Informative article. I am in since Friday, found this article in TDWaterhouse and wanted to share with share holders. By the way it has a strong buy rating.
Turkey's Oil Potential: Onshore and Offshore
On the surface, Turkey has everything going for it in oil and gas. Onshore, it’s under-explored with one of the top international shale plays the Dadas Shale about to get tested for the first time with new technology.
Offshore there is talk of a Black Sea bonanza. The country has good governance, full-package infrastructure, easy access to markets and attractive fiscal terms.
But under the surface in the ground, where it counts there has yet to be a big discovery to ignite the country’s energy sector, and the share prices of the Canadian and American juniors active there.
BACKGROUND -- Big Oil is All Around Turkey
Turkey’s oil production doesn’t tell much of a story. Production is less than 70,000 boe/d, and Turkey imports 90% of its oil and natural gas needs.
Nor is Turkey about proven reserves: It only has about 270 million barrels of proven oil reserves and 218 billion cubic feet of natural gas reserves, so it isn’t exactly Iraq - which borders Turkey to the southeast.
Turkey is about close-ology and a recently renewed interest by the majors in the tight oil, or shale oil - the ''unconventional'' stuff.
In terms of close-ology, there is:
1. To the North - Black Sea potential.
2. To the South - 27 billion barrel onshore finds like Iraq’s Kirkuk field.
3. To the East - Azerbaijani oil fields.
4. To the West - well, this just gets silly. Look at this list:
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b. 4 billion barrels in the Greek waters of the northern Aegean Sea.
c. An estimated 7 billion cubic feet of natural gas in one well offshore the Greek-held part of Cyprus discovered late last year.
d. 33+ trillion cubic feet of gas discovered in nearby Israeli waters.
And Turkey knows how to lure investors. It offers foreign oil companies a flat 12.5% royalty tax and a 20% corporate tax rate.
Countries compete for private industry exploration dollars, and one key advantage Turkey has over competing nations—like those in the South American countries where a lot of juniors spend money - is speed in the bureaucracy.
''Approval processes are clear and rapid,'' Patrick McGrath, Chief Financial Officer for Anatolia Energy Corp., told OGIB. Anatolia is exploring for the Dadas shale in southern Turkey.
Turkey has a web of pipelines, refineries and export terminals. Here, there is no question of refinery difficulty or getting product to market.
For pipelines, there is:
The Blue Stream system transporting Russian natural gas to Turkey under the Black Sea.The Baku-Tbilisi-Ceyhan pipeline (the longest), which transits oil from Azerbaijan.Kirkuk-Ceyhan pipeline (the largest), which transits oil from northern Iraq.The planned Samsun-Ceyhan crude oil pipeline which will run from Turkey’s Black Sea province of Samsun to the Turkish Mediterranean hub at Ceyhan.
Six operating refineries can produce 714,275 bpd—yet there’s only 58,000 bopd of internal production. The southwestern port at Ceyhan is becoming a major regional energy hub, with several new refineries already permitted.Combine this with the most favorable financial terms in the region and the infrastructure to get oil to market, and Turkey should be an energy hotspot. It just needs a big discovery. The majors are working offshore, and majors and juniors are working onshore.
- Jen Alic, guest editor
NEXT: With one of the top shale oil prospects in the world, Turkey’s potential is as big as the Barnett Shale in Texas. Geologically it’s just like the Woodford shale in Oklahoma. In Part 2, we’ll outline who is drilling this world-class play, and when investors should be paying attention.
Keith Schaefer
Editor/Publisher
Oil and Gas Investments Bulletin
editor@oilandgas-investments.com
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