PETROLEUM EXPLORATION IN TURKEY
Mesut ATALAY
Yerbil Geological Services Ltd.
Turkish Association of Petroleum Geologists,
Member of Executive Committee
1. Introduction
Petroleum sector is made of a chain of different activities.
These activities can be divided into two main groups. The group
that includes exploration and production activities is called
as "upstream" and the one that includes post-production,
that is, transportation, refining, storage and distribution
activities is called as "downstream" activities. The
exploration activities, which form the first chain of the petroleum
sector, include geological, geophysical and drilling works performed
for the purpose of finding petroleum and gas. These works start
with compilation of all existing geological, geophysical and
subsurface data from wells related to the exploration area and
the sedimentary basin, which includes the exploration area.
These data, which were produced by different institutions for
different purposes in different times, are to be evaluated continuously
to enlighten the subsurface geology both in local and regional
scale. The megascopic geological features as large as tens or
hundreds of kilometers, e.g., the North Anatolian Fault Zone,
the East Anatolian Fault, are complied and evaluated along with
the reservoir parameters of microscopic features, such as porosity
and permeability, and the chemical features in the order of
ppm (part per million). The purpose is to outline the subsurface
in detail as much as possible. The exploration wells are drilled
in prospect areas determined as favorable for the formation
of petroleum reserve in the exploration area, which is continuously
re-evaluated under the light of accumulating new information.
If a petroleum accumulation of economic size is encountered,
this means a new oil field is discovered and production activities
start with drilling the extension wells and production wells
to develop the field. If the exploration well results negative
and there is no other drilling potential in the exploration
area, then that exploration license is relinquished according
to the articles of Petroleum Law.
2. History Of Petroleum Exploration In Turkey
The history of petroleum exploration in Turkey extends into
the Ottoman period. The first exploration activity with drilling
is the shallow wells with gas show drilled in the Çengen area
near Iskenderun in 1890 (1). Oil and gas shows were encountered
in shallow wells drilled in 1898 around Ganos in Thrace. Turkish
Petroleum Company was established jointly by foreign companies
in 1914, but stopped its operation due to First World War.
Following the foundation of the Republic, Government made a
decision, as a principle, to explore himself the petroleum resources
in Turkey. For this purpose, in accordance with the Petroleum
Law No 792 enacted on 24 March 1926 the right to explore and
produce all petroleum and petroleum related materials within
the boundaries of Republic of Turkey was given to the Government
provided that the rules of the Mining Law will be obeyed. Although
the first geological survey initiated in this period, the exploration
activities started significantly after the establishment of
Petroleum Exploration and Operation Management on 20 May 1933
with the Law No 2189. Baspirin-1 well drilled to a total depth
of 1351 meters around Midyat between 13 October 1934 and 15
June 1936 has been considered as the first deep well drilled
in Turkey.
Petroleum Exploration and Operation Management was attached
to Mineral Research and Exploration Institute (MTA), which was
founded on 22 June 1935 by the Law No 2804, and the petroleum
exploration activities were conducted by MTA afterwards. The
main duties of MTA in its Law was " to search the existence
of mines and rock quarries suitable for exploitation in the
country, the conditions of more feasible exploitation of mines
and quarries being exploited and in this connection to conduct
exploration operations, scientific, geological and technological
research, to prepare maps, plans and sections, to conduct projects,
scientific reports and feasibility studies, and to train the
qualified personnel for the mining sector" (2) and MTA
carried out extensive work in those days conditions to execute
these duties. The petroleum exploration activities were conducted
in Southeast Anatolia, Iskenderun, Adana, Van and Thrace through
geological, geophysical and drilling operations.
Petroleum was encountered in the Raman-1 well drilled south
of Batman in 1940 and commercial discovery of petroleum was
made in Raman-8 drilled in 1945. Garzan field was discovered
in 1951 following the discovery of petroleum in the Raman field.
After constructing the refinery of 3 tons per day capacity in
the Maymune area in the Raman field, another refinery with 200
tons per day capacity was constructed in Batman in 1948, of
which the capacity was increased to 330 000 tons per year in
1955
As the petroleum activities attained their own legal frame through
the Petroleum Law No 6326 on 7 March 1954, they were also opened
to domestic and foreign private capital. Turkish Petroleum Corporation
(TPAO) was founded by the Law No 6327 on the same day and the
relevant units of MTA was connected to TPAO. The control of
application of Petroleum Law was given to Petroleum Administration
that was established by the Petroleum Law and the name was later
changed to General Directorate of Petroleum Affairs.
