Erdogan promised the Turks a year with free gas

On April 20, 2023, Turkish President Recep Tayyip Erdogan promised to provide the country’s households with free gas within a year after production begins at the recently launched Sakarya field in the Black Sea. He announced this at the ceremony of launching gas supplies from Sakarya to Turkey’s gas distribution network. Production will be carried out in several stages: at the first stage, it is planned to increase daily production to 10 million cubic meters. gas, and by 2026 – up to 40 million cubic meters. m, according to the Anadolu agency.

“We have reduced the term for putting the discovered gas into operation to less than three years, although in the world it is 6-7 years. Day and night, with the work of about 10,000 personnel and 50 ships, we have achieved this in record time,” Erdogan said.

In addition, the Turkish president stressed that the Black Sea natural gas will cover up to 30% of Turkey’s fuel needs, and the new Filyos and Zonguldak fields will turn into an important energy and technological base of the country.

Now the total explored reserves of the field in the Black Sea reach 710 billion cubic meters. m. The market value of Turkish gas is about $1 trillion. These reserves, according to Turkish Energy Minister Fatih Donmez, will be enough to meet Turkey’s domestic needs for 35 years. The authorities expect that the first gas supplies will begin to reach households in the first half of May.

It is doubtful that Turkey will be able to cover 30% of its consumption with a production of 10 million cubic meters. m of gas in Sakarya, the chief analyst believesOpening Investments” in the oil and gas sector Aleksey Kokin. He recalled that in 2022 the country used about 60 billion cubic meters. m, a third is 20 billion cubic meters. m, or 55 million cubic meters. m per day. “Even at the peak in 2027-2028, only 14.6 billion cubic meters can be extracted from Sakarya. m per year,” the expert believes.

On April 21, May futures for gas on the Dutch TTF hub was trading at around $463 per 1,000 cubic meters. Based on this price, as a result of Erdogan’s “gift”, the country’s budget may lose more than $1.6 billion in one year. In Turkey itself, 1,000 cubic meters for consumers in April cost more than 4,000 liras ($206). In this case, then the state’s spending on free annual gas supply could amount to $751 million. The expenditure part of the Turkish budget for this year is 4.47 trillion liras ($232 billion)

Erdogan’s statement was made a month and a half before the general presidential elections scheduled for May 14 in Turkey. The ratings of the two key candidates are close. According to the latest available Türkiye Raporu polls conducted in early April, 45.5% of voters were ready to vote for the incumbent president, and 54.5% for opposition candidate Kemal Kılıçdaroglu.

The budget deficit of the central government of Turkey in March 2023 amounted to 47.22 billion liras ($2.46 billion), the country’s finance ministry announced in early April. The total deficit for 2023 widened to 250 billion liras, mainly due to the impact of the devastating earthquake in early February. But at the end of March, the Turkish president, as part of his election program, already promised a 20% reduction in gas prices for all households, as well as a 15% reduction in all electricity tariffs.

Erdogan’s populist steps have already shown their effectiveness in the 2015 parliamentary elections, recalls Pavel Shlykov, Associate Professor at the Institute of Asian and African Countries at Moscow State University. Then in June, the ruling Justice and Development Party (AKP) showed unsatisfactory results. And already in the early elections in November of the same year, the AKP, together with its allies, took an absolute majority – 62%, Shlykov emphasized.

Such a result, according to the expert, the party then managed to get through targeted work with voters. “Politicians knocked on every door and looked for arguments that later tipped the scales in their favor. Therefore, the incumbent president is working in all directions, given the high price of both victory and defeat,” Shlykov added.

The relative parity in the ratings of candidates can be explained by the failures of Erdogan’s policy in monetary policy, continues Shlykov. According to the latest Turkstat data, inflation in March 2023 exceeded 50.5% in annual terms, and in October 2022 this figure was 85.5%.

“Such a policy is reflected in the daily life of literally every resident. If in 2013 the nominal GDP per capita was about $13,000-15,000, then this year it is less than $10,000. At the same time, Erdogan promised at least $20,000. The Turkish economy dropped from 17th to 19th place in the world,” Shlykov concluded.