The benefits of Turkey’s recent giant natural gas discovery in the Black Sea will be felt mostly in the medium and long term as the gas is expected to be ready for public consumption in 2023, economists told Anadolu Agency. 

As announced Friday by President Recep Tayyip Erdogan, some 320 billion cubic meters of natural gas reserves were found after the drill ship Fatih started work on July 20 off the Black Sea coast.

The size of the discovery dwarfs all the natural gas Turkey has ever produced – 16.6 billion cubic meters – by twenty-fold, and is expected to create $65 billion in economic value.

Enver Erkan, an economist at Istanbul-based private investment firm Tera Yatirim, told how on Wednesday, after Erdogan teased the arrival of good news ushering in a “new era” in Turkey, energy shares and the Turkish lira both gained ground.

The US dollar/Turkish lira exchange rate fell to around 7.20 ahead of the announcement, after hovering above 7.34 earlier in the week.

Underlining the importance of energy as a driver of Turkey’s current account deficit, Erkan said the reserves found equal about eight years of the country’s gas needs.

If the country discovers more such resources in the near future – which leaders have said is likely – this will bring greater benefits still, Erkan said.

“Rescuing Turkey from foreign exchange sensitivity is crucial for its economic transformation,” he explained.

Noting that the market reaction is still in the short run, Erkan said this will also cut costs for households as well as help the production economy.

Meeting long-term gas needs

Uzeyir Dogan, investment consultancy director at Gedik Investment, stressed that initial rumors saying Turkey had found 800 billion cubic meters of natural gas reserves in the Black Sea served to lift market expectations.

“The announced figure, which is less than half of the amount mentioned, upset the market,” Dogan explained, telling how the Turkish lira lost ground and the country’s stock exchange fell after Erdogan’s announcement.

The reserves’ discovery itself is very positive, beside their size, which is huge, Dogan stressed.

“This amount will meet Turkey’s gas needs for a long time,” he said.

“We will see a lasting impact of the news [on financial markets] in the medium term.”

At the close on Friday, Borsa Istanbul’s BIST index had fallen 1.50% to 1,109.88 points.

One US dollar traded for 7.3450 Turkish liras as of 5 p.m. local time (1400GMT) Friday.

Saying that Turkey set its mind to finding gas and learning how to process it, Dogan said this will give the country renewed impetus and acceleration.

Help with current gas contracts

Ferhat Yukselturk, managing partner of Istanbul-based eCons Consulting, said the news is promising, as besides its size, new natural gas finds in nearby areas of the Black Sea are likely.

As the process of bringing gas into the economy points to a period of at least three years, he said expecting to see a significant impact on the economy in the short run would be “overly optimistic.”

But he pointed to a possible benefit in helping Turkey get better terms in its current international gas contracts.

“If we can put these reserves into use at a time close to the expiry date of long-term contracts with Russia, our bargaining power will increase as we use the most expensive gas from the country in Europe,” Yukselturk said.

When the discovery was made, the Turkish drill ship Fatih was exploring at the Tuna-1 well – now renamed the Sakarya Gas Field, after a nearby Black Sea province – some 100 nautical miles (185 kilometers) north of the Turkish coast in the western Black Sea.

Erdogan hailed the natural gas discovery as the biggest in Turkey’s history.

In addition to closing the country’s current account deficit, the find could also trigger changes in its gas contracts with Russia, Iran, and Azerbaijan.

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