In the Republican time, 37 exploration, 7 extension, 13 production
and 19 test wells, as a total of 76 wells were drilled and 95
881 tons of petroleum was produced totally during the 20 years
period between the drilling of first well in 1934 and legislation
of Petroleum Law in 1954 (3)
The Petroleum Law was amended a few times depending on the
economic and political conditions of the time, of which the
amendment with Law No 1702 on 18 April 1973 was statist and
the amendment with Law No 2808 on 30 March 1983 was liberal.
The foreign petroleum companies rushed into Turkey with the
legislation of the Petroleum Law which is a liberal law in general.
The ten-year period following the legislation of Petroleum
Law is considered as the first peak period. Drilling activities
increased following the increase in the geological and geophysical
surveys and several oil fields were discovered. While the geological
and geophysical works made a peak in 1958 with 164 crew-month
of geological and 157 crew-month of geophysical survey (4),
drilling activities increased continuously until 1965 (Figure
1). While TPAO was discovering new fields, Kahta field as the
first discovery of foreign companies was discovered by California
Asiatic company. Mobil discovered its first field, Bulgurdağ,
in 1960 and its main field,
The external dependency in the gas market is stronger and the
gas business depends almost fully to importation. The Hamitabat
and Kumrular gas fields discovered in 1970 by TPAO in Thrace
were followed by other fields discovered in 1980's and 1990's.
The produced gas was restrictedly consumed in production of
electricity and in local industry and gas consumption was restricted
for a long time since the substructure and the market was not
established in regional and country scale. The importation of
gas initiated in 1987, the annual importation of gas increased
rapidly in accordance with the importation contracts and its
usage became extensive. The domestic production of gas, which
increased to 731 million tons in 1999, has been decreased to
311 million tons in 2001 due to economic reduction in recent
years and to importation contracts based on irrational prediction
of demand. The gas importation was 15.52 billion cubic meters
and the consumption was 15.83 billion cubic meters.
A total of 5 963 507 meters of drilling was carried out in
3015 wells as of end 2002 in Turkey. The distribution of these
wells according to types is given in Table 1. The analysis of
Table 1 indicates that, of the exploration wells, 60% was drilled
by TPAO, 5.4% was drilled by MTA, 0.3% was drilled by other
domestic companies, 28% was drilled by foreign companies and
6.3% was drilled jointly by domestic and foreign companies.
Table 1- Distribution of wells drilled in Turkey as of
31.12.2002
| Companies |
Explor |
Extens. |
Prod. |
Inject. |
Strat.
Test |
Total |
| TPAO |
681 |
320 |
991 |
23 |
37 |
2052 |
| MTA |
61 |
8 |
15 |
- |
20 |
104 |
| Other domestic
comp |
4 |
1 |
16 |
- |
18 |
39 |
| Foreign companies |
317 |
110 |
253 |
- |
5 |
685 |
| Joint foreign+domestic
|
72 |
31 |
24 |
7 |
1 |
135 |
| Total |
1135 |
470 |
1299 |
30 |
81 |
3015 |
The most conspicuous feature of Table 1 is that activity of
domestic companies is almost negligible. The domestic capital
should be encouraged to be more active the highly risky petroleum
exploration with a smart exploration policy instead of being
unwillingly.
3. Importance Of Petroleum Exploration
The petroleum sector is made of a chain of different activities
from exploration to marketing. Each of these rings of the chain
is a large activity area and is in a tight interrelation. Each
field of activity has different specific properties. It is possible
to mention the importance of petroleum exploration, which forms
the first ring of the chain, into the following groups.
The technological importance of oil exploration includes the
accumulation of information and qualified manpower in this subject
and capital(7). The technology used in the oil exploration develops
very fast. The technology consists of many different branches
requiring expertise and accumulation of information in them.
The expertise in geological, geophysical, geochemical and other
exploration techniques and in drilling technology, the application
of, and in fact, the leadership in developments in these subjects
is possible only by doing intense exploration activity. The
realization of this is possible only by having qualified manpower
and instrumentation in each branches of exploration, that is,
by allocating capital into this field and having activity continuously.
The institutions having qualified manpower, knowledge and technology
may go into international operations by using the experience
gained at home.
The property that differentiates the exploration activity from
other sectors is that the information obtained during the activities
accumulates continuously and is used in later activities. The
information related to a certain part of a sedimentary basin
is important not only for that specific area, but also for the
whole basin. The proper estimation of each of the local parameters
related to petroleum exploration depends on gathering and realistic
evaluation of information related to distribution and variation
of the parameters in the basin. Therefore, as required by the
Petroleum Law, the new data related to an exploration license
are transferred to and filed at the General Directorate of Petroleum
Affairs following the relinquishment of the license, to be used
by other explorations in future. By this way, since quantity
and quality of information increase by the time, it would be
possible to do more realistic evaluation in the exploration
activities.
