How Turkey’s gas discovery may affect energy geopolitics

President Recep Tayyip Erdoğan has shared the good news with the Turkish public about the discovery of a sizeable natural gas reserves in the Black Sea, calling it the start of a new era in Turkey in terms of decreasing dependency on foreign energy resources.

Erdoğan suggested that the initial findings show that the discovery of a 320 billion cubic meters reserve is just a part of potentially more abundant natural gas reserves in the Black Sea.

The technical details about the gas reserves will require a more specific assessment of how it will affect the Turkish gas imports, and, in general, the energy markets.

Since the late 1990s and particularly in the early 2000s, Turkey has been intensifying its investments into the natural gas infrastructure by creating a nationwide pipeline network to use eco-friendly natural gas as the primary source of household heating and industrial production.

This has enormously increased Turkey’s natural gas imports, particularly from Russia through the Blue Stream and now TurkStream pipelines stretching to the Anatolia via the Black Sea. In estimating the figures, Turkey’s natural gas imports from three main suppliers, Russia, Azerbaijan and Iran, as well as LNG from Algeria and Nigeria, sums up for 50 billion cubic meters, costing around $13 billion annually.

However, a changing trend in Turkish imports is visible. Turkey has nearly suspended the flow of natural gas from the TurkStream, a pipeline with around 15 billion cubic meters capacity while increasing the supply of gas from Azerbaijan.

One of Turkey’s closest allies, Azerbaijan, has now become the number one gas supplier to Turkey in line with the Turkish plans to reduce its dependency on the Russian market. It became possible after the Trans Anatolian Pipeline (TANAP), a pipeline running the Azeri natural gas to the European markets via Turkey, became operational in 2019.

Thus, Turkey’s imports from Russia diminished by around 60 percent in May 2020 compared to May 2019.

Having said all, one should not expect an immediate abandonment of the Russian sources. Turkey and Russia are jointly working for the construction of Turkey’s first nuclear plant with broader plans to increase the annual bilateral trade to $100 billion. However, this would lead to a more enhanced relationship with Azerbaijan, whose main energy company SOCAR has sizeable investments in Turkey.

Turkey has always wanted to be a regional energy hub by hosting multiple pipelines to meet the source countries with consumers all over the world. It wanted to use its Ceyhan port in Adana as the second Rotterdam in the European continent, but the changes in the global energy markets did not allow it.

The discovery of natural gas in the Black Sea would lead to new ambitious plans by Turkey to find more reserves in the same area to lure international companies for investment.

Serving the domestic needs of the country will stay a priority, but there is a potential that Turkey can turn into a new supplier, especially for the European markets.

These assessments may sound immature, given the fact that we know very little about the reserves. But this allows us to think over potential ramifications on the regional energy geopolitics.