Energy and Allyship: The Implications of Turkey’s Natural Gas Policies

By THO Nonresident Fellow, Altan Atamer

In 1974, a Greek nationalist coup sought to nullify the rights of Turkish Cypriots. A successful Turkish military intervention hindered these aims and granted Turkish Cypriots a safe haven in the island’s Northern half. Ever since then Cyprus has remained divided. However, a new element was added to the decades old conflict when, in 2010, natural gas reserves were discovered in the “Aphrodite” gas field off of the island’s coast. 

While initially hailed as a great economic opportunity, the natural gas find in “Aphrodite” now seems to have enflamed the tensions of the past. Most recently, questions concerning the ownership of the deposits as well as the appropriate means of allocating future profits have stalled efforts to extract the natural gas. These natural gas finds have internationalized the conflict which had historically been between Turkey, the Turkish Republic of Northern Cyprus, Cyprus and Greece. Now countries like Egypt, France, and Israel have all indicated an interest in “Aphrodite.” Regardless of the changing dynamics of the conflict, Turkey seems to be resolute in defending its interests as well as that of Turkish Cypriots. Due to a lack of exploitable natural gas resources elsewhere in Turkey and the government’s willingness to defend its drill ships by military means, any future resolution to this conflict would need to take into consideration the interests of the Turkish community. But in 2020, a whole new dynamic to the conflict in the Eastern Mediterranean would be introduced – this time from an unlikely source – the Black Sea.

On 21 August 2020, Turkish President Recep Tayyip Erdoğan confirmed the rumors that the “Fatih” drillship had discovered natural gas in the exclusive economic zone (EEZ) of Turkey’s Black Sea coast (Xinhuanet 2020). However, the extent of the discovery is what proved to be the most significant element in Erdoğan’s announcement. It was initially revealed that the “Tuna-1” field held about 320 billion cubic meters of natural gas (Bechev 2020), although recent estimates have since then been upwardly revised (Daily Sabah 2020). This discovery does not just dwarf the 130 billion cubic meters expected from the “Aphrodite” gas field (Oil & Gas 360 2018), it also provides a pathway towards lessening Turkey’s current energy dependence and has significant effects for both the Turkish economy and regional relations. 

Turkey is almost entirely dependent on foreign natural gas. Prior to the natural gas discoveries in the “Tuna-1” area of the Black Sea, 2019 domestic production of natural gas supplied less than 1 percent (0.3 billion cubic meters) of Turkish demands (Lepic 2020). Thus, a whopping 73 percent of Turkey’s energy demands had to be fulfilled by imports from Azerbaijan, Iran, and Russia (Lepic 2020). Obviously, the magnitude of this foreign energy dependence represents both political and economic challenges for Turkey. For example, the cost of meeting the 2019 Turkish demands for natural gas via foreign imports cost the government $41 billion (Cohen and Yuzucu 2020). This figure is not just a sizable portion of Turkey’s national budget, but as demand for natural gas is expected to rise once world economies and industries open up post COVID-19 (Lepic 2020), and the Turkish lira continues to deteriorate in relation to the US dollar, continued energy dependence does not seem like a tenable situation.

Furthermore, the economic challenges to energy dependence are compounded when taking into consideration political developments. Currently, some of Turkey’s energy is imported from states that do not share cordial relations with the United States. This ultimately creates obstacles in the US-Turkey relationship. As recently as 2018, Turkish import of Iranian natural gas was heavily scrutinized by then-President Donald Trump and his administration. It was only after intensive lobbying efforts and the release of Pastor Andrew Brunson from Turkish detention, that the US backed down from potential sanctions (Pamuk and Kucukgocmen 2018). Yet, as evidenced by the US’s recent sanctioning of Turkey’s defense sector due to the latter’s purchase of Russian S-400 missile systems, it does not seem that US is afraid of pressuring its NATO ally to conform to American interests. Consequences for continued engagement with “American adversaries” thus loom large for countries like Turkey who are, unfortunately, dependent on energy from states like Iran and Russia. While it is not yet clear how the Biden administration would react to continued Turkish trade with Iran and Russia, the discovery of natural gas in the “Tuna-1” field grants Turkey an opportunity to alleviate American concerns and avoid potential sanctions – an opportunity that was not available a couple of years ago. 

With this being said, there are drawbacks to the natural gas discoveries in “Tuna-1” that need to be taken into consideration. First and foremost, is the size and practicality of the project. While even conservative estimates of the “Tuna-1” find suggest that it could prove to significantly address Turkey’s reliance on foreign energy, the natural gas deposit itself is proving to be particularly difficult to harvest. Located at over 4,500 meters below sea level and 150 kilometers from the Turkish coast, development of the infrastructure necessary to exploit the natural gas reserve may prove both tricky and taxing (Cohen and Yuzucu, 2020). A similarly difficult, yet sizably smaller, find in Romania’s EEZ has yet to be exploited due to the billions of dollars that would need to be spent in order to build the necessary infrastructure (Fawthrop 2020). Furthermore, while natural gas is cleaner than other fossil fuels like coal, it is still very detrimental to the environment (Union of Concerned Scientists, 2014). Considering the environmental pollution that would be caused in order to develop the necessary infrastructure to extract the natural gas, as well as the harmful effects of transporting it from “Tuna-1” to Turkey, both the development and the exploitation of “Tuna-1’s” natural gas does not represent a step forward for the country in terms of finding cleaner fuels or renewable energy sources. Any investment in this project would ultimately be a commitment to a natural resource that is not just harmful but potentially antiquated for Turkey’s future energy needs. Thus, serious questions need to be raised regarding whether the money would be better invested in Turkish projects that seek to develop infrastructure for renewable energy.

