Turkiye's gas extraction may promise better future for Lira - Turkish economist

Turkiye, an industrial country with a rich history, improved its strength in the economy under the rule of Recep Tayyip Erdogan over 20 years. Its nominal GDP has increased by 4-5 times over 20 years. According to the last data, Turkiye's GDP is expected to exceed $1 trillion first-ever. Turkiye witnessed rapid development in all sectors of the economy from the military industry to tourism. However, despite all efforts and hardworking of the Turkish people, foreign trade turnover remains the weakest link in the Turkish economy. Most of the time Turkish foreign trade turnover results in a negative trade balance. In other words. Turkiye imports more than it exports due to a lack of energy resources - more precisely oil and gas. Frankly speaking, it is one of the reasons for the devaluation of the Turkish lira. Therefore the discovery of a gas field in the Black Sea excited the Turkish people and friends of Turkiye. Many think that at last Turkiye will manage to get rid of energy dependency and will be fully independent in turn of energy.

As a result of hardworking and determined will, the gas extracted from the field in the Black Sea reached Zonguldak and Turkish President Recep Tayyip Erdogan lit the torch at the ceremony in Filyos. The president announced that very soon the country will be provided with domestic natural gas.

In a comment on the issue, Economist Ibrahim Yumsak told Azernews that domestic natural gas will have direct and indirect effects on the Turkish economy.

“With regard to direct effects, it reduces the first gas import and provides the potential. As it is known, the most important item of Turkiye's foreign trade turnover is energy. Excluding Turkiye's energy imports and gold imports, Turkish foreign trade turnover results in a positive balance. From this point of view, it has the potential to contribute to closing the current deficit in trade turnover. The second direct effect on the Turkish economy is the introduction of domestic production and the reduction of costs. The fact that it can be supplied at a more affordable cost than the gas imported from abroad will provide an important opportunity for the Turkish economy in terms of budgetary balances,” the economist said.

He noted that it will ensure supply security in natural gas and energy, as well. Despite it currently has a share of around ten percent, it will be possible to increase this rate to fifteen percent, perhaps twenty-five percent, in the coming years. Ibrahim Yumshak stressed that even the possibility to produce ten percent of natural gas imports by its own means will eliminate the negative effects of the cuts made by the countries, which import natural gas, from time to time on the Turkish economy.

“Another important effect is to have natural gas exploration, extraction, and processing knowledge, that is, to have the know-how. For the first time, Turkiye has provided these processes with domestic opportunities to a significant extent. Therefore, he learned how to search, with which ships to search, how to extract, and how to process. So, in its own economic regions, especially in the eastern Mediterranean, Turkiye will be able to do it without the need for foreign companies in the next period. In fact, this may provide an opportunity not only within its own borders but also for other countries. Turkiye will have an opportunity to transfer this knowledge to other countries and regions neighboring the Black Sea, the Mediterranean, and so on, and to generate income in the following processes,” the economist opined.

Besides that, Yumshak said that the outstanding feature of domestic natural gas production is that it has taken three years from discovery to commissioning. Compared with similar projects, it shows how determined and point-oriented both Turkish engineering and the government are in this regard.

As for indirect effects, the expert noted that it has the potential to eliminate controlling Turkiye with the help of energy.

“If these reserves are found in other regions, or if the volume of the reserve increases, the effects we have mentioned may be increased further,” he opined

He also noted that it will impact on the Turkish lira. First of all, it will increase the confidence in the Turkish currency, as costs will be evaluated in Turkish lira. The fact that Turkiye replaces some of the energy which it imports with foreign currency with domestic resources will reduce the demand for foreign currency, as well.

“Besides that, it will contribute to Turkiye's potential to become Europe's energy hub for the first time, especially after the Russia-Ukraine crisis, with its own production. There is no alternative other than Turkiye in the safe transfer of energy resources especially Azerbaijan, Turkic republics, Gulf and Middle East countries to Europe. There were some criticisms because this potential was not his own production. Turkiye has now become a country that produces natural gas, so the fact that it does this with its own technology makes it possible to ensure Europe's energy security through Turkiye. After the election, it is probable that similar collaborations will be opened between the Turkic Republic and European countries and source countries,” he added.