Turkey is hopeful that the Black Sea Sakarya field could support gas exports to Europe, as Ankara touts the country’s potential to be a regional gas hub.

Discovered during drilling in 2020, Sakarya is due to start flowing gas in the coming weeks. Peak output of 15bn cubic metres per year is expected by 2026.

“Including the first and second stages [of the project], we will pump 40mn cubic metres of gas into the national system [from Sakarya] daily,” the general manager of the Turkish Petroleum Corp (TPAO), Melih Khan Bilgin, told Russia’s TASS news agency on April 13. “We will also have good potential for [supplying gas] to the European market. Under the current conditions on the [energy] market I don’t think we will have problems finding clients in Europe.”

The field’s imminent launch comes ahead of Turkey’s general election next month, and Turkish President Recep Tayyip Erdogan is keen to stress his administration’s achievements in providing the country with cheaper and more secure energy supply for what is set to be a heated contest, which will pit the incumbent leader against a united opposition led by Kemal Kilicdaroglu.

Turkish gas consumption came to 60.44 bcm in 2022, after rising nearly 19% year on year, according to state statistics, whereas production pales in comparison at less than 500 mcm. The country covers the gap with pipeline imports from Azerbaijan, Iran and Russia, as well as LNG supplies.

In other words, supply from Sakarya will not nearly be enough to give Turkey gas supply independence. But the government is hopeful of also ramping up imports from Russia, which may give it a surplus it can pass on to the higher-priced European market.

Establishing Turkey as a hub for Russian gas supply is strongly advocated for by Moscow, which is anxious to find alternative routes to the European market amid the conflict in Ukraine, the damage to the Nord Stream 1 and 2 pipelines and the end of westward gas flow via the Yamal-Europe pipeline because of sanctions.

NewsBase understands that Gazprom is seeking to sell gas on its own electronic exchange in Turkey, whereas Ankara wants to use its own Epias exchange as a platform for Russian sales. Therefore the same platform would handle gas from various sources, including LNG and Turkey’s own offshore fields. Other regional gas producers such as Azerbaijan, Iran and Turkmenistan have also been invited to take part, although it is unclear how much volume they could provide.

By selling on its own exchange, Gazprom would have total control over the price, whereas pricing at Epias would be influenced by domestic prices in Turkey and long-term import contracts. On the other hand, sales at a Turkish hub are likely to be looked on more favourably by European buyers, even if there are still Russian molecules in the mix.

In any case, extra Russian gas could either be used in Turkey or re-exported to Europe but not directly by Gazprom, as most European customers are unlikely to want to deal with the Russian state supplier. In the former case, this would mean less of Sakarya’s gas is required domestically and so more could be exported.

Taking with a pinch of salt

It is important to note that Sakarya’s reserves have not been independently audited, and so the estimates for the field and the rest of the Turkish Black Sea come only from either the government or TPAO. The estimate for the amount of gas in the Turkish Black Sea has been repeatedly raised since Sakarya’s discovery, from an initial 170 bcm to 320 bcm to 540 bcm to 652 bcm and then 710 bcm.

The government has a motive to inflate those figures ahead of the election on May 14. While the Turkish economy is growing at a robust pace, the country’s inflation crisis is a major campaign theme. Erdogan announced at the end of March that his government would slash energy bills for consumers and companies to ease the cost of living crisis, but the administration is also keen to demonstrate it has a long-term plan for more affordable energy.