On the other hand, there are also clear economic and political incentives that favor the extraction of natural gas from “Tuna-1.” President Erdoğan expects to open this newfound energy source for domestic consumption by 2023 (Fawthrop 2020). While this figure seems ambitious, it is worth noting that any eventual successful development of the infrastructure necessary to harvest the natural gas in “Tuna-1” would still represent a significant reduction of import fees currently paid to foreign energy companies. In fact, the independent energy consultancy agency “Rystad” estimates that the “Tuna-1” gas reserves would save the Turkish government nearly $21 billion per year and, “actual savings could be even higher as global gas prices and import costs are expected to rise in coming years” (Rystad 2020). The natural gas reserves in “Tuna-1” would thus halve Turkey’s budgetary commitments to natural gas imports. This lessening of Turkish energy dependence could also be used as leverage in future deals concerning the price of importing foreign energy as the current deals, which are soon set to expire, reflect a general weakness in Turkey’s bargaining power (Rystad 2020). In short, the influence of foreign countries on Turkey, especially countries like Russia and Iran, would lessen in relation to the development and extraction of the natural gas present in “Tuna-1.” This would prove to be economically and politically beneficial for both Turkey and US-Turkish ties. 


References:

Bechev, Dimitar. 2020. “Turkey's Plans to Become a Regional Energy Giant Just Got a Boost.” Foreign Policy. https://foreignpolicy.com/2020/08/28/turkeys-plans-to-become-a-regional-energy-giant-just-got-a-boost/ (January 22, 2021).

Cohen, Ariel, and Talya Yuzucu. 2020. “Turkey's Gas Find in the Black Sea: How Big Is This Tuna?” Atlantic Council. https://www.atlanticcouncil.org/blogs/energysource/turkeys-gas-find-in-the-black-sea-how-big-is-this-tuna/ (January 21, 2021).

Daily Sabah. 2020. “Erdoğan Announces Additional 85 Bcm of Natural Gas on Black Sea Gas Discovery Site.” Daily Sabah. https://www.dailysabah.com/business/energy/erdogan-announces-additional-85-bcm-of-natural-gas-on-black-sea-gas-discovery-site (January 22, 2021).

Fawthrop, Andrew. 2020. “Major Black Sea Gas Discovery Could Prove 'Transformational' for Turkish Energy Prospects.” NS Energy. https://www.nsenergybusiness.com/news/industry-news/turkey-gas-discovery-tuna-1/ (January 24, 2021).

Lepic, Bojan. 2020. “Rystad Energy: Giant Tuna-1 Discovery Could Save Turkey $21 Billion.” Offshore Energy. https://www.offshore-energy.biz/rystad-energy-giant-tuna-1-discovery-could-save-turkey-21-billion/ (January 23, 2021).

Oil & Gas 360. 2018. “The Eastern Mediterranean's New Great Game Over Natural Gas.” Oil & Gas 360. https://www.oilandgas360.com/eastern-mediterraneans-new-great-game-natural-gas/ (January 23, 2021).

Pamuk, Humeyra, and Ali Kucukgocmen. 2018. “Turkey to Continue Buying Natural Gas from Iran despite U.S. Sanctions.” Reuters. https://www.reuters.com/article/us-iran-nuclear-turkey/turkey-to-continue-buying-natural-gas-from-iran-despite-u-s-sanctions-idUSKBN1KT210 (January 24, 2021).

Rystad. 2020. “There's a Catch! Turkey's Hooked Tuna Gas Discovery Could Save It up to $21 Billion in Import Costs.” Rystad Energy - Energy Knowledge House. https://www.rystadenergy.com/newsevents/news/press-releases/theres-a-catch-turkeys-hooked-Tuna-gas-discovery-could-save-it-up-to-$21-billion-in-import-costs/#:~:text=The future development of Turkey's,appraisal drilling and further testing. (January 24, 2021).

Union of Concerned Scientists. 2014. “Environmental Impacts of Natural Gas.” Union of Concerned Scientists. https://ucsusa.org/resources/environmental-impacts-natural-gas#:~:text=Natural gas is a fossil,new coal plant  (January 24, 2021).

Xinhuanet. 2020. “Turkey Announces Substantial Gas Find in Black Sea.” Xinhuanet. http://www.xinhuanet.com/english/2020-08/22/c_139308571.htm (January 23, 2021).