Highlights of Turkish energy market in 2021

By Ebru Sengul Cevrioglu

IZMIR, Turkey (AA) - Hydrocarbon discoveries in the Black Sea, record high renewable installations and production, the ratification of the Paris Climate Agreement and accelerated gas supply security efforts amid the global energy crisis marked the top news stories in Turkey's energy sector in 2021.

This year demonstrated Turkey’s successful hydrocarbon exploration in the Black Sea with the discovery of another 135 billion cubic meters (bcm) of natural gas, as announced by Turkish President Recep Tayyip Erdogan on June 4.

"Our Fatih drillship has made a new natural gas discovery of 135 bcm in the Amasra-1 well in the Sakarya Gas Field," Erdogan said at the groundbreaking ceremony of the Filyos port and natural gas operating facility in the Black Sea province of Zonguldak.

Turkey's first drillship, Fatih, conducted drilling operations in the Turkali-1 and Turkali-2 wells and the Amasra-1 well in the first half of the year, followed by new operations at the Turkali-3 well on May 28, the Turkali-4 well on July 31 and the Turkali-5 well on Sept. 12

The ship made the country’s largest gas find ever and the biggest offshore gas discovery worldwide in 2020 of 405 bcm of natural gas at the Tuna-1 well located about 170 kilometers off Turkey's Zonguldak coast.

With this discovery, Turkey's natural gas resources in the Black Sea reached 540 bcm, a volume that is projected to cover around 12 years of Turkey's current gas demand if fully recovered.

On Feb. 12, government sources told Anadolu Agency that Turkey would start using gas from the Sakarya Gas Field in the first quarter of 2023.

According to Energy Minister Fatih Donmez, the country also plans to start new exploratory drilling in the Black Sea in early 2022.

The Head of Turkey's Energy Market Regulatory Authority (EPDK) Mustafa Yilmaz also confirmed on June 9 that Turkey's gas discovery of 540 bcm with a market value over $100 billion would be open for trading under the name ‘Black Sea Gas Contract’ in Turkey's future gas market, which was launched on Oct. 1 this year in Istanbul.

- Infrastructure activities kickstart for Black Sea gas

Meanwhile, with plans to construct 169 kilometers of subsea natural gas pipelines at the Sakarya gas field in 2022, Turkish Petroleum awarded a consortium, comprising Subsea 7 and Schlumberger, a major contract worth over $750 million for the Sakarya gas field development on Oct. 15.

The engineering, procurement, construction, and installation (EPCI) contract will cover the subsurface solutions to onshore production, including completions, subsea production systems (SPS), subsea umbilicals, risers and flowlines (SURF) and an early production facility (EPF).

On Nov. 16, Italian multinational oilfield services company Saipem also revealed its award of two new offshore contracts for transportation and installation activities for the field worth over $600 million.

Donmez confirmed on Nov. 22 that engineering works at the field had been completed and that the first subsea pipes would be laid next spring.

On Nov. 26, Turkish Petroleum (TP) appointed Wood, the global consulting and engineering company, as the integrated project management partner for the field development project.

- 4th drillship set to join fleet in spring next year

On Nov. 17, the country added a fourth drillship to its fleet of vessels that include Fatih, Yavuz and Kanuni. The new 238-meter-long and 42-meter-wide ship weighs 68,000 gross tons and has a maximum drilling depth of 12,200 meters.

Donmez said exploratory work would accelerate in the first quarter of 2022 with the Fatih drillship scheduled to drill one more natural gas exploration well. He confirmed on Nov. 25 that the new drillship, which is capable of operating in harsh sea conditions and even in high-pressure reservoirs, would join the fleet next spring and begin activities in the summer.

Progress has also been made with onshore explorations with the announcement on Nov.1 of the discovery of an additional 60 million barrels of oil equivalent reserves from 26 new onshore explorations during the year.

- Ongoing diplomatic efforts in Mediterranean

Turkey accelerated its efforts to resolve disputes in the Eastern Mediterranean. While Turkey and Greece began a new round of exploratory talks in Istanbul on Jan. 24 after a five-year hiatus, Foreign Minister Mevlut Cavusoglu signaled on March 4 that Turkey could sign an agreement on maritime jurisdictions with Egypt following negotiations.

"Depending on the course of our ties, as two countries with the longest land and sea borders in the Eastern Mediterranean, we could also sign an agreement with Egypt by negotiating maritime jurisdictions," Cavusoglu said, reiterating that Egypt, who last year signed an agreement with Greece on the boundaries in Eastern Mediterranean that respected the southern borders of Turkey’s continental shelf.

