Turkey is expected to move to a more robust stage in the energy sector, after announcing a natural gas discovery estimated at 320 billion cubic meters, according to economists and energy experts.

The discovered natural gas field will provide a great advantage in the ongoing price negotiations with gas-exporting countries and the drafting of current contracts with Turkey.

Turkey's annual production of natural gas increased to 473.8 million cubic meters by the end of 2019, while natural gas imports reached 45.2 billion cubic meters.

On Friday before last, Turkish President Recep Tayyip Erdogan said that his country had discovered the largest natural gas field in its history in the Black Sea, and that Turkey had moved to the ranks of the most prominent countries in the world thanks to this discovery, pointing out that the initial indications for the discovery of the largest gas field indicate a great possibility of existence Other fields in the same area.

 Russia is ahead

As for Turkey's imports of natural gas during the past year, Russia received the largest share of those imports, at 33.6%, followed by Azerbaijan, 21.2%, and Iran, 17.1%.

Turkey was also able to provide its remaining needs of natural gas, which amount to 28.1%, by importing this vital material from Algeria, Nigeria, Qatar, the United States, Trinidad and Tobago, and Norway.

Long decades

While Turkey's long-term contracts to import natural gas are nearing completion, Turkey's share of liquefied natural gas, which can be imported at reasonable prices, has gradually increased.

In this context, Turkey's long-term contracts with the Russian company Gazprom, which cover 8 billion cubic meters of gas imports, expire in 2021.

On the same date, the 6.6 billion cubic meter contract of gas with Azerbaijan and the long-term LNG agreement with Nigeria, which covers 1.3 billion cubic meters, expires.

In addition, the term of the gas contract with Algeria amounts to 4.4 billion cubic meters, which ends in 2024, and the term of the Blue Stream pipeline from Russia with 16 billion cubic meters, and the long-term gas contract with Iran, which covers 9.6 billion cubic meters.

Gas contracts covering 6 billion cubic meters coming to Turkey via the Trans-Anatolian Natural Gas Pipeline will end in 2033, while gas contracts for the Turkish private sector with Russia, covering 6 billion cubic meters, expire in 2043.

Consequently, price negotiations for long-term imports of natural gas contracts between Turkey on the one hand and other suppliers in Russia, Iran, Algeria and Nigeria, are still in full swing.

Shopping center

According to experts, the discovery of 320 billion cubic meters of natural gas reserves in the Black Sea will strengthen Turkey's position during the negotiations, and it will also help Turkey achieve its goal of becoming a trade center.

At the same time, experts expect deeper drilling in the area where natural gas was discovered in the Black Sea, and there may be other potential discoveries.

Volkan Yekit, a partner in APLUS energy investment and consulting, said Turkey's discovery of a natural gas field in the Black Sea coincided with a very important and beneficial period in which new prices for long-term contracts are being negotiated.

Yekit added that the long-term natural gas supply agreement concluded by Turkey with a value of 16 billion cubic meters will end in 2021, and that Turkey, through the agreements of liquefied natural gas and floating liquefied natural gas, has succeeded in reducing the share of gas contracts through pipelines that are based on transporting Oil.

He pointed out that natural gas prices have witnessed a decline during the last period.

Due to the effects of the Corona epidemic, and that the natural gas sector in Turkey has reaped remarkable profits in this field.

He stressed that the recent discoveries in the Black Sea will help Turkey achieve a more established position in the international trade market, and turn Ankara into a commercial center for gas production.

Chance

For his part, Burak Koyan, head of the Energy Trade Association, said that the discovery of 320 billion cubic meters of natural gas in the Black Sea region carries strategic importance in many ways.

Koyan described the discovery as a qualitative leap that will affect other areas, noting that the new discovery will not be limited to the natural gas sector only, as the Black Sea is full of many resources that Turkey will inevitably invest in the coming period.

"This discovery has changed the rules of the game to a large extent for Turkey ... it is believed that the annual reserve that can be extracted from here may reach about 5 billion cubic meters," he said.

He added, "This figure represents 10% of Turkey's annual consumption of natural gas ... Turkey should offer cheaper gas, and in this way, it provides gas access to more markets."

Kuyan pointed out that Turkey's possession of this amount of natural gas provides it with cheaper gas, enabling it to generate electric power at cheaper costs than Europe.

He explained that when industrialists use electricity at a cheaper price, this automatically increases their export potential, so we can consider this discovery as a first step in a process that would accelerate electricity and natural gas trade.