Turkey floats ‘new cooperation’ with Iran after gas find

Turkey says its largest-ever natural gas discovery in the Black Sea could lead to new cooperation with Iran even as Ankara aims not to be just a buyer, but also a producer.

Turkey is dependent on imports for almost all of its energy needs and Iran is a key supplier of Ankara’s natural gas purchases which generate nearly 40 percent of the country’s electricity production.

“The countries we have been cooperating with for years are Iran and Russia. This new period for Turkey may lead to new cooperation with these countries,” Turkish Finance Minister Berat Albayrak said in a televised interview on NTV Tuesday.

Turkish President Tayyip Erdogan said on Friday his country was determined ultimately to become a net energy exporter as he announced the discovery of a 320 billion cubic meter natural gas field that could come on stream as soon as 2023.

Turkey’s senior officials and media said the discovery could transform Turkey’s dependence on Russia, Iran and Azerbaijan for energy imports.

Albayrak said it would help remove a chronic current account deficit which has driven the lira to record lows against the dollar. The discovery, officials hope, could reduce Turkey’s energy import bill which stood at $41 billion last year.

Analysts have said it was not clear whether the 320 billion cubic meters (bcm) Erdogan announced referred to total gas estimates or amounts that could be extracted.

On Monday, Iran’s Minister of Petroleum Bijan Zangeneh said recoverable gas is estimated at 230 bcm, translating to 35 mcm per day once it is produced. This is while Turkey needs 130 mcm a day which it sources from Iran, Russia and Azerbaijan.

“Investing at sea is expensive and requires technology. On the other hand, it takes time and needs a refinery to build,” he said.

Many officials and analysts have cautioned that it could take up to a decade for gas from the Black Sea find to come online, and would need billions of dollars of investment to build up the infrastructure for production and supply.

According to Turkey’s Energy Minister Fatih Donmez, the gas find is located in waters 2,100 meters deep, with drilling extending another 1,400 meters below the sea bed.

Through a pipeline, Iran sells about 10 billion cubic meters a year of gas to Turkey under a 25-year supply deal signed in 1996. The pipeline has been the target of occasional attacks by PKK terrorists, but the latest blast in March and Turkey’s dithering on repairing it prompted many observers to wonder whether it was a sign of a shift in Ankara’s energy policies.

Iran’s Fars news agency even speculated that the situation might be the result of aggressive US efforts to push its liquefied natural gas (LNG) into Turkey.

According to US officials, Washington has offered to sign a $100 billion trade agreement with Turkey, which their presidents discussed at the Munich Security Conference.

Other reports suggested that Turkey was unwilling to repair the damaged pipeline because it was unhappy with the price of Iranian gas.

Last month, Iran’s Ministry of Petroleum said it had resumed exports of natural gas to Turkey. Authorities in Turkey also denied there was a major issue with the pricing, insisting that repair work on the pipeline had been delayed because of the spread of the new coronavirus in the region.