Another importance of the exploration activities is the economic
consideration. The new petroleum reserves can be discovered
only by the exploration activities. If it is assumed that a
petroleum field to be discovered at the end of exploration work
amounting to a few million Dollars would produce 100 million
barrels oil in the next 10 years and the oil price is 25 Dollars
per barrel, this would yield an economic size of 2.5 million
Dollars. The high risk but enormous income at the end of a prolific
exploration work and lack of necessity of proportion of success
to the amount of investment are other strikingly specific features
of the sector. It is possible to be successful, that is, to
discover a major oil field, at the end of drilling a cheap well,
as well as being unsuccessful at the end of spending great amount
of money. A typical example of this nature is the Karakuş field
near Adıyaman. The cumulative production in this field as of
end 2001 exceeded 105 million barrels when considered together
with the Cendere field located in the same structure. The daily
production is 11 670 barrels on the same date; Karakuş field
is the largest of Turkey both in daily and total production.
The other economic aspects of petroleum exploration are the
employment and taxes to be generated by the services sector
in the exploration activities and the royalty to be given to
the government as part of the oil to be produced from a new
field. A royalty of 12.5% of the gross production is given according
to the Petroleum Law. The 13.12 million barrels royalty given
in 15 years from the 105 million barrels production of the above
mentioned Karakuş field makes 328 million Dollars when a 25
Dollars per barrel price is assumed.
One other importance of petroleum exploration is the strategic
nature of petroleum. Petroleum and gas, same as coal, are fossil
fuels, that is, they are source of energy impossible to renew.
Therefore, possession of the areas including the existing reserves
or discovery of new reserves are of strategic importance. The
strategic importance of petroleum has been continuing to increase
since its commercial production started mid 19th Century. The
sufficiency of petroleum reserves at strategic importance can
only be maintained by discovering the new reserves which is
possible only by continuous performance of exploration activities
to search and outline the petroleum potential as a whole. The
decrease in the discovery of new fields plays a role to further
increase the strategic importance of petroleum.
4. Petroleum Potential Of Turkey
The petroleum exploration activities, which were seriously
considered after the foundation of Republic, have been carried
out also with the contribution of domestic and foreign capital.
As of end 2001, a total of 170 foreign and 20 domestic companies
have been operating. The number producing companies are 11,
two of which are domestic and 9 are foreign. The production
data of these companies are given in Table 2.
Table 2- Reserves in Turkey as of end 2001, (8)
| Reserve |
TPAO |
Shell |
Mobil |
Other |
Total |
| Oil in place (million barrel) |
4639 |
1294 |
539 |
163 |
6635 |
| Recoverable oil (million barrel) |
601 |
356 |
94 |
43 |
1098 |
| Total production (million barrel) |
419 |
282 |
79 |
31 |
811 |
| Remaining recoverable oil (million barrel) |
183 |
74 |
15 |
14 |
284 |
| |
| Natural gas in place (million cu m ) |
13025 |
4654 |
|
2621 |
20300 |
| Recoverable natural gas (million cu
m) |
8563 |
3258 |
|
2069 |
13890 |
| Total gas production (million cu m)
|
5122 |
46 |
|
49 |
5217 |
| Remaining recoverable gas (million cu
m) |
3441 |
3211 |
|
2021 |
8673 |
| |
| Total oil fields discovered |
61 |
24 |
3 |
12 |
100 |
| Oil fields produced in 2001 |
47 |
20 |
1 |
8 |
76 |
| |
| Total natural gas fields discovered |
14 |
2 |
|
4 |
20 |
Table 2 indicates that the recoverable oil reserves are slightly
above one billion barrels, of which 811 barrels has been produced
and the remaining recoverable reserve is 286 million barrels
(42 million tons). This remaining recoverable oil of 42 million
tons is less than 1.5 times of annual consumption of 30 million
tons. The domestic production, which is in declining period,
was 2.5 million tons in 2001. The amount of recoverable oil
is 17 fold of annual petroleum production. Production ceased
in about one quarter of the discovered fields.
The oil exploration activities in Turkey have been concentrated
in Southeast Turkey and Thrace and the sedimentary basins out
of these areas were not sufficiently explored. The parameters
forming the petroleum system of all sedimentary basins in Turkey
have been outlined with the available information. There exists
further petroleum potential both in Southeast Turkey, Thrace,
Adana regions and the other sedimentary basins (9).