On May 5, a Turkish delegation headed by Deputy Foreign Minister Sedat Onal visited Cairo at Egypt's invitation. At the end of the visit, the two countries issued a joint statement describing the exploratory round of bilateral talks as "frank and in-depth." Turkey and Egypt on Sept. 8 ended the second round of exploratory consultations by agreeing to continue the talks.

Israel's then Energy Mnister Yuval Steinitz said on March 10 that Tel Aviv is ready to cooperate with Turkey on natural gas in the Eastern Mediterranean. This was echoed by Israel's then Prime Minister Benjamin Netanyahu who said on March 12 that his government is in contact with several countries, including Turkey, over natural gas in the Eastern Mediterranean Sea.

Netanyahu's remarks on talks with Turkey were the first to be publicly announced, while the former Israeli PM confirmed that Israel was also holding talks on tackling the issue of gas exports to Europe with Egypt, Greece and the Greek Cypriot administration.

On March 8, Israel, Greece and the Greek Cypriot administration signed a memorandum of understanding on the EuroAsia Interconnector that connects the electricity grids of the three states through a sub-sea cable. Turkey expressed strong reservations over the lack of consultation on the EU-backed project on March 16. Turkey sent a diplomatic note to the Greek and Israeli embassies as well as the delegation of the European Union, recommending consultation with the Turkish government before further action is taken.

Most recently on Nov. 29, Erdogan said that the appointments of Israeli and Egyptian ambassadors would be scheduled once Turkey decides on a course of relations for each country.

Meanwhile, Turkey and the Turkish Republic of Northern Cyprus (TRNC) signed two cooperation protocols on April 29 to meet the energy needs of the TRNC.

- Renewables break ground

This year also saw the addition of as much renewables as possible to the country’s energy mix through mini solar Renewable Energy Resource Zone (YEKA) tenders, known as YEKA GES-3 on April 26.

On May 26, Donmez also announced the plan to administer four YEKA tenders for solar and wind, each with a capacity of 2,000 megawatts (MW).

The Global Electricity Review 2021 report released on March 29 by London-based think-tank Ember revealed that Turkey outpaced the world average in electricity generation from wind and solar in 2020. Turkey generated 12% of its electricity from wind and solar in 2020 relative to the world average of 9.4%. The share of all renewable sources stood at 43% out of the country’s total power generation, with coal and gas accounting for 34% and 23%, respectively.

On June 21, the Renewable Energy Guarantee of Origin (YEK-G) System and the Organized YEK-G Market to enable electricity producers to prove the source of renewables under Turkey's Energy Exchange Istanbul (EXIST) launched for contracts.

Clean power investments in Turkey have also hit $66 billion with renewables constituting over 53% of Turkey’s total installed electricity capacity, according to data of Turkey's Electricity Transmission Company on Sept. 16.

- 5th-biggest wind power investor in Europe

In WindEurope’s report published on April 13, Turkey was ranked as the fifth-biggest wind power investor in Europe in 2020 with €1.6 billion. Wind power plants accounted for over half, or 51.5%, of Turkey's additional electricity capacity of 1,268 MW during the January-April period.

Turkey's installed wind energy capacity passed the 10,000 MW threshold at the end of August, reaching 10,010 MW. It became the largest source of electricity generation for the first time in the country's history with a 22.6% share on Nov. 28. Wind power plants generated 178,964 megawatt-hours (MWh) out of a total of 791,794 MWh of daily electricity output.

The country's wind electricity generation hit an all-time record on Dec. 11, generating 20.01% of total power, when wind power produced 187,598 MWh of electricity.

- Ratification of Paris Climate Agreement

On Oct. 6, the Turkish Grand National Assembly ratified the Paris Climate Agreement that aims to limit the global temperature increase to 1.5 degrees.

The agreement came into force in Turkey on Nov. 10. Within this framework, Turkey will update its Nationally Determined Contributions (NDCs) -- the means by which each country every five years shows efforts to reduce national emissions and adapt to the impacts of climate change.

On Sept. 17, the European Commission's executive vice president for the European Green Deal and Turkish minister of environment and urbanization held the first EU-Turkey high-level dialogue on climate change. The officials discussed the necessary steps to fight the devastating effects of climate change and to significantly cut emissions by 2050.

May this year was marked as the warmest in the last 51 years in Turkey, according to the country's meteorology department on June 18. The average May temperature in Turkey rose by 2.6 degrees Celsius (4.7 degrees Fahrenheit), according to data from the Turkish State Meteorological Service.

