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[NEWS ANALYSIS]
Energy-hungry Turkey drilling for more oil

You may think that you cannot do without your car and therefore without the automotive industry, or that you can't live without your computer and consequently the information technology industry.

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However, in reality there is just one industry which is more important than any other: the traditional energy industry. Without fuel from crude oil and natural gas, modern society and all its accoutrements would grind to a halt as cars would run out of oil and laptop batteries would never be recharged. Turkey is, sadly, energy poor; that is to say it lacks large fossil fuel reserves and has had to spend millions of YTL to generate power from its limited natural resources by building hydroelectric dams across most major rivers, solar panels on many houses and wind farms on the Aegean coast.

Other alternative supplies like a nuclear power plant at Akkuyu remain unrealized even after a decade of planning. Geothermal energy sources, while significant, have yet to be comprehensively exploited. Alternatives to fossil fuels currently only provide around 15 percent of Turkey’s needs, and global warming has begun to have serious adverse effects on hydroelectric power output.

    Fossil fuels supply over two-thirds of Turkey’s energy needs while over 75 percent of its oil for consumption is imported. Unfortunately, much of this is supplied from countries such as Iran and Syria, which have a history of hostility towards Turkey. It has been forced to foster better relations with suppliers like Libya -- where there is less bad blood -- and become involved in exploration projects in partnership with the Israelis in the Mediterranean.

However, recent surges in the price of international crude oil -- which have increased to as high as $78 per barrel -- have simultaneously alarmed Turkish politicians and opened new doors of opportunity for the national oil industry. The record prices for world crude on the Mediterranean spot market have encouraged Turkey to undertake larger exploration projects and make the possible extraction of crude from local oil shale much more feasible.

Shale oil constitutes Turkey’s second largest solid fossil fuel reserve after lignite, and total reserves are estimated to be about 5 billion tons. A recent report from the International Conference on Oil Shale held Nov. 7-9, 2006 in Amman makes an interesting read. According to estimates in 1993, a manufacturing cost of $31-$43 per barrel was quoted for a plant processing 50,000 barrels per day. Although the figures need to be updated, the studies were done when the price of crude oil was around $30 per barrel; with current prices averaging over $60 this year and the prediction that they will remain high, oil shale investment and development look increasingly attractive.

Most of Turkey’s oil fields are located in southeastern Anatolia near its borders with Iran, Iraq, and Syria. Last week it was reported that an area formerly littered with land mines near Mardin on the Syrian border had been cleared and that 21 of 25 wells sunk by the state-owned Turkish Petroleum Corporation (TPAO) were now producing 2,400 barrels of crude oil per day. In another area along the same border, the recreation yards of six gendarmerie stations were explored; they are now producing 50 barrels per day. The gendarmerie in the region has even offered, in a show of patriotic enthusiasm, to move out of their barracks to allow more wells to be drilled.

Syria, on the other hand, has been quick to remind Turkey that they are not the friendliest of neighbors, placing rigs directly opposite the Turkish ones on the other side of the border, and they are now also tapping into the same reservoir. The rigs stand just 10 meters apart on either side of the barbed wire of the border. The TPAO remains undeterred and has announced that they will be drilling 10 more wells as soon as they clear more minefields.

Turkey’s proven and estimated petroleum stocks are thought to be good for approximately three years’ worth of domestic consumption (as compared to the Saudis’ estimated 100-year reserve). Proven reserves are estimated at about 16 million tons, and enhanced oil recovery techniques may allow for the extraction of another 30 million tons (again compared with Saudi Arabia’s 1.2 trillion tons). In 1985, exploration proved that Turkey has oil deposits at very deep levels but it was not known how large those deposits might be.

Shell Oil determined that oil at Paleozoic levels would be recoverable and other investigations proved significant deposits in central Anatolia under the salt flats on the plains north of Konya. In 1991, British Petroleum began exploring for oil in offshore areas of the Black Sea, and the TPAO has since carried out extensive exploration and extraction work there. It is also suspected that the Aegean shelf contains considerable petroleum deposits, but as long as maritime borders with Greece remain unsettled, conflicting claims to the Aegean seabed will limit prospects for exploration. Prospects for new domestic finds in southeastern Turkey are often impeded by the conflict Kurdish militants and in the past small sites have been attacked.

More recently, there have been new efforts focusing on the Mediterranean Sea, especially after the Greek Cypriots upped the ante in the region last month by putting drilling rights up for auction in its coastal waters. Turkey had already announced its intention to carry out seismic surveys in the shallow waters around Antalya, İskenderun and Mersin in spring of this year, and tenders for a 4,000-kilometer-square stretch of coastal waters were opened on Aug. 7. The TPAO is hopeful that the exploration work with foreign partners will begin in early autumn. Greek Cyprus has negotiated and delineated underwater boundaries with the Egyptians and the Lebanese, but Turkish officials insist that continental shelves in semi-closed seas must be decided by a consensus of all coastal and neighboring countries. The Turkish government believes the Egyptian and Lebanese agreements are unacceptable under international law and is pressuring them to back out of the treaties.

Initial studies show that there may be between 6 and 8 billion barrels of crude oil in the eastern Mediterranean, but disputes between the Greek Cypriots and Turkey may adversely affect the political thaw between Turkey and Greece. The gas pipeline between the two countries, which is due to be completed and operational by the end of this year, was heralded as a great success for foreign policy and an indicator of a new warmth between the two countries; however, a turf battle in the Mediterranean could cause these old rivals to take a step back from their warming relationship.

Turkey appears to be willing to push at the boundaries of this friendship in order to achieve greater oil production. In the past it has been slow to exploit its resources. While 20,000 new wells are drilled worldwide every year, Turkey has only sunk 3,600 since the establishment of the Turkish Republic in the 1920s. The wells that Turkey does have tend to be on small reservoirs with vertical structures that are easily exhausted or adversely affected by rising water content. In almost all the ageing fields production is falling despite better extraction methods. Although the new wells on the Syrian border are producing good quality crude oil, they simply are not bringing up enough volume to enable long-term energy planning, and new lines of production are vital to Turkey’s continued economic success and stability. Extraction may well prove more important than good intention.

 

14 August 2007, Tuesday

FAZILE ZAHIR  TODAY’S ZAMAN

   

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