Türkiye holds LNG supply talks with ExxonMobil while setting the stage to search for oil in Black Sea

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Türkiye is going all out to wean itself from its dependence on foreign natural gas and diversify its sources of supply, as demonstrated by the ongoing liquefied natural gas (LNG) negotiations with the U.S.-headquartered energy giant, ExxonMobil. On a mission to expand its energy mix while boosting domestic production, the country is getting ready to kick off oil alongside gas exploration activities in the Black Sea while also pursuing energy transformation with nuclear power and renewables.

Türkiye’s energy independence quest was fortified with the opening of the country’s first underground natural gas storage facility and the start-up of a giant gas project in the Black Sea. Earlier this year, plans were disclosed to speed up exploration in three locations, especially in the Black Sea, throughout 2024 to produce more value-added products and reduce dependency on foreign sources of supply in the energy arena. To this end, at least three more gas exploration wells in the Black Sea are on the country’s agenda this year.

In a bid to create a new supply portfolio without being dependent on a single source of energy supply, Türkiye is in talks with ExxonMobil for 2.5 million tons of LNG, worth approximately $1.1 billion. The country currently imports almost all of its natural gas needs, thus, the idea behind the latest negotiations is to forge a new supply portfolio without being dependent on a single supplier. If the long-term agreement is ironed out, the U.S. oil major may tuck a new ten-year LNG supply deal under its belt.

While working to bolster energy security with gas purchasing options from different sources, Alparslan Bayraktar, Türkiye’s Minister of Energy and Natural Resources, emphasized: “We need to buy gas from somewhere for supply security. This could be Russia, Azerbaijan, Iran or LNG options. We need to evaluate from a competitive point of view.”

Some analysts believe that this move will enable Türkiye to downsize its gas exports from Russia, which in turn has the potential to strengthen the country’s ties with the Western world, weakening its bonds with Russia. However, Bayraktar points out that Türkiye is working with Russia to construct the Akkuyu nuclear power plant, the country’s first nuclear power plant while South Korea and Russia have shown a serious interest in a similar nuclear project in the Black Sea.

Judging by this, Türkiye has no intention of turning its back on Russia, like some countries did, instead their collaboration is poised to grow, albeit in different areas, such as nuclear power. While Türkiye produces and processes natural gas in the Black Sea and oil in the Southeast, Bayraktar confirms drilling operations will be undertaken to search for oil alongside natural gas in the Black Sea at the end of this year. Will these projects change the rules of the game? It may be too early to tell either way.

While highlighting that the oil produced by TPAO and the private sector is set to enable Türkiye to become a country that produces 200,000 barrels of oil per day, Bayraktar noted: “We always talk about natural gas, but hopefully we will drill an exploration well in the Black Sea, which we think shows signs of oil, within a few months in the coming period.”

The country’s Black Sea gas production is currently 3.7 million cubic meters of natural gas, which is enough for approximately 1.4 million households. Türkiye plans to reach 10 million cubic meters in the first quarter of next year to deliver domestic natural gas to around 4 million households or 16 million people if the household population is four. The current interim target is to achieve 5 million cubic meters per day around May. Subsequently, the plan is to up the daily production ante to 40 million cubic meters in Phase 2 and Phase 3.

As new discoveries are expected to raise the reserves in the Sakarya gas field, the Abdülhamid Han drillship is anticipated to go to the Black Sea soon to search for more hydrocarbons. Bayraktar, who underlines that Türkiye will continue to pursue a strategy based on resource diversity by investing in both traditional and renewable energy sources, explains that the country has multifaceted goals such as “ensuring supply security, affordable cost, achieving net zero emissions and achieving energy independence.”

Furthermore, Türkiye’s Minister of Energy and Natural Resources is adamant that rapid expansion of renewable energy capacity will contribute to energy independence and reduce electricity costs, representing the backbone of energy industry decarbonization. Currently, the country consumes 1 million barrels of oil per day.

Bayraktar elaborated: “Türkiye’s energy self-sufficiency has recently exceeded 30%. This success is the result of a balanced approach that includes both hydrocarbon exploration and production and increasing renewable energy sources to create domestic alternatives to oil and natural gas imports.”

According to Türkiye’s Minister of Energy and Natural Resources, the country is currently home to a giant nuclear power plant construction site, one of the largest natural gas discoveries in recent years, platforms that enable regional natural gas and oil trade, approximately 80 GW of renewable energy projects, one of the largest rare earth elements fields, and an electricity grid.

As a result, Bayraktar outlined the need for a collective and holistic approach to energy that will provide the country with a resilient national energy system, thanks to a multi-billion dollar investment plan and ambitious energy efficiency targets.

As the country’s continued investment in oil and natural gas may be seen as questionable in the context of global calls for decarbonization, he underscored: “It is neither possible nor rational to suddenly abandon fossil fuels without creating alternative ways to ensure the welfare of our people and maintain our global competitive position.

“A transition that ignores the facts could impact public opinion through significant increases in energy prices, jeopardize public support for net zero targets and turn the transition period into a missed opportunity.”

Aside from operations within its onshore and offshore areas, Türkiye intends to start seismic work in Somalia before the end of 2024, which is expected to enable it to conduct deepwater drilling activities for exploratory purposes in 2025. 

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