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Alternatives & Analyses: The new gas find in the Black sea – a game changer with immense geopolitical implications

There is need for discounting Erdogan’s story on Black sea gas discovery for its populist ‘premium.’ Politicians are entitled to political hype, but there are indisputable facts— most of them sound positive for the E&P business in the region. But the geopolitical implications might be equally immense – as usual when oil and gas come into play.

The geological discovery estimate is based on models processing the data received – pressure and depth of the production layer in the reservoir – the 320 billion cubic meters is a ballpark estimate of the so-called ‘payzone’, but it should be treated with a grain of salt as all preliminary guesses. Standard press releases by listed oil and gas companies, which follow strict reporting rules, usually refer to a range in the estimates. Such was the case with the neighboring Neptune field in the Romanian EZ.

Further drilling and tests are required before the reserves and the estimates are proven as fact.

But the good news is indisputable. At least three wells come next – but investment makes great sense.

A deep-water appraisal or production well, at 2000+ depth costs between USD 100-140 million. All the necessary investment before production starts will top USD 1,2 billion. Still, if half of the initial 320 billion cubic meters ends up as proven recoverable gas – its market value at present prices exceed USD 15 billion.

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This is all good news for the gas-based green transition in the SEE to 2050 EU emission targets.

The populist overtones in President Erdogan’s announcement are to be expected as he needs ‘breaking news after nine unsuccessful drilling operations in the Mediterranean and the worst dip in history of the Turkish lira value.

In the E&P world, there are three categories appraising gas reserves – ‘possible’ reserves (those that have a less than 50 percent but higher than 10 percent chance of recovery). Then come ‘proven’ reserves with above 90 percent recovery chance and in-between are the ‘probable’ reserves. These categories depend on the technologies used, the production costs and the market price of gas.

The TPAO ship Fatih started drilling operations on July 20th, and in less than a month, the news of the discovery broke, which might sound to some as a hasty announcement. The year 2023, which Erdogan gave as the starting year for production, is too challenging and contested a timeframe by professionals too.

But the upside of this announcement to E&P activities in the Black Sea is beyond doubt. Look for more investments and more gas finds in the Black Sea.

The downside is that tensions will move from the East Mediterranean to the Black sea, and Cold War times will return.

After significant discoveries in oil and gas, the geopolitical standoff in the Black sea will skyrocket. The Balkan and the Black Sea region will return to center stage in global politics as the race to explore in the deep-water zone progresses.

What is certain – Russia’s pincer energy-based strategy is history. The Kremlin has lost its energy weapon.

Expect a spike in the military standoff between NATO and Russia in the Black sea as Kremlin renews grandstanding and tries to harass exploration and production in the promising areas. On the watch list – Ukraine and Russia disputes over conflicting claims on economic zones.

Besides attempts to explore and produce gas on its own in the Black Sea, Russia will continue its military build-up in the Black Sea, intensifying its operations in the Balkans.

Bulgaria’s role is critical for the transit of TPAO’s Black Sea gas to the EU and Moscow will focus on exploiting the vulnerabilities in NATO’s ‘weakest link’. The pressure on the Government of Bulgaria to release capacities in all transit pipelines, including the Turk Stream – 2, is rising.

The gas find news comes as a wakeup call for many in Washington and the EU capitals as they will have to reconsider their benign neglect of protests in Bulgaria. Neither NATO, nor the EU can afford to overlook the grip that Russia-linked corruption and mafia have over the country.

Ilian Vassilev

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One thought on “Alternatives & Analyses: The new gas find in the Black sea – a game changer with immense geopolitical implications

  • Thank you for this heads-up on gas resources in the Black Sea.
    Hopefully, Turkey will be more resolute in developing them than Romania was with its reserves. Another positive effect of Turkey having its own offshore gas reserves could just be that Turkey would be less aggressive in pursuing offshore exploration the Greek, Cypriot or Libyan territorial waters. This may be wishful thinking, as many military tensions or wars are not just borne out of economic necessity, but rather to stoke tensions and rally the population behind the flag.


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