- 1st state-owned FSRU to improve supply security

With the easing of COVID-19 restrictions and acceleration of energy demand amid the global energy crunch, Turkey made further efforts to attract new investments and contracts to meet the country's growing energy needs.

Turkey's daily natural gas consumption reached a record high of 280 million cubic meters on Jan. 19. The country's gas consumption increased amid cold weather conditions and lockdowns during the COVID-19 pandemic which saw a rise in household gas consumption.

On April 22, Turkey's first floating LNG storage and gasification vessel (FSRU), Ertugrul Gazi, arrived in Turkey and anchored at the Dortyol port in the southernmost province of Hatay following its certification.

"Our ship, which will be commissioned after testing, will contribute to the natural gas supply security of our country," Donmez said. The inauguration ceremony of the FSRU was held on June 25.

On Sept. 8, a confidentiality agreement for cooperation on LNG as bunker fuel for sea-going vessels was signed between BOTAS, which aims to become the most environmentally-friendly public institution in Turkey, Arkas Bunkering, a subsidiary of Turkey's Arkas Holding and an established maritime transportation company, and Sumitomo Corporation, one of the largest holdings in Japan.

On Oct. 1, Turkey launched the Natural Gas Futures Market (NFM) under the country's energy exchange, EXIST. Energy Minister Donmez, via a video message at the opening ceremony, said the gas futures market would bring Turkey a step closer to its aim of becoming a regional hub.

On Oct. 15, an additional natural gas trade agreement of 11 bcm to run until the end of 2024 was made between Azerbaijan and Turkey.

Turkey and Nigeria also signed three memorandums of understanding in the fields of energy, hydrocarbons and mining on Oct. 20.

- Power Futures Market launched

Turkey’s Power Futures Market was launched on June 1 within the Energy Exchange Istanbul (EXIST) to provide market stability and transparency to market participants who currently trade on the spot power market in day-ahead and intraday markets operated by EXIST.

On July 3, the Turkish Electricity Transmission Corporation (TEIAS) was included in the scope of the country's privatization. A presidential decision published in the Official Gazette confirmed that preparatory measures would be made for privatization in cooperation with Turkey's Ministry of Energy and Natural Resources and the Privatization Administration.

Turkey's daily electricity consumption reached a record high, increasing to 1,066,604 MWh on July 28.

- Foundation of 3rd unit of Akkuyu NPP laid

On Feb. 11, Russian energy company Inter RAO announced the sale of a 0.82% stake in the Akkuyu Nuclear JSC, the project company of Turkey's first nuclear power plant Akkuyu, for around 1 billion rubles in the fourth quarter to a shareholder whose identity has not been disclosed. Inter RAO is only one of six Russian companies along with Rusatom Energy International JSC, Atomstroyexport CJSC, Rosenergoatom JSC, AtomTechEnergo JSC and Atomenergoremont JSC that have shareholdings in Akkuyu Nuclear JSC.

The foundation of the third unit of the Akkuyu NPP was laid on March 10 with a groundbreaking ceremony attended by Erdogan and Putin via videoconference.

The Turkish president declared on Sept. 18 that the first unit of the Akkuyu nuclear power plant would be completed by May 2023. He also said on Sept. 30 that Russian and Turkey agreed to work on the construction of two more nuclear plants.

Russia's largest lender Sberbank announced on Nov. 17 that it would provide loans of $800 million for the construction of Akkuyu NPP. The seven-year loan will be provided to the project company Akkuyu Nuclear JSC.

- Mineral exports increase by 48%

Turkey’s boron exports have expanded in the year with China becoming a key export market, with exports reaching 5.8 million tonnes. On Jan. 29, Turkey sent off a third export train of boron to China.

Gold production in the country reached the highest level in the history of the Republic hitting 42 tonnes and contributing $2.4 billion to the economy, Donmez confirmed on Jan. 7. This record supersedes the previous highest production in 2019 of 38 tonnes.

He also announced on Feb. 3 the discovery of 1.92 million ounces of gold reserves in the country's northwestern province of Bilecik.

Turkey's mineral exports increased by 48% in the January-September period of 2021, compared to the same period of last year, reaching $4.38 billion, according to Donmez on Nov. 16. China, the US and Spain were the top three exporting countries, with Indonesia, Uzbekistan, Hong Kong, Albania and Serbia newly added to the list of Turkey's export markets.