OME Oil and Gas Director Dr. Chat Karbuz wrote down the production processes of the Black Sea gas, which was discovered in the Sakarya Gas Field and put into use recently, and its importance for different sectors in Turkey, in 3 questions.
How could Black Sea gas be made usable in a short time?
The discovery of the Sakarya Field, first of all, “There is no oil and gas worth anything in Turkey.” He overcame his prejudice. In our country, which is surrounded by seas on 3 sides, we could not do enough research, maybe we did not believe that we could explore. Our resources may not have been favourable, because deep-sea drilling requires risking around $100 million for an undertaking with less than a 30 percent chance of success. Even if this attempt results in discovery, not to mention whether it contains a commercial amount of reserves. Probably due to these risks and criteria, the number of drillings drilled in deep waters in Turkey was extremely insufficient until a few years ago.
After the first drilling ship added to its inventory by Turkish Petroleum Corporation (TPAO) in 2017, Turkey’s technical equipment has increased with the acquisition of 3 more ships and 2 seismic research ships it owns. The largest natural gas discovery in the Black Sea was made on August 21, 2020, as a result of the combination of this equipment with the motto “we will find it if there is”, which was initiated to evaluate our resources in the seas as well as on land. Although the discovery of Sakarya Natural Gas Field created joy, it brought some pessimism with it. Because developing such a huge field and putting it into production is not for every brave man. It requires knowledge, technical and technological equipment, experience, financial power expressed in billions of dollars, strong coordination ability, fast decision-making ability, complex planning skills, tremendous cooperation as well as perseverance and determination.
For this reason, the fact that Black Sea gas was put into production in 28 months after the discovery of the Zohr field off the coast of Egypt, which is the largest natural gas discovery ever made in the Mediterranean, is a record in the sector. All possibilities were mobilized for the development of the Sakarya Field, the biggest natural gas discovery in the Black Sea, and the field was commissioned 32 months after the discovery.
Discovered by the Italian energy company ENI on 30 August 2015, the Zohr field is more or less similar to the Sakarya field in terms of reserve size, water depth and distance from the land. Dissimilar are the operators of the 2 fields in question. On the one hand, a giant company like ENI, which is one of the largest oil and gas companies in the world and has all kinds of technical and technological knowledge, skills, equipment and experience in the exploration-production sector, and on the other hand, TPAO, whose name has not even been mentioned until today. The difference between the development and production of 2 huge fields with similar characteristics is only 4 months. This is an admirable achievement. In short, the discovery and production of the Sakarya Field, which opened a new page in the energy history of Turkey, is a great achievement for our country. We hope more will come and oil will be added to these discoveries.
What will be the return of Black Sea gas to Turkey?
Almost all of the natural gas consumed in Turkey (55 billion cubic meters in 2022 according to GAZBIR data) is imported via pipelines from Russia, Azerbaijan, Iran and from various sources as liquefied natural gas. According to official sources, 10 million cubic meters of production will be made per day from the first phase of this field, and this amount will increase to 40 million cubic meters per day, ie 14 billion cubic meters per year, with the activation of the second phase as of 2027. With the production in the South Akçakoca Sub-Basin Field, developed in partnership with Canadian Trillion Energy and TPAO, Turkey’s total natural gas production will exceed 15 billion cubic meters. How many years the said amount can remain at a plateau level depends on the total reserve size and the determined production plan. It is difficult to make a clear statement about the plateau duration since the reserve figures are not a fixed value and are revised upwards or downwards in the light of current data.
As it is frequently mentioned, the Sakarya Field will have a positive impact on the reduction of the gas import bill and the current account deficit, and will contribute to the development of the Turkish economy in general. In the next 5 years, approximately one fourth of the total natural gas consumption in Turkey will be met by domestic production. We can see the increase in domestic production as an important milestone in ensuring Turkey’s energy supply security. However, the indirect effects of this should be interpreted as a gain. As is known, a significant portion of gas contracts with external suppliers will expire in the coming years. It is expected that the size of domestic natural gas production will play an important role in matters such as which of these will be renewed or not, the terms of the contracts to be renewed or to be made.
Another reflection of domestic production is its potential to serve as an important tool towards Turkey’s goal of becoming a natural gas trade center. The role of domestic production in the development of worldwide successful natural gas trade centers or reference hubs is undeniable. The contribution of domestic production to HH in the United States (USA), NBP in England and TTF in the Netherlands being the reference hubs are obvious examples of this. Therefore, the Sakarya field is also important in this respect. However, turning into a reference hub is a long-term process; In this process, it should not be overlooked that a transparent, competitive, free market mechanism should be established and market actors should be provided with indiscriminate access to gas infrastructure.
What will be the contribution of Black Sea gas to the oil and natural gas rector?
It is necessary to look at the effect of Black Sea gas on the oil and natural gas sector from various perspectives. From the energy policy perspective, we can probably state that Turkey may follow a more exploration-production-oriented path in the high seas in the coming years. It is also a matter of curiosity how this will affect foreign oil and gas companies and the gas equation in the Eastern Mediterranean.
From the perspective of its impact and potential contributions to the oil and gas sector in Turkey, Black Sea gas will open the door to new business opportunities and enable the development of these branches, not only in exploration and production, but also in various fields of activity such as service and service. Sakarya Field being an internship door for the technical staff to be trained; providing a basis for technology development; It is in question that it provides gains in many areas such as oil and gas exploration in the deep seas, field development, increasing knowledge and experience in production. With the experience, technical equipment and knowledge to be gained in this way, Turkish companies will perhaps take their place in the international arena in the future, from exploration and production to various branches of the service sector. In short, Black Sea gas should not be viewed only as natural gas production.
These developments may also create a need for change for TPAO in the future. Potential public offerings of TPAO and BOTAŞ were discussed in the past, but no concrete steps were taken. In the following years, this issue may be brought up again and a limited number of shares may be offered to the public at the beginning, as in the case of Saudi Aramco. If it can be realized, the spread of this to Turkey’s energy and mining sector may also be on the agenda.
Looking at the Black Sea gas from the perspective of the international oil and gas sector, it can be expected that the region will become a center of attraction again due to the discovery of a huge natural gas reserve. Therefore, it should not be surprising to see the activity that can be seen especially in Romanian and Bulgarian waters in the following years.