​A few reactions to today’s announcement by President Erdogan

TURKEY - In Brief 21 Aug 2020 by Murat Ucer

---

As heralded by the media coverage of the past two days, President Erdogan announced today that Turkey has discovered natural gas reserves in the Black Sea region. Initial findings suggest reserves of about 320 billion cubic meters, but there is potential for further finds, Erdogan said. He also announced the target date for the start of domestic consumption as the year 2023 (see here for the Reuters coverage).Here are a few (tentative) numbers to provide some perspective. According to data from the Energy Market Regulatory Authority, Turkey has imported little over 45 billion cubic meters of natural gas in 2019, which means that projecting this rate of consumption forward, these reserves, assuming they can be feasibly extracted and fully deployed, could secure about 7 years of consumption. From a current/trade account perspective, we know that Turkey’s total energy imports amounted to some $42 billion last year -- down to around (a 12-month rolling) $35 billion as of June (see chart) -- but the precise breakdown of this figure into products, i.e. crude, natural gas and other products, is not readily available. We reckon though, that some 25%-30% of this amount is comprised of natural gas imports. Taking these figures as our reference for 2023+ and assuming that all goes well in terms of drilling, extraction, etc., Turkey’s annual savings could amount – again very roughly speaking — to some $10-$15 billion, or some 1%-1.5% of GDP.While this is not a trivial sum, Ankara has clearly oversold its case, considering the fanfare and propaganda that was on display in the last few days, because this is neither a game-changer nor a "historic development" that Ankara wants us to ...