The potential of Turkey's gas find for the region

Turkey’s recent discovery of natural gas reserves in the Black Sea has the potential to transform an economy battling to stave off recession and change the energy landscape of countries encircling the Eastern Mediterranean. How significant is its discovery and what are the implications for gas producers in the region?

Sizeable reserves

Turkey's exploration has paid off handsomely, netting the biggest find in its history. The 320 billion cubic metre reserve field in the Black Sea could transform the country into a net exporter by 2023.

The announcement comes during a difficult period for the Turkish economy, with finance minister Berat Albayrak last week forecasting the country's GDP would fall between 1 per cent growth and 2 per cent contraction. Citigroup analysts have forecast a 3 per cent contraction, according to Reuters. The Turkish lira also plunged to record lows against the dollar last week.

The country is currently heavily reliant on energy imports, which reached $41 billion last year. The potential for self-sufficiency in energy as well as the possibility of reaching export potential in three years could prove a massive boost to its revenues as well as reducing its debt burden from importing energy.

Choppy waters

Extracting the gas may not be straightforward. Turkey, which has a large Eastern Mediterranean coastline, has adopted a more aggressive stance to foreign policy in recent years and is embroiled in a dispute with Greece over the rights to explore for oil and gas. The neighbours are no stranger to conflict and increased tensions in the seas led to France deploying additional military presence to stave off conflict. Turkey has also previously ramped up drilling for oil and gas off the coast of Cyprus, but the latest discovery in Turkish waters could potentially redirect Ankara’s efforts towards its own patch rather than drilling in more contentious waters.

Regional success

Turkey will look to Egypt’s successes in monetising its large Zohr gas find. Egypt's find in 2016 is transforming the country from a gas importer into an exporter and the biggest player in the Eastern Mediterrenean. Its discovery prompted a search for additional reserves by Cyprus, Israel, Greece, Turkey and Lebanon. Israel has been successful in developing the massive $3.6 billion (Dh13.2bn) Leviathan field and signing export deals with Jordan and Egypt, which have peace treaties with Tel Aviv. Greece has also awarded contracts to energy majors to help develop its unexplored hydrocarbon resources. Cyprus, meanwhile, has been searching for potential partners to help develop its Aphrodite field as well as liquefaction infrastructure. Lebanon, which launched licensing rounds for hydrocarbon assets in 2017 and awarded contracts to a consortium led by Total, has not been successful in exploration so far. Ankara is therefore in a strong position to become the next leader in gas export in the region, if it’s able to successfully navigate energy relations with its neighbours.