Yet another violation of the commitment made by the Italian government and SACE exactly two years ago, during COP26 in Glasgow, to stop financing fossil fuel projects abroad. This is how the issue of the loan guarantee for the construction of the Sakarya gas field in Turkey by SACE came about.
It is 30 May 2023, the presidential elections in Turkey were held two days earlier, but the partial results leave little room for fantasy, so much so that candidate Kemal Kılıçdaroğlu immediately admits defeat: Recep Tayyip Erdoğan will still lead the country. On the basis of documents in ReCommon’s possession, in those very days the Italian export credit agency SACE issued a loan guarantee for the first phase of the Sakarya project, a gas field in Turkish territorial waters in the Black Sea. The cost of the operation is USD 243 million, covering loans from the Arab Petroleum Investments Corporation, Denizbank, and US giants JP Morgan and Citi. Another trancheis in the form of a direct loan from Eksfin, SACE’s Norwegian counterpart. The total financing goes to the Turkish Petroleum Corporation, a state-controlled company and project leader.
To understand the importance of the Sakarya project, one must turn back the hands to the summer of 2020, when Turkey announced a major gas discovery in the Black Sea, off the coast of Zonguldak. The project is called “Sakarya Gas Field Development”, named after the river where a crucial battle of the Greek-Turkish war took place in 1921. Some analysts call it “the largest discovery in the Black Sea”, with reserves of 710 billion cubic metres of gas. The field will be in operation for at least 25 years, which could be many more if new discoveries are made. In the first phase, daily gas production is expected to be 10 million cubic metres, 40 in the second and 60 in the third. From the wells in the Black Sea, which have recently come into operation, the gas arrives at the Filyos (Zonguldak) facility via a pipeline of about 170 kilometres laid at a depth of 2,200 metres, and from there to the national distribution network. The transport and installation of the subsea pipeline is in the hands of Saipem, Italy’s leading engineering company in the oil&gas sector, whose main shareholders are Eni and Cassa Depositi e Prestiti.
In April 2023, one month before the presidential elections, Erdoğan himself inaugurates the arrival of the first cubic metres of gas at the Filyos industrial site. This is too good an opportunity not to be exploited for campaign purposes: he promises to supply unlimited gas for domestic consumption free of charge for one month and up to 25 cubic metres per month for one year. While it is true that in the weeks leading up to the elections Erdoğan inaugurated various strategic projects, Sakarya plays a special role: marked emphasis on the speed of the project’s construction thanks to domestic manpower; jibes at oil majors such as Shell and BP who have failed to find gas in previous exploratory roundsin the Black Sea; drilling vessels bearing the names of Ottoman Empire rulers. Sakarya is the jewel in the crown embodying all of Turkey’s autarkic ambitions. On May 28, a few hours after the first exit pollsof the runoff, Erdoğan is already celebrating his third term in office and takes the opportunity to immediately lash out against the LGBTQI+ community, denouncing its interference with the sanctity of the family, and promising to “strangle anyone who dares to touch it”. In the same hours, SACE celebrates the beginning of LGBTQI+ Pride Month, pledging to “create an inclusive workplace”: a statement that evidently clashes with the direct and indirect consequences of the guaranteed projects in some countries.
Among these consequences are, of course, those on climate and the environment. The first phase of the Sakarya project will contribute to the emission of 140 million tonnes of CO2equivalent, roughly the same as that produced by the Philippines in 2022.
The context must also be taken into account. The project is to be considered “ultradeep”, i.e. at a depth greater than 1,500 metres below the sea surface, thus falling into the sub-category of non-conventional oil&gas: the most dangerous ones, with potential irreversible environmental and climate impacts. On land, the most impacted site is in the vicinity of the Filyos industrial zone – in particular the waters of the river of the same name and the wetlands in the vicinity of the installations, with repercussions on the marine fauna and birds in the area.
During COP26, 34 countries and five public financial institutions adhered to the so-called “Glasgow Statement”, a joint commitment to end new international public financing for coal, oil and gas extraction, transport and processing projects by 31 December 2022. However, the Italian government and its export credit agency SACE decided to disregard that commitment, unlike their counterparts in the UK, France, Denmark and Sweden. Through SACE’s operations, Italy is the leading public financier of fossil fuels in Europe and the sixth globally. Since the Paris Agreement came into force, the amount guaranteed for fossil fuel projects amounts to EUR 15.1 billion.
With the first phase of the project now complete, Sakarya is now preparing for the second one, with the aim of increasing the number of operational wells and, consequently, production. Saipem has already got a new commission, and SACE could be in the game again. The only way to avoid further social, environmental and climate repercussions is to adopt serious policies to move away from fossil fuels, starting with the implementation of the Glasgow Statement.
