Selami Incedalci, head of Turkey’s General Directorate of Petroleum Affairs
In 2012, the US O&G major held discussions with TPAO over a possible shale exploration partnership, but the talks were inconclusive. Since then, the deliberations have advanced and are likely to yield an agreement, Turkish officials said.
Incedalci said ExxonMobil has expressed interest in onshore exploration in Thrace, located in northwestern Turkey, as well as in the southeastern region of the country.
Turkey Shale Map; Source: shaleexperts.com
Turkey is seeking to cut its annual energy bill of roughly $60 billion by reinvigorating efforts to develop domestic resources including coal, solar, nuclear and wind energy.
Given that Turkey’s domestic gas consumption is increasing, as well as its geographical placement that makes it an ideal location from whence to supply global markets, significant exploitable shale reserves could likely be a game changer for Turkey’s economy.
Incedalci also said that US, Canadian and European investors have also expressed interest in Turkey’s shale oil and gas. The energy ministry, he added, is planning to conduct talks with potential investors in October.
So far, Canada’s TransAtlantic Petroleum and the Anglo-Dutch major Shell are conducting exploration activities in the area around the southeastern city of Diyarbakir.
Current estimates as to how large Turkey’s shale gas reserves vary significantly.
One energy official told Reuters that data from some international agencies indicate Turkey could hold a large 20 trillion cubic meters (cbm) of total reserves. Another expert told the news agency that proven reserves thus far were significantly lower, at 6-7 cbm.
TPAO currently has operations in Iraq, Azerbaijan, Libya, Kazakhstan and Colombia.
Why Turkey Is A Key Player
According to the IEA, energy use will continue to increase at an annual growth rate of about 4.5% from 2015 to 2030, approximately doubling over the next decade.
Turkey is a key player in O&G supplies movement from Russia, the Caspian region and the Middle East to Europe, the EIA recently said in its annual country analysis. The country has been a major transit point for seaborne-traded oil and is becoming more important for pipeline-traded oil and natural gas.
Currently, growing volumes of Caspian and Russian oil are being sent by tanker via the Turkish Straits to Western markets, while a terminal on the country’s Mediterranean coast of Ceyhan serves as an outlete for oil exports from the Kurdish region of northern Iraq (currently beset with conflict) and for both O&G exports from Azerbaijan.
As of the beginning of this year, the Oil & Gas Journal (OGJ) estimated Turkey’s proved oil reserves at 295 million barrels, located principally in the southeast region.
In 1991, Turkey’s oil production peaked at 85,000 bbl/d, but it subsequently declined each year and reached its nadir in 2004 at 43,000 bbl/d. Although Turkey’s production of liquid fuels has slightly increased since 2004, it is far shy of what the country consumes annually.
In 2010 and 2011, Turkey’s economy was one of the fastest growing in the world at more than 8% annually. The country’s oil consumption grew with this economic expansion. However, while economic growth slowed in 2012 and Turkey’s economy grew at just over 2% from the previous year, total consumption of liquid fuels rose by 6% in 2012.
In 2013, Turkey’s economy grew by 4%, and total consumption of liquid fuels increased by another 6%. Turkey’s domestic production, however, shows no indications of any significant growth in the short-term future.
Some analysts speculate that offshore reserves may emerge as a future source of Turkey’s oil supply. A significant volume of reserves may be located under the Aegean Sea, although this has not been confirmed because of an ongoing territorial dispute with Greece. Additionally, the Black Sea may hold significant oil reserves. TPAO has increased its exploration activities in the Turkish region of the Black Sea, which could hold between 7 and 10 billion barrels of oil. The offshore region is being explored with TPAO, which has formed joint ventures with ExxonMobil and Brazil’s Petrobras. Turkey’s ministry of energy plans to commence commercial production in the Black Sea by 2016.
Last year, the country’s total liquid fuels consumption averaged 734,800 bbl/d. In excess of 90% of crude oil consumption and significant quantities of petroleum products came from imports.
The IEA recently revealed that Turkey’s crude oil imports are expected to double over the next decade. In 2012, most of Turkey’s crude oil imports came from Iran, which supplied 35% of Turkey’s crude oil. Russia has fallen behind Middle East suppliers in terms of volume and is now the fourth-largest supplier of crude oil to Turkey. Russia was until recent years the largest source country of Turkey’s crude oil.
Natural Gas Overtakes Oil As Most Important Fuel Consumed
In terms of natural gas, Turkey’s natural gas reserves as of the beginning of 2014 stood at 241 Bcf, according to the OGJ. In 2012, the country produced 22 Bcf of natural gas, depending almost exclusively on imports to meet domestic demand. Turkey’s growth in energy demand has been among the most rapid in the world in 2010 and 2011, although decelerated economic growth in 2012 has dampened the natural gas consumption increase to some extent.
In terms of the volume of fuel consumed in Turkey, natural gas has overtaken oil and continues to account for an increasing share of the energy mix in Turkey.
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