© Bloomberg. The Fatih oil drilling ship prepares to sail to the contested waters of the Mediterranean Sea for oil and gas drilling operations near Anatalya, Turkey, on Tuesday, Oct. 30, 2018. Turkey’s first deep-sea drilling ship, flanked by Turkish war vessels, set sail Tuesday looking for natural gas and oil in contested waters of the Mediterranean, a launch liable to exacerbate longstanding tensions with Greece.
(Bloomberg) — Turkey expects to find out the full potential of its historic gas discovery in the Black Sea next month, when drilling of the prospects touted by President Recep Tayyip Erdogan will be completed.
After exploration reaches a targeted depth of around 4,500 meters (15,000 feet), the Tuna-1 well will have gone through two other formations that appear promising and can add to the 320 billion cubic meters of recoverable gas already struck, a senior Turkish energy official said on Wednesday, asking not to be named because the information isn’t public.
Turkey expects the field discovered last month — the largest of its kind in the Black Sea — to meet up to 30% of its domestic gas needs when plateau production is reached, currently targeted for 2025. The discovery is critical for the $750 billion economy that relies on imports for nearly all of the 50 billion cubic meters of gas it consumes annually.
Turkiye Petrolleri AO, the country’s state oil company, is also planning to drill two more appraisal wells in the Sakarya gas field, according to the official. The close proximity of the field to the coast and domestic demand for gas leave little reason for TPAO to currently consider a partnership with foreign oil majors, although enlisting the help of service companies is likely, he said.
Turkey has one of Europe’s largest power markets with generation capacity having nearly tripled to over 85.2 gigawatts during the 15 years through 2017, according to official data. Natural gas accounted for just a fifth of the country’s electricity generation so far this year.
But the discovery could push Turkey’s gas demand 60% to as much as 80 billion cubic meters per year by 2030, the official said.
The Eastern Mediterranean nation is now looking at inking new supply contracts that would allow it to import cheaper gas and trim the annual average energy bill of around $44 billion, the official said. Starting from April next year, long-term contracts with Russia’s Gazprom (MCX:) PJSC (OTC:), Azerbaijan’s Socar and Nigerian liquefied producers for about 16 billion cubic meters of annual supplies will expire, the official said.
Those contracts are indexed to oil prices and include take-or-pay clauses. Turkey will only renew contracts if more flexible terms are introduced, such as pricing linked to global hub prices, or it will seek supplies elsewhere, the official said.
Turkey’s imports from Russia dropped this year while U.S. LNG accounted for a significant part of the supply mix, with prices considered to be very competitive by Turkish authorities, the official said.
©2020 Bloomberg L.P.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.