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Breakeven price for Tuna-1 field to be significantly below imported gas cost

Oil&Gas Materials 9 September 2020 14:25
Breakeven price for Tuna-1 field to be significantly below imported gas cost

BAKU, Azerbaijan, Sept.9

By Leman Zeynalova – Trend:

The breakeven price for the Tuna-1 field, discovered by Turkey in the Black Sea will be between $3.00 and $3.50 per MMBtu, significantly below the cost of imported gas, Trend reports referring to Rystad Energy.

The future development of Turkey’s giant Tuna-1 gas discovery could save the country up to $21 billion in import costs, Rystad Energy estimates, depending on the field’s peak output, which remains to be determined pending appraisal drilling and further testing. Actual savings could be even higher as global gas prices and import costs are expected to rise in coming years.

The discovery is reported to have an initial gas reserve volume of approximately 320 billion cubic meters (Bcm), but the size of its actual recoverable reserves is still uncertain. As a result, Rystad Energy’s calculations are based on a peak production range of between 2.5 Bcm and 20 Bcm per year. The lower end reflects a more cautious approach, while the higher end a far more bullish outcome.

In any case, a successful development of the field would represent a substantial reduction to the country’s import costs – between $200 million and $1.5 billion per year – based on the field’s breakeven price range and Turkey’s average gas import price for 2020.

“The timing of the discovery could hardly be better, as nearly 40 percent of Turkey’s contracted import volumes – representing 24 Bcm out of the country’s 59 Bcm per annum imports of pipeline gas and LNG – are set to expire in 2020 and 2021,” says Sindre Knutsson, Rystad Energy’s Vice President Gas Markets.

A successful development of the Tuna-1 discovery could offer Turkey significant natural gas supplies at much more competitive terms, taking effect from the field’s estimated startup date of 2028.

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Follow the author on Twitter: @Lyaman_Zeyn

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