Turkey’s ambitions in the Mediterranean cross allies, but Russia’s biggest loser will be

The Tuna-1 reservoir (the name is associated with the Turkish name of the Danube river, not with fish) is estimated to contain 320 billion. cubic meters of natural gas. This is about 2.5 times the amount in the Aphrodite camp in southern Cyprus, which is one of the causes of the tensions between Ankara and the Greek-led Mediterranean coalition.

Turkish President Recep Tayyip Erdogan has promised that the Black Sea natural gas field will be put into service in 2023. – On the occasion of the centenary of the Republic of Turkey. If that happens, Turkey will be able to reach the 7% target. (about 45 billion cubic meters in 2019) annual demand for natural gas from its own sources.

This is a significant achievement for a country that relies on oil and gas imports. This discovery of natural gas contributes to the government’s campaign to boost national production to boost the economy and improve the image of the yerli ve milli country (locally and internationally).

Still, gas industry experts are skeptical. According to them, the amount of natural gas found would cover Turkey’s needs for only seven years. And extracting hydrocarbons is difficult. Turkey’s national oil and gas company, TPAO, would have to invite a Western company to do this.

Furthermore, contrary to optimistic statements by the Turkish leader and his finance minister Berat Albayrak, the finding is unlikely to address Turkey’s deepening economic woes of runaway inflation (the country’s currency has depreciated by nearly a fifth since this year), slow growth and deficit in the balance of payments.

And all of this is endangering Turkey’s trade relations, especially with Russia. Since the 1990s, Gazprom has been the largest supplier to the Turkish market, supplying the Turks with half of their gas. Since the launch of the Blue Stream gas pipeline between Russia and Turkey in 2005, Turkey has become Russia’s second largest buyer of natural gas (after Germany).

In trade negotiations with Ankara, Moscow often dictated its terms, introducing a pro-Russian pricing formula or introducing a full pay-as-you-go clause in long-term contracts, which required Turkey to buy a certain amount of natural gas. every year.

Turkey has not even benefited from a dispute between Russia and the EU following the annexation of Crimea and the suspension of the South Stream gas pipeline project, which would have transported Russian gas to Europe via other countries. Turkey has signed an alternative gas pipeline project in the Black Sea, TurkStream, but has been unable to obtain concessions from Russia. 2016 RT Erdogan agreed to most of Putin’s terms: that was the price of reconciliation between the two states after the clashes between them in Syria.

It seems that Turkey now has more favorable opportunities. Since 2018, the Turkish state-owned company BOTAS and several private importers have bought large quantities of liquefied natural gas from Algeria, Nigeria, Qatar and the United States at lower prices than Gazprom. Gas from Azerbaijan also meets the needs.

Gazprom’s share of the Turkish market from 52% 2017 fell to 47 percent. 2018 and up to 33 percent. 2019 At the same time, gas demand in Turkey is declining due to a slow economy. For this reason, the Russian Black Sea gas pipelines, TurkStream and Blue Stream, are far from operating at full capacity. The popular assertion in the 2000s that Russia was pressuring its neighbors as an “energy weapon” was no longer in line with market realities.

Access to natural gas in the Black Sea will strengthen Turkey’s negotiating position. Long-term contracts agreed with Gazprom should be renewed in 2021. at the end of 2007 (TurkStream pipeline) and 2025 (Blue Stream pipeline). Transactions with Azerbaijan, Nigeria and Qatar are also coming to an end. Turkish negotiators will push for greater flexibility. Turkey’s 2 billion euros will also be considered. Dollar debt to Gazprom for fines for non-compliance with annual quotas by Turkish importers. Ankara’s bargaining chip will be alternative suppliers and the possibility of extracting hydrocarbons, even if they are still at the bottom of the Black Sea.

Turkey’s neighbors will closely monitor the progress of future negotiations. August 24 Bulgaria and Greece finally agreed on a joint liquefied natural terminal in the Greek port of Alexandroupoli, near the Greek-Turkish border. They will also seek to tap into new alternative resources to seek help in Russia.

There is more than just Tuna-1 in the region. The Black Sea countries have been searching for oil and natural gas for many years, as have the energy companies Exxon Mobil (USA), Total (France), OMV (Austria) and Repsol (Spain). Romania has long expected to find natural gas in its exclusive economic zone, including the Neptun Deep project, 60 miles north of the Turkey find. Bulgaria is exploring the Khan Asparuh field, where in 2016 Total oil found. Many of these projects face technical and logistical difficulties. Low hydrocarbon prices also interfere.

The good news is that the Black Sea is more conducive to regional cooperation than the eastern Mediterranean, where there has been almost no bloodshed due to conflicts of interest. Although there are jurisdictional disputes (the main one is Crimea annexed by Russia), the borders in the Black Sea are well established, exclusive economic zones have been established. In the Mediterranean, Turkey is deteriorating, making it difficult for competitors Greece, Egypt and Israel to secure what they consider to be their share of energy. And in the Black Sea, it can set an encouraging example for neighbors looking to diversify their gas supply.