Thread by @v_madalina

Now, that the fever of #Turkey's gas finding has cooled off (or not?), time for a (long) THREAD on challenges and implications #OOTT #ONGT

➡️ The gas is in ULTRA-deep waters: mark this term, it bears important outcomes

Tuna-1 well is located in 2115 meters water depth 1/

and the gas reserves were hit 1400 meters further, at nearly 3500 m water depth.
Total depth of drillings is expected to reach 4525 m where two more layers of gas are likely to be found (accord' to Fatih Donmez)

*Currently 500 m is considered the threshold for "deep waters" 2/

Depths over 1500 meters are considered "ultradeep waters"

👉Feature 1> in comparison with onshore projects, the offshore ones are considerable more expensive & involve long term deployments

👉Feature 2 > ultradeep projects are even more challenging
Since 1996, the oil & gas 3/

industry has entered a stage with active deepwater exploration operation, spurred by technological advancements

Nevertheless, the ultradeep water drillings are particularly challenging: they require specific project engineering, high scale investment, and specific technology 4/

which a limited number of companies have hitherto developed

Given these factors, the following implications arise :

1. How much of the 320 bcm #Sakarya gas field is recoverable : the more, the better.
Nevertheless, this is #Turkey's largest ever gas discovery and most 5/

important in entire Black Sea #ONGT

In the same vein-and very important when it comes Turkey's energy security-is whether future gas reserves will be found in the block area, which totals 7000 square kilometers-Turkish authorities are rather positive about that 6/

2. When the gas will reach the consumers
Given the complexity entailed by ultradeep waters projects, and the *scale of investment*(see below), the 2023 timeline put forward by the Turkish authorities might be overly optimistic

3. Scale of investment-CAPEX and OPEX-for 7/

exploration, development and production phases

According to @IEABirol, an investment of $ 6 billon is needed to start production from #Sakarya field

In the same context, is interesting to see whether the investment would be entirely assured by Turkey, or #TPAO would partner 8/

with other energy major(s), and, if the case, which would those be. To mention that TPAO has 100% equity in the 7000 square block AR/TPO/KD/C26-C27-D26-D27, where the discovery was found

➡️ Now, about the implications of the gas discovery

1. First & foremost-and probably 9/

most important one, is that it will undoubtedly strengthen #Turkey's energy security, through different ways : >reduction of gas imports >reduction of country's overall #energy bill
>mitigation of geopolitical risks stemmed by energy cooperation with Russia
>building up of 10/

important leverage for future re-negotiations of gas contracts with main suppliers, chiefly Russia, but also Iran & eventually Azerbaijan.

* Some observers highlighted the fact that the gas discovery is not a "game changer" for Turkey, in the sense that it will not fully 11/

cover its energy needs. But when it comes Turkey's energy security, the gas finding is-if not a game changer-at least a very important element

2. Major implications on the gas contracts with Russia, which expire on 2021, respectively 2025

It will be highly interesting 12/

and intriguing 😎-to see how Turkey would use this new leverage in its negotiations with Russia. (Very)likely to witness relevant changes in comparison with current contracts: shorter term contract(s), lesser prices, lesser volumes; & also probably less restrictive conditions 13/

ie : take or pay obligations

3. Important implications on the future of #Turkstream pipeline, if an important reduction of Russian gas imports would occur.
To be reminded that Turkstream is project of $ 7 billion (the part destined to Turkish market), whose investment-aside 14/

its geoeconomic implications-needs to be made profitable.
In this regard, it will be intriguing to see what would be the trade-offs from the Russian side (especially when it comes the gas price), and if their scope would encompass solely the gas, or it would touch also 15/

#geopolitical aspects of Russia-Turkey relation
#OOTT #ONGT