Energy sector acquisitions skyrocketed last year: PwC

ISTANBUL

The total volume of acquisition and mergers in the Turkish energy sector reached $2.8 billion in 2021, up 155 percent
year on year, according to a report released by PwC Turkey yesterday.

“The total deal value which had started to gain momentum in 2020 confidently continued its upward trend in 2021 against all odds of the new variants of the COVID-19 virus and the macroeconomic shocks in the domestic market. 40 energy deals generated an estimated total value of $2.8 billion, marking a stellar increase of 155 percent from $1.1 billion in 2020,” said the professional services and consultancy firm in the report.

“And, the average deal value had a 40 percent jump from $50 million in 2020 to $70 million in 2021,” it added.
According to the report, the recovery in the total deal value in 2020 gained further momentum in 2021 against the lasting odds in both global and domestic markets. Almost two years after the break out, the pandemic is still here at full force with new mutations as the global inequalities in the vaccine roll out prevents the full suppression. The need for the Turkish energy administration to align its actions with the global best practices shaped by the Paris Climate Agreement and to create shields to protect the market from further shocks is even more critical to enhance resilience through the uncertainties.

The absence of the foreign investors in the Turkish energy deal space in 2020 continued in terms of numbers in 2021 as well. However, Actis’ deal in Uluğ Enerji Dağıtım marked an important foreign interest in the electricity distribution space.
The report said, “39 utility deals were disclosed in 2021 with an estimated total value of $1.5 billion, trebling the $500 million in 2020.”

“The majority of the targets were again in renewable energy including privatisations and the rest in thermal power generation, gas distribution, electricity distribution and EV charging infrastructure - a novelty on our deal list,” it also said.
Unlike 2020 with six oil and gas deals dominating the total deal value, 2021 was quiet on that front with only one deal. But the the total deal value more than doubled from $600 million in 2020 to $1.3 billion.
“The lack of progress in the liberalization of the gas market sustained the lack of investor interest despite the hype of the resource discoveries in the Black Sea,” said the report.

Meanwhile, Turkish Petroleum Corporation (TPAO) announced late on Jan. 10 that a daily flow of 1.15 million cubic meters of natural gas was achieved after a successful flow test of the first reservoir section in Turkali-1 appraisal well in the Sakarya Gas Field off the Black Sea province of Zonguldak.

The well has an estimated gas production potential of 2.7 million cubic meters per day, according to data obtained during the test. Natural gas extracted from the well is expected to reach the natural gas processing facility to be established at the Filyos Port next year. Well flow tests in the field are carried out by drillship Kanuni, which joined the TPAO inventory in 2020. Production at the Sakarya Gas Field will peak in 2026, Energy and Natural Resources Minister Fatih Dönmez said on Dec. 31, 2021. “As of that date, we will be producing a third of gas consumed in Turkey in this region,” he said, during a visit to the Filyos Port natural gas facility construction site in Zonguldak.

Last year, total natural gas consumption in Turkey was estimated at 60 billion cubic meters. In recent years, Turkey imported around 45 billion cubic meters of natural per year paying approximately $12 billion to pipeline suppliers Russia, Azerbaijan and Iran, as well as to liquefied natural gas (LNG) suppliers including the
United States, Morocco, Qatar and Nigeria.