not clear that the two are linked. Turkey’s regional maritime geopolitics and intentions may start becoming clearer after presential elections.
In any case, Erdogan confirmed that the government will continue to search for more hydrocarbon reserves both at sea and on land, but the primary focus will be the Black Sea. However, exploration in the East Med is likely to continue, mostly driven be geopolitics rather than a serious hope for gas discoveries. None have been made so far.
Interestingly, unlike in the East Med, Turkey has already delineated its EEZ with its Black Sea neighbours, based on the equidistance principle – in effect in accordance to UNCLOS – a crucial step in the extraction and monetization of energy resources, including Sarkaya.
This, of course, is not the case with the East Med. Even though recently Turkey’s minister of defence, Hulusi Akar, said “we will take measures to find a solution with Greece”, he did not include Cyprus.
The geopolitical risk associated with the unresolved Cyprus problem and Turkey’s continuous threats impact development of Cyprus’ gasfields. With elections in Greece and Turkey ushering-in new governments by the summer of 2023, the second half will be the right time to redouble efforts to overcome these obstacles.
Turkey’s priority will be to tackle its catastrophic economy problems, something that will require the goodwill, cooperation and support of Europe and the US. This may provide one more opportunity to tackle Cyprob.
Dr Charles Ellinas, @CharlesEllinas , Senior Fellow, Global Energy Centre, Atlantic Council
