International Oil Companies Gamble on Turkey’s Shale Gas
While information on Turkey's hydrocarbon reserves remains elusive, some shale investors are willing to take the risk.
Shell has begun exploring shale gas in Turkey. Despite the scale of this new undertaking, the only sources of information about Turkey's reserves are media speculation and a 2013 report by the US Energy Information Agency (EIA). While this has not stopped investment, it does underscore the a risk the companies investing in Turkish shale are taking.
Royal Dutch Shell's Turkey branch and the Turkish Petroleum Corp. (TPAO) are drilling Turkey's first shale gas-exploration wells in Diyarbakir province's Sanbugday 1 natural-gas field. According to its agreement with the TPAO, Shell is expected to drill five wells into the Dadas shale formation. While this investment has drawn attention and interest into Turkey’s shale gas reserves, Shell's spokesmen made no public assessments prior to completing the first well, underscoring the obscure environment and the dearth of public information.
Shale gas and oil explorations are a new source of hope for Turkey, which has a highly vulnerable energy market. The annual growth rate of Turkey’s energy consumption is 4.5%, and overall annual demand is expected to rise to more than 237 million tons of oil equivalent by 2030. This growth rate makes the country attractive to investors, but also hides also a huge vulnerability.
The country’s energy economy is built on imports from its main suppliers, Russia and Iran. If Turkey can realize its shale dream, it would reduce this dependency and help ensure Turkey's growth remains sustainable. Moreover, Turkey’s unconventional reserves could help push the country one step further in its quest to be a top ten global economic power by 2023. But determining the probability of any of this relies on clear and distinct information on Turkey’s shale reserves and their economical viability.
