Turkey's TPAO, Shell to Begin Exploration Drilling in Black Sea

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Researched by Industrial Info Resources (Sugar Land, Texas)--Turkey's state-owned energy company, Turkiye Petrolleri Anonim Ortakligi (TPAO) (Ankara, Turkey), and Royal Dutch Shell plc (NYSE:RDSA) (The Hague, Netherlands) will begin exploration drilling for possible oil and gas reserves in the Western Black Sea. Turkish Energy Minister Taner Yildiz said he is hopeful about the venture.

"Our first priority is to improve and use national energy resources as much as possible," Yildiz said during a press conference in Istanbul. "Our neighboring countries, such as Bulgaria and Romania, have found natural gas and oil resources in this region. So, that's why we're hopeful for this venture of TPAO and Shell."

TPAO and Shell Turkey will spend about $300 million in the exploration process, which will take place 100 kilometers offshore Istanbul, with a 2,000-meter exploration drill. The drilling vessel, which set sail for the exploration area, will be supported by three ships and two helicopters.

Even though Turkey is not a country with proven oil reserves, TPAO is conducting oil exploration works with private companies. Yildiz also said that 45 oil exploration companies, including 17 foreign firms, conducted 226 exploration drillings in Turkey, both onshore and offshore, in 2014.

"Our ratio of finding oil and gas is 33%," Yildiz said. "Turkish government will pay $1.9 billion less for oil and gas imports, with these new findings of oil and gas."

He also said that the 50% slump in oil prices has cost $500 million in revenue for TPAO. The West Texas Intermediate (WTI) crude oil price recently fell below $50 a barrel for the first time since April 2009.

"The oil price decline won't deter TPAO from drilling, but we're planning to drill half of the 130 wells planned for 2015," TPAO Chief Executive Officer Besim Sisman said at a press conference. "Decreasing oil prices require us to review our activities and designate our priorities accommodating ourselves to circumstances."

Shell executives said that the pricing will not effect this exploration. "Oil price developments won't stop Shell from exploring. We'll start drilling this month, a year before than planned earlier," Shell Upstream Turkey Director Joris Grimbergen said at the press conference.

Shell Turkey Chairman Ahmet Erdem, pointed out the importance of the venture, saying: "Only 5% of Turkey's oil needs and 2% of its natural gas needs are met with national resources. With this new well, we will obtain significant data whether there are hydrocarbon resources in Western Black Sea. These explorations works are important, since Turkey wants to increase its national oil and natural gas production."

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