A great number petroleum discovery in Turkey has been made
after drilling the second or third wells. Adıyaman, Çemberlitaş
and Karakuş fields are examples of this feature. Positive results
have been obtained, under the light of new data, in areas where
the dry wells were drilled in the past due to improper location
definition resulting from insufficient subsurface data or the
wells were relinquished due to technical reasons.
The offshore areas have been poorly explored although Turkey
is surrounded by seas in three directions. The offshore drilling,
which is rather expensive depending on the depth of bathymetry,
will be realized in future.
Only the fraction of petroleum consumption of Turkey less than
9% is supplied by indigenous production. This feature is much
less in natural gas; it almost fully depends on the importation.
Therefore, Turkey is a petroleum-hungry country. On the other
hand, it is known that Turkey is not a petroleum country. But
it possible to discover new petroleum and natural gas fields
by using comprehensive exploration programs.
5. Results And Recommendations
During the time following the foundation of Republic, while
revolutions have been realized on one hand, intense efforts
had been spent for exploration and production of raw materials
and natural resources to realize the economic development. By
this way, the foundation of petroleum sector in Turkey has been
made and the sector became successful in a short time. The petroleum
sector was opened to foreign and domestic private investors
with the application of the Petroleum Law in 1954. After achieving
success in Turkey, TPAO went outside and had exploration alone
or jointly with others in Asia, and Africa. TPAO became stakeholders
in major projects in Caucasia and Central Asia.
The petroleum fiels of various scale, 100 in number, and 20
gas fields have been discovered in Turkey by MTA, TPAO and foreign
companies in the 70 years history. MTA and TPAO drilled 2156
wells, 742 of which are exploration, and discovered 600 million
barrels recoverable reserves. A total of 170 foreign companies
operated in Turkey in 50 years period. A great part of the registered
capital of one billion Dollars stayed in Turkey. This is because
the great majority of the companies could not discover any oil
and it was not possible to transfer outside any capital for
these companies. The foreign companies drilled 820 wells as
a total, 389 of which is exploration, discovered 500 million
barrels recoverable reserves in about 40 fields and produced
400 million barrels oil. Since producing companies are allowed
to transfer their registered capital and benefits from the income
obtained from the oil they produced, they transferred 1.1 billion
Dollars as registered capital and benefit. However, the indigenous
production could never compensate the consumption in Turkey,
where growth has been fast and, parallel to that, consumption
of petroleum product has increased rapidly too. The ratio of
indigenous production to consumption, which is less than 10%
in recent years, has reached to its maximum value of 55% in
1969. The dependency to oil importation will be more in future
in Turkey, where almost all of the producing fields are in declining
period and consumption continues to increase. As a consequence
of energy policies of recent years, Turkey inclined towards
natural gas and almost all of consumption depends on importation.
As originating from the nature of oil exploration, all of the
exploration activities, whether small or large, provide accumulation
of highly valuable data that are used in determining the petroleum
potential of the country and exploration work later. Under the
light of data available at present, it cannot be said that the
petroleum potential of Turkey has been fully explored. Most
of the exploration wells were drilled in 1950's, 60's and 70's
when the information was sparse and technology was poor. With
the new exploration activities, new prospects can be defined
as well as positive results can be obtained from the prospects
which were drilled before but negative results were obtained.
The internal sedimentary basins and offshore areas were relatively
less explored when compared with Southeast Turkey and Thrace
where exploration has been more.
Although not a petroleum country, Turkey is still attractive
for exploration. Decrease of external dependency of petroleum,
which is a strategic material, is only possible by increasing
the ratio of compensation of consumption by indigenous production.
This is conditional to increase of exploration work. The precautions
should be taken which will increase the exploration activities
of TPAO and domestic and foreign companies. The following recommendations
are suggested:
1. The exploration budget of TPAO should be increased; TPAO
should be kept out of political influence and should reattain
its traditional oil company identity.
2. The joint operation of TPAO with foreign companies should
have realistic frame, joint operation should be arranged to
be attractive for foreign companies.
3. The issue of cessation of transfer of registered capital
with exchange guaranty, which influenced the entry of new foreign
capital, should be solved.
4. The domestic private capital should be supported for petroleum
exploration through regulations in tax laws. The domestic investor
who will be successful in oil business and gain exploration
and production experience at home will be an example and motivate
the other domestic companies to go and make investment into
petroleum exploration and also will operate later out of country.
5. The Petroleum Market Law and the revision of Petroleum Law
No 6326 should be cleaned of articles, which would negatively
affect exploration activities, on the contrary, should be supportive.
However, the supportive articles should be realistic but not
exaggerated.
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