Turkey could save up to $21 billion in import costs with the future development of its giant Tuna-1 gas discovery, according to an analysis by Rystad Energy.
The actual savings depend on the field’s peak output, which remains to be determined pending appraisal drilling and further testing. They could be even higher as global gas prices and import costs are expected to rise in coming years, Kallanish Energy learns.
According to Sindre Knutsson, Rystad’s vice president Gas Markets, the estimate is based on peak production range of 2.5 and 20 billion cubic meters (Bcm). The lower end reflects a more cautious approach, while the higher end would be a far more bullish outcome.
Turkey estimates initial gas reserve volumes of around 320 Bcm, but the size of recoverable reserves is still uncertain.
Under its analysis, Rystad estimated breakeven price for the field around $3-3.50 per million British thermal units (MmBtu). This is lower than the estimated $4.70/MmBtu price of imported liquefied natural gas in Turkey, proving to be an economical choice.
The recently made discovery offshore the Black Sea couldn’t have come at a better time, noted Knutsson. That’s because around 24 Bcm or 40% of the Turkish gas contracted volumes are due to expire in 2020-2021.
“Turkey’s newfound hope that low-cost discoveries are feasible will no doubt pave the way for further exploration programs,” he said. “The government seems to have grasped the strategic importance of this breakthrough, as demonstrated by its decision to send no fewer than five war ships to escort the seismic vessel Oruc Reis through the Mediterranean Sea.”
Whether or not the Middle Eastern country successfully develops the resources, the discovery gives Turkish gas buyers some sort of bargaining power. Rystad expect buyers to be keen to move away from oil-indexed contracts and instead use a European price benchmark, such as TTF, in their new deals.
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