Besim Şişman, CEO and Chairman of the Board, Turkish Petroleum Corporation (TP): Interview

Interview: Besim Şişman

How can Turkey work towards decreasing its dependence on costly energy imports?

BESIM ŞİŞMAN: Turkey is a major consumer of energy, accounting for about 1% of global primary energy consumption, or 120m tonnes of oil equivalents per year. This figure will continue to rise as the country works to become one of the world’s top 10 economies by 2023. Unlike some of its neighbours, Turkey is not a hydrocarbon-rich country and has to purchase resources abroad to cover around 70% of its energy consumption, importing 90% of its oil and 98% of its natural gas. Having to import so much from abroad puts significant strains on the country’s finances: in 2013 alone, energy made up the largest portion of Turkey’s $65bn current account deficit. TP is the primary exploration and production entity in the country and works to develop Turkey’s domestic oil and gas supplies. The firm is also investing in production abroad to help reduce expenditures and meet Turkey’s energy needs.

What role is domestic production playing in meeting Turkey’s energy needs?

ŞİŞMAN: In terms of domestic petroleum production, around 50,000 barrels per day are produced in Turkey, of which TP produces 40,000. Unfortunately, this puts only a small dent in overall daily consumption, which stands at 700,000 barrels. While Turkey will never be a major producer of oil and gas, some areas, like shale gas, present opportunities. According to a report by the International Energy Agency, Turkey has a production potential of 20trn cu ft of shale gas and oil.

As such, we are currently working on two shale projects. One, near Diyarbakır, is being developed in partnership with Shell. Drilling has finished and the well is being fractured. Once this process is complete we will have a better idea of the basin’s potential.

There is a similar project in Thrace on which TP and ExxonMobil are collaborating. We signed a memorandum of understanding with ExxonMobil and Halliburton in September 2014 to assess Thrace’s potential for unconventional hydrocarbons. Hopefully, in 2016 we should have a better idea of the production potential of the nation’s shale reservoirs.

Another area of opportunity is the Black Sea, where we have engaged in seismic mapping operations to identify promising areas. In general, it appears that the eastern portion of the sea can produce oil, while there is more gas on the western side. Given the expense of deepwater wells – $250m-300m each – TP has partnered with international players like ExxonMobil, Petrobras and Chevron to develop six wells. We are hoping to drill more wells in the area in 2015. In addition, new exploration and production activities are going on in the Mediterranean, off Antalya and İskenderun.

Where is there the most potential for Turkish exploration and production abroad?

ŞİŞMAN: The easiest places in which to operate are the ones close to Turkey, such as Azerbaijan, which shares cultural and historical links with the country. Turkey is already involved in projects in Azerbaijan, such as the Shah Deniz fields, and we are hoping to work with them more in the future. We are also active in places like Iraq and Afghanistan, which are very attractive from a production standpoint, though political issues sometimes overshadow investments in the Middle East.

Africa also has significant potential. While most people know that North Africa is rich in oil and gas, many overlook nations in the continent’s interior. Countries like Somalia, Sudan, Angola and Mozambique, while somewhat risky from an economic and political standpoint, will likely be important oil-producing countries going forward. Where there is risk, there is return; so, we are currently focused on this part of the world. In addition, if Turkey’s relationship with Israel and Greece were to improve, places like the Levantine Basin in the Eastern Mediterranean and the areas around Cyprus could also yield resources. Given the costs associated with exploration and production, it is more realistic for TP to be an operator in countries close to Turkey.