Turkish President Recep Erdoğan announced on Friday that Turkey has found some 320 billion cubic metres of natural gas reserves after the drillship Fatih started operations off Turkey’s Black Sea coast on July 20.
Erdoğan said the discovery was the largest in the country’s history and Turkey aims to have the natural gas ready for use by 2023.
Friday’s announcement marked a rare occasion in Turkish politics where even the opposition rushed to congratulate Erdoğan’s government.
But some analysts remain sceptical of the discovery, saying while the sum of the natural gas is notable, the find is not significant enough to fix Turkey’s finances or turn it into a regional energy hub as touted.
The discovery is positive news for Turkey, “but it’s not the game changer that some were expecting” after earlier reports suggested the find would meet Turkey’s energy needs for the next two decades, Ulrich Leuchtmann, head of foreign exchange research at Commerzbank, told the Associated Press.
\Nate Schenkkan, director of special research at the Washington-based Freedom House, called the gas find “relatively small” – only 40 percent of the expected reserves of 800 billion cubic metres a Turkish source told Reuters on Thursday.
While the 320 billion cubic metres from the Black Sea find is significant, it is smaller than other discoveries in the nearby eastern Mediterranean – about a third of Egypt’s Zohr field, one of the largest discovered in the Mediterranean, which is estimated to hold 850 billion cubic metres of natural gas, according to AP.
“For sure having some gas is better than not having any gas,” Schenkkan said. “But hard to shake the feeling this was all about owning the news agenda for a week, again.”
Many analysts and officials have said Erdoğan’s recent foreign and domestic ventures – including converting the Hagia Sopha landmark into a mosque and risking a direct confrontation with neighbouring Greece over territorial disputes – are designed to divert the Turkish public’s attention away from Turkey’s cratering economy.
Turkey’s central bank has spent tens of billions of dollars of its foreign currency reserves to support the lira this year. Despite these efforts, the lira hit a record low of 7.4 per dollar this week.
A recent lending boom by Turkey’s state-run banks has fuelled demand for imports and widened Turkey’s current account deficit. A slump in foreign investment and tourism revenues means Turkey has fewer funds to finance that gap, and increasing concerns for financial and economic instability.
Leuchtmann noted that investors seem sceptical about the assertion that the find would eliminate Turkey’s current account deficit.
For Turkish economist Uğur Gürses, it was “very clear” that Turkey’s current account deficit will not end with Black Sea discovery.
“If we do a rough estimate, the total reserve of 320 billion cubic metres is worth about $64 billion at a price of $200 per thousand cubic metres,” Gürses told Gazete Duvar in an interview published on Saturday. “The consumption of roughly 45 billion square cubes a year roughly translates to seven years of production.”
The economist said a rough calculation may not be feasible since the gas flow rate cannot match production capacity, which would span the process over a longer period.
“So, it looks like the contribution will have minimal impact over a long period,” he said.
Other experts, including Leuchtmann and Gürses, have cautioned that it could take up to a decade for Turkey to extract the gas from the Black Sea find, and the project would require billions of dollars of investment to build up the infrastructure for production and supply.
“Turkey will need to raise a lot of capital to invest in building this field,” John Bowlus of the Centre for Energy and Sustainable Development at Istanbul’s Kadir Has University told AP.
“Alongside that, they’re going to have to partner with some kind of international company in the sense that they don’t have experience developing an offshore gas field of their own.”
Sohbet Karbuz, director of hydrocarbons at the Paris-based Mediterranean Observatory for Energy, disagreed with the time table estimated by other analysts, saying Turkey may move ahead swiftly with investment decisions.
“The process will move very quickly, in terms of financing, time and procedures. Help will probably be needed from foreign companies from a technical and technological perspective but I see 2023 as a reasonable target,” Karbuz told Reuters.
Jonathan Lamb, a senior oil and gas analyst at Wood & Co., a Czech investment bank, drew attention to the lack of clarification in how much of the gas was recoverable.
“What the market really wants to know also is how much they can produce per year, but I don’t think they are in the position to say that yet,” Lamb told Bloomberg.
Erdoğan said on Friday that the Fatih vessel located the gas in the so-called Sakarya field and exploration is continuing in surrounding areas of the Black Sea.
The fact that gas has been found in the Black Sea, where Turkey has already delimited its border with coastal neighbours, was seen as a positive development.
“It’s incredibly significant for Turkey because the find was in the Black Sea, unlike the eastern Mediterranean, which is riddled with all kinds of geopolitical problems,” Bowlus said.
Turkey has also been exploring for energy resources in the eastern Mediterranean, where its survey operations in disputed waters have drawn protests from Greece, Cyprus and the European Union.
Diplomatic and military tensions between NATO members Turkey and Greece boiled over on Aug. 10 when Ankara sent the Oruç Reis survey vessel, escorted by warships, to map out possible oil and gas drilling in territory over which both countries claim jurisdiction in the eastern Mediterranean.