Experts skeptical about Turkey’s latest gas discovery

Experts skeptical about Turkey’s latest gas discovery
Turkey's President Recep Tayyip Erdogan watches Turkish drilling ship, Fatih, in the background. (AP)
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Updated 25 August 2020

Experts skeptical about Turkey’s latest gas discovery

Experts skeptical about Turkey’s latest gas discovery

ANKARA: As Turkey recently announced a major natural gas discovery in the Black Sea on Friday, how this will translate into reality is being widely discussed.

According to President Recep Tayyip Erdogan, the discovery of 320 billion cubic meters (11.3 trillion cubic feet) of natural gas in Turkey’s exclusive economic zone will reduce the country’s dependence on foreign energy supplies, especially from Russia, Azerbaijan and Iran — a factor that constantly increases the country’s current account deficit.

Last year, Turkey’s energy imports cost the country $41 billion, while it consumed 45 billion cubic meters of gas in the same period.

Mehmet Ogutcu, head of the Bosphorus Energy Club and a former diplomat, told Arab News that a “98 percent import dependency and $12 billion annual gas import bill creates a challenge to Turkey’s economy and national security.”

The country is also conducting exploratory drilling for oil and gas in the eastern Mediterranean, that could hold about 122 trillion cubic feet of gas by some estimates, but these moves have enraged regional actors over maritime rights and further strained Turkey-EU relations.

Turkey plans to extract and make this gas available by 2023 — when the country will hold its parliamentary and presidential elections.

But, some experts have voiced their suspicions over this goal, and whether this reserve is likely to meet Turkey’s energy needs, claiming that the initial production process will require six years at minimum.

Some commentators also doubt the plan’s viability, as several members of the government have made similar announcements in the last two decades.

According to Ogutcu, the reserve estimate needs to be independently verified.

“The 2023 goal seems to be too optimistic as the Black Sea has tough geological and climate conditions for exploration and production. Plus, the average period from discovery to market is around 7-8 years in the gas industry,” he said.

Getting gas to the public is also believed to require additional financial resources reaching to billions of dollars in infrastructure.

Ogutcu thinks that investor appetite is currently low, over the gas glut in international markets, low demand and correlating prices.

Another point of contention is that the plan could shorten the terms of Turkey’s contracts with Iran and Russia for energy supplies that will end in 2023 and 2026 respectively.

Aydin Sezer, an expert on geopolitics and energy, said it was not technically possible to announce a reserve through a single drilling.

 The country’s drilling ship Fatih began work on July 20. Sezer believes it ought to take four to six months to be technically suitable.

“The site of the discovery in the western Black Sea — now renamed the Sakarya Gas Field — expands 250 square kilometers, and at least 8 to 10 drillings should have been conducted in this area in order to announce a realistic amount of reserves. The real reserves can be determined in two years at least and could be extracted in 7 to 10 years,” Sezer told Arab News, adding that the announced reserves could not be taken as commercially viable at this point.

According to Sezer, the reserves cannot be extracted completely, and even if they were would only meet the country’s energy needs for six years.

On the other hand, as the gas found is 3,500 meters deep, reaching and extracting natural gas beyond 500 meters will require US companies that are specialized in deep water extraction technology.

Madalina Vicari, an independent expert on energy geopolitics, thinks the gas discovery is important for the country’s energy security, but not a game changer in the sense of covering Turkey’s gas import needs.

“The discovery is in ultra-deep waters, and ultra-deep water drillings bear significant challenges, technical and economic alike, as they require special engineering projects, and intensive capital investments,” she told Arab News.

In this regard, for Vicari, it is yet to be seen how much gas is recoverable, and when exactly the gas will flow into the Turkish market.

“Given the challenges of the project, it would likely take at least a few years until the gas reaches consumers. The 2023 timeline is overly optimistic. It remains to be seen to what extent the Sakarya field will reduce Turkey’s gas imports,” she said.

Vicari also thinks that Turkey’s energy contracts with Russia may turn into shorter term contracts along with significant price bargains, while the new gas discovery is also a challenge for the Turkstream pipeline.

“And Russia, in order to not have at least one of Turkstream’s lines idle, might offer significant price concessions,” she added.
 


Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier. (Shutterstock)
Updated 25 min 52 sec ago

Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
  • Spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday — the opening day of the event

PARIS: Emerging stronger from the COVID-19 pandemic, Asia is set to dominate this year’s virtual World Economic Forum as a virus-battered West struggles and a new US president faces particularly daunting challenges.

The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier.
While the coronavirus leaves a mounting death toll and upends economies, depriving millions of people of work, China and Asian countries in 2021 are making a strong comeback from the virus that hit them first.
In virtual format because of the pandemic, next week’s event is headlined: “A Crucial Year to Rebuild Trust.”
The spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday, the opening day of the event that will last through next Friday.
The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.
US President Joe Biden will not appear at the virtual Davos, which has never been a fixture on the White House calendar — even if the new administration has pledged to revive a US multilateral foreign policy after four years of Donald Trump’s America First approach.
Trump had been an exception as he stopped in Davos twice, with the real estate billionaire enjoying mixing with the global business elite.
Before him, Bill Clinton was the only American president who had traveled to Davos, and that was just once.
Showing up from Asia are China’s and South Korea’s presidents as well as the prime ministers of India and Japan.
Following the first virtual session, Davos will move in May to Singapore, far from the luxury Swiss ski resort where it has taken place since it was launched in 1971, the brainchild of German professor Klaus Schwab.
The stated reason for the changes is health safety.

FASTFACT

The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.

But a virtual forum is not particularly attractive for the world’s well-heeled movers and shakers, who value huddles behind closed doors in fancy hotels over meetings in formal settings.
French insurance-credit group Euler Hermes said in a study this month that the “world’s economic center of gravity” (WECG) has been moving toward Asia since 2002.
“The COVID-19 crisis could accelerate the shifting global balance toward Asia,” it added.
“By 2030, we forecast the WECG, could be located around the confluence of China, India and Pakistan,” the study projected.
The speech by Xi, who addressed Davos back in 2017, seems almost to set the clock back, as if the business world seeks to erase the Trump era.
Four years ago, he presented himself as the champion of free trade, much to the joy of Davos participants who feared the newly elected Trump’s protectionist moves.
Biden is nevertheless sending John Kerry, the special climate envoy who will be welcomed after the new Democratic president has brought Washington back into the Paris climate accord.
The agenda includes workshops titled: “Stakeholder Capitalism: Building the Future” as well as “Advancing a New Social Contract” and “Resetting Consumption for a Sustainable Future.”
In a column published in mid-January, Schwab said 2021 could be a positive and historic year, 75 years after the original “Year Zero” following the devastation of World War II.
“We once again have a chance to rebuild,” he said, calling for rethinking capitalism in the light of a pandemic that has worsened inequality.
He said “COVID-19 has delivered the final blow” to the post-war model where free markets and limited government produced prosperity and progress that now is “no longer sustainable, environmentally or socially.”