Erdogan Unveils Biggest Ever Black Sea Natural Gas Discovery

President Recep Tayyip Erdogan said Turkey has found 320 billion cubic meters of natural gas in the biggest ever discovery in the Black Sea, and hopes to begin production by 2023.

The lira and benchmark share index both gave up gains, though, possibly reflecting disappointment among investors over the size of the deposit.

“We have conducted this operation completely through national means,” Erdogan said Friday in a much-trailed press conference at his office in Istanbul. “We didn’t even rely one bit on foreign sources in drilling operations.”

The Fatih drill ship located the gas in the so-called Sakarya field, he said, and exploration is continuing in surrounding areas.

“The question now is how much of this gas is recoverable,” said Jonathan Lamb, oil and gas senior analyst at Wood & Company, a Czech investment bank. “This is not clear yet. What the market really wants to know also is how much they can produce per year, but I don’t think they are in the position to say that yet.”

The Borsa Istanbul 100 index fell as much as 1.8%, while shares in energy companies including refiner Tupras, Aksa Enerji and Aygaz dropped sharply after the news. The lira was trading 0.6% lower at 7.3414 per dollar at 10:15 p.m. in Istanbul.

Erdogan Unveils Biggest Ever Black Sea Natural Gas Discovery

Turkey bought three drilling ships in recent years as it dramatically expanded energy exploration in the Black Sea and contested waters of the eastern Mediterranean. It’s keen to find sizable energy reserves to ease its heavy reliance on imports from Iran, Iraq and Russia, and support one of the biggest economies in the Middle East.

The Fatih, which was purchased by Turkey in 2018, drilled to a total depth of 4,525 meters (14,850 feet) in the Tuna-1 discovery, Turkey’s state-run oil company TPAO said. The prospective area has “approximately 2 billion barrels of recoverable oil equivalent,” making it a “colossal” gas find with further potential from the deeper section of the well, according to a statement on the company’s website.

TPAO said the exploration process shows the company is capable of assessing resources beneath ultra-deep water. Even so, it has little experience in deep-sea gas production and would likely need to enlist a major firm to exploit the field. With oil and gas prices having slumped, the economics of developing such a find may be less attractive than in the past.

“Turkey is a premium gas market, which has never been significant on a global scale,” said Ashley Sherman, principal analyst on Caspian and Europe upstream at Wood Mackenzie. “The discovery really reinforces the country’s potential role as an energy producer in the region.”

Erdogan Unveils Biggest Ever Black Sea Natural Gas Discovery

Tuna-1, some 150 kilometers (93.2 miles) from Turkey’s coast, is close to an area where maritime borders of Bulgaria and Romania converge. It’s not far from Romania’s Neptun block, until now the largest gas find in the Black Sea in decades, and which was discovered eight years ago by Petrom and Exxon.

Romania has shallow-water gas projects, but a major deep-water find eight years ago has still to be exploited. A company backed by The Carlyle Group Inc. is also exploring off Romania, aiming to get gas in 2021. Rosneft PJSC has explored in the Russian part of the Black Sea but without concrete results.

Turkey is mired in territorial disputes with Greece and Cyprus in the eastern Mediterranean as it searches for oil and gas in contested waters. France has temporarily increased its military presence to ward off Turkish steps, and German Chancellor Angela Merkel on Wednesday said the European Union was concerned over the increased tensions.

Erdogan said he also expects “good news” from exploration activities in the eastern Mediterranean.

Erdogan Unveils Biggest Ever Black Sea Natural Gas Discovery

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