Home / Oil & Energy / Oil & Companies News / Turkish gas finds could ‘stimulate’ Black Sea exploration and production: panel

Turkish gas finds could ‘stimulate’ Black Sea exploration and production: panel

Exploration for natural gas in the Black Sea will be further spurred by recent Turkish finds, panelists said Oct. 21 at the Ukraine Gas Investment Congress in Kyiv, adding that with first gas from projects there due in the next several years, infrastructure and information sharing will be keys to development.

“The fact that Turkey is making finds has stimulated the Black Sea,” said Martin White, vice president of Halliburton. “This gives confidence to companies to go deeper.”

First gas is set to be produced by Turkey by 2023 in the Black Sea, with Ukraine’s Naftogaz set to begin production of its offshore gas reserves in “shallow water by 2024-25. With deeper waters, the timeline extends to 2025-26,” said Maksym Vityk, head of exploration and strategic projects at the state-owned company.

Maksym Nemchynov, deputy Ukrainian energy minister, said that the country has “high hopes in regards to the Black Sea” as the country seeks to end gas imports from other countries and looks to produce more gas itself to become self-sufficient within the next 10 years.

Nemchynov said Ukraine was “looking for collaboration” in order to fully exploit potential deep water gas reserves. The country could “supply the whole region,” as “the idea that we will be counting on our own resources purely for our own use was wrong” and the government was seeking to “create a gas hub in Ukraine for the region,” he added.

Rafael Duque, business development and commercial director of OMV Petcom, said “the next step for the Black Sea will be deepwater” where there have been “excellent discoveries” already, but more may be on the horizon as the market is “eagerly awaiting the results of the 3D seismic survey.”

In terms of the results of the seismic survey, and any future survey, collaboration between the countries in terms of both data and information would be key, said White, with the ability and desire to share information among themselves boosting potential extraction volumes and boost outside interest.

PSAs over licenses

In order to fully maximize recovery rates from the Black Sea and allow for increased distribution, further infrastructure investment would be required as well as a change in the way that acreage is offered to players, according to Vitaliy Radchenko, partner of Energy & Projects at CMS Cameron McKenna Nabarro Olswang.

“This is the last unexplored region in Europe,” Radchenko said. “The gas is there, we just need to get it out. It is all about the infrastructure. If you look at the North Sea, it is a web of gas pipelines, this is the direction that is needed to be followed.”

Radchenko also said that allowing production-sharing agreements over licensing rounds would also benefit production potential.

“Licenses are limited, they have their term [about 20 years], but PSAs are better for longer-term capital investment,” he said, adding that allowing license swaps between companies could also be beneficial for the Black Sea.

Black Sea gas will be competitive

“The world has a scarcity of gas at the moment, just look at the prices,” said White, adding that gas produced from the Black Sea would be able to “compete effectively in the market place.”

Duque agreed, saying that “it will compete, but it will depend on the cost of gas production, but it will be competitive with other sources of gas from other countries.”

In addition, Duque said the investment decision would also be dependent on governments, saying that “every country has a different regulatory regime. You could sacrifice some of the potential revenues for a steady, stable regulatory regime,” with the region having a history of large governmental involvement in oil and gas production and distribution.

Developing the Black Sea’s gas reserves were key, not only for the region, but for Europe as a whole,” Nemchynov added.

Nemchynov pointed to another reason, he said, to develop Ukraine’s Black Sea gas reserves: the ongoing dispute between Ukraine and Russia over Russian gas flow to Europe via Ukraine. Russian gas flows into Europe are slated to be lower this winter, with the country’s Gazprom gas giant opting not to buy additional capacity on the Ukrainian transit system in anticipation of regulatory approval of commercial flow on the Nord Stream 2 pipeline to Germany.

“This blackmail from the Russian side, this would not have been possible if we would have developed Black Sea reserves,” he said.
Source: Platts

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping