1. OIL MANAGERIAL SESSION
Thursday, 26 September 1996
‘‘New Frontiers for Hydrocarbon Exploration and Exploitation
in South-Eastern European Countries’’
HYDROCARBON EXPLORATION AND
PRODUCTION IN TURKEY
Ozer BALKAS
Exploration Group Manager
Turkish Petroleum Corporation (TPAO)
FIRST CONGRESS OF THE BALKAN GEOPHYSICAL SOCIETY
Hosted by : Hellenic Geophysical Union
September 23-27, 1996
Athens, Greece

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HYDROCARBON EXPLORATION AND PRODUCTION IN TURKEY
Ozer BALKAS
Exploration Group Manager
Turkish Petroleum Corporation (TPAO)
Turkish Petroleum Corporation (TPAO) has long had the big shares in the
hydrocarbon exploration and production in Turkey. Since its establishment in 1954,
TPAO has carried out exploration and production activities all over the country.
The aim and the general mission of TPAO can be summarized as follows:
 Providing a continuous and effective exploration activity for oil and gas,
 Determining the hydrocarbon potential and reserves to create a challenge
against domestic consumption,
 Providing continuous oil and gas supply and services in exploration and
production facilities.
I- MAJOR DEVELOPMENTS IN THE OIL INDUSTRY OF TURKEY
The Existence of oil shows in Turkey was first mentioned by the Turkish historian
Evliya Celebi in the 18th century. But exploration began in the second half of the
19th century. Since then, both domestic and international companies have
carried out exploration work in the Thrace Region. Outbreak of the First World War
, coupled with the collapse of the Ottoman empire, halted oil-related activities
temporarily.
The National Assemble issued a declaration in the 1920’s for undertaking of all
the rights of hydrocarbon exploration and production affairs by the newly
established government. In 1926, Ministry of Commerce and Industry was granted
with a concession for exploration in the Thrace Region. Exploration activities
intensified in 1935 with the establishment of the Mineral Research and Exploration
Institute (MTA), a Government body empowered to explore for minerals and
hydrocarbons in Turkey. MTA drilled several wells in Southeast Anatolia,
primarily in the Raman Region, during the following years. In 1940, the first
productive well was drilled in the Raman Area, setting a background for later
exploration stages . In 1951, Garzan Field was discovered in the same region,
also as a result of MTA-sponsored explorations.
In 1954, a liberalized petroleum legislation opened up oil exploration to both
domestic and foreign private companies. These changes in the Government’s
petroleum policy were embodied in the Petroleum Law # 6326, which governs all
of the hydrocarbon exploration and exploitation activities today. In the same year,
Turkish Petroleum Corporation (TPAO) was established by the Law # 6327 as the

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national oil company. TPAO later took over all the rights and responsibilities for
hydrocarbon exploration and production activities including transferring all
operation resources from MTA.
As a result of liberalization, 58 foreign oil companies started in exploration for oil
in Turkey during the period from 1954 to 1973. International oil companies drilled
321 wells whereas TPAO drilled 601. Consequently, drilling up to 1574000 meters
was achieved and oil was discovered in 36 fields where 19 of which belong to
TPAO.
1973 and 1974 marked a return to nationalistic petroleum policy, with the
amendment of a number of articles of the Petroleum Law. Measures such as the
fixing of the wellhead price level in Turkish Liras equivalent made oil exploitation
uneconomical in December 1973. As a result, oil exploration by foreign companies
virtually ceased. In the meantime, domestic production, which peaked at 25.2
million STB in 1969 slowly declined, while imports were rising. For example, in
1978, only 20.3 million STB of crude oil were produced. At the same time 99.4
million STB were imported, as compared to the 28 million STB imported in 1969. It
became apparent that unless more oil was discovered, production would continue
to fall. TPAO, however, was hampered by a lack of resources, which prevented it
from carrying out the efficient and conclusive studies against the complex geology
of Turkey.
In March 1979, the Government modified the decree of 1973 to make exploration
more attractive to international oil companies. The most important measure was
to allow crude oil from wells drilled since January 1,1980 to be sold on a par with
world market prices expressed in US dollars, hence freeing prices from the
pressure of the weak domestic currency. In 1980, the Government adopted
additional measures to attract foreign investors, such as permitting successful
companies to export 35 percent of hydrocarbons produced onshore and 45
percent of hydrocarbons offshore.
In order to facilitate the further availability of foreign investment, all companies,
which relinquish any license area, are required to deposit all seismic, geological
and drilling data available for the concessions with the General Directorate of
Petroleum Affairs (GDPA). As a result, the volume of publicly available exploration
information has expanded considerably. Greatly improved investment led to a rise
in exploration and production activity and 1700 new wells have been drilled since
1973. Oil production reversed its decline in the late 1980’s and peaked in 1991, to
the 35 million STB level. As of January 1, 1996, Turkey had 6526 billion STB of
original oil in place and 236,9 million STB of recoverable oil and most of which
discovered by TPAO. By January 1,1996, cumulative oil production in Turkey

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reached a total of 682,6 million STB. 24,6 million STB of oil were produced in
Turkey in 1995, 17,5 million STB of which belong to TPAO .
II- THE ADMINISTRATIVE STRUCTURE OF THE TURKISH PETROLEUM
SECTOR
The Ministry of Energy and Natural Resources of the Republic of Turkey was
established in 1963 in order to assist in determining the objectives and policies on
these matters and to enable exploration, development,production and
consumption of the energy resources in compliance with these objectives and
policies. The two major bodies concurred with the Turkish petroleum sector are
GDPA and TPAO.
The General Directorate of Petroleum Affairs which is subordinated to the Ministry
of Energy and Natural Resources with the annexed budget and institutional
personality enforces the provisions of the Petroleum Law numbered 6326 which
regulates the hydrocarbon policy of the state with the other laws amending the
above mentioned one and the resolutions of the decree laws of the Cabinet of
Ministers depending on the law numbered 79 which arranges the liquid fuel
activities.
GDPA is an agency of the Ministry of Energy and Natural Resources. Its main
responsibilities are:
 Awarding reconnaissance permits, exploration licenses and production leases
and supervise the companies involved in the fields of exploration and
production;
 Awarding licenses and contracts for the refining, transportation and distribution
of oil, gas and petroleum products.
 Maintaining archives of detailed geological and geophysical data and
information from previous exploration activities (this information is gathered
from companies which relinquished their exploration licenses for various
reasons);
 Publishing an annual report on the activities in the petroleum sector and several
special reports. Both the archives and the reports of GDPA are available to the
public.
III- DOMESTIC EXPLORATION ACTIVITIES

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Turkish Petroleum Corporation (TPAO) has carried out exploration activities
through the basins in the country. The aim of the exploration studies can be
summarized under two topics:
 Determining oil and gas potential of the sedimentary basins of Turkey,
 Discovering and developing new oil and gas fields to support a continuous high
level of production in the country.
The exploration activities have mostly concentrated in The Southeast Anatolia and
Thrace basins. As a result of continuous and effective exploration activities, 70
commercial oil and gas fields were discovered until 1995. 51 of them are oil fields
which are mostly located in Southeast Anatolia, and the other 19 are gas fields
which are mostly located in the Thrace basin. TPAO added 3 new oil fields and 2
new gas fields to the inventory of producing fields in 1995. The primary reservoirs
are mostly Upper Cretaceous aged highly fractured carbonates for oil in Southeast
Turkey and Miocene-Oligocene aged sandstones for natural gas in Thrace.
To realize the national mission, TPAO has extended its exploration activities and
investments countrywide. Concurrently, Turkish Petroleum Corporation has also
made various joint exploration agreements with other oil companies to increase
the amount of exploration investments and to create an international atmosphere
in our oil and gas industries.
Concession : By the end of 1995, TPAO had 146 concessions (61060 km2
), out of
which 106 were exploration and 40 were production licenses. Two of the
production concessions are joint ventures with SHELL and another two with
ARCO.
Geological and Geophysical Field Studies : In 1995, TPAO carried out 95 20/30
crew/month geological studies. This amount represents 100 % of the total
geological studies in Turkey for 1995. In 1995, 85 22/30 crew/month geophysical
studies were also carried out by TPAO. This represents 98 % of the total
geophysical studies in Turkey for the same year.
Exploration And Appraisal Drilling : In 1995, 28 exploration, appraisal and
production wells were drilled. In the meantime, cumulative meterage reached
58422m. Of these, 16 were exploration and appraisal wells with a cumulative
depth of 30592 meters and 12 were production wells with a cumulative depth of
27830 meters. Two of the exploration and appraisal wells were drilled for the
TPAO joint ventures with other companies.
Offshore Exploration : In connection with the projects and plans prepared in
January 1995, the offshore pre-drilling exploration studies in the Western Black
Sea basin have been completed.

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Discoveries : As a result of exploration and drilling activities, TPAO made 3 oil and
2 natural gas discoveries in 1995. The UNSALDI-1 and EAST SILIVANKA-2 oil
wells are in the SE Anatolia District and KAVAKDERE-2 is in the Thrace Basin.
They have been put in production. The KARAÇALI-2 and DEGIRMENKÖY-O1 gas
wells which are in the Thrace basin have also been put in production.
Joint Petroleum Activities of TPAO : For the purposes of increasing the amount of
exploration investments, sharing the investment risk and creating an international
operating atmosphere in Turkey, Turkish Petroleum Corporation is in favor of
making Joint Oil Exploration Agreements with foreign oil companies, under the
coverage of which several studies have been carried out by collaborative work in
new areas.
TPAO has made joint venture agreements for hydrocarbon exploration and
production in Turkey with ARCO, TEXACO-GARNET and SHELL onland, and with
ARCO, BP, TAURUS and MOBIL offshore concessions. Consequently, in Joint
Petroleum Activities, five new commercial oil fields have been discovered, while
three of them have been discovered by The TPAO-ARCO and the rest have been
discovered by The TPAO-SHELL Joint Venture.
IV- DOMESTIC PRODUCTION ACTIVITIES
Crude Oil Production : TPAO owns and operates 41 oil fields which are mostly
located in the southeastern part of Turkey . Three oil fields are joint-venture fields
with ARCO Turkey Inc. and Perenco ( formerly owned by Shell). Average daily oil
production from 601 wells is 53000 STBPD . As of January 1,1996, the
remaining recoverable crude oil reserve is 236.9 million STB. Currently, TPAO is
providing 75 percent of the total domestic oil supply, which is about 10 percent of
the total domestic demand. Cumulative oil production of TPAO by the end of 1995
was 329.3 million STB while gas production was 2.5 million m3
.
Oil bearing formations are mostly fractured and faulted carbonates where the oil
production is generally under the influence of strong water drive. The depth of oil
reservoirs vary between 1200-3500 meters.
Natural Gas Production : TPAO also operates 4 natural gas fields located in The
Thrace area and one field in Southeast Turkey. The Natural gas reserve as of
January 1,1996 was 6.3 billion Sm3. The daily gas production rate is 0.5 million
Sm3. Currently, a new offshore gas field in the Marmara Sea, namely The North
Marmara gas field, is being developed and the expected production rate is one
million Sm3 per day. This has been discovered in 1988 at a 43 m water depth and
2.5 km away from the shore. Estimated reserve is 3 billion Sm3 and production life

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is expected to last for seven years. After feasibility studies, three production wells
have been drilled. As a growing nation, Turkey’s annual oil and gas needs are
expected to reach 40 million tons of oil, and 30 billion m3
gas by the year 2010.
V- INTERNATIONAL PETROLEUM ACTIVITIES
TPAO undertakes the responsibility for supplying the energy requirement of the
country and meets most of the petroleum demand through imports with the
approximate payment around 2.9 billion US Dollars annually. Therefore, the
Company has been continuing its exploration and exploitation activities abroad
for a decade to create an additional hydrocarbon production and to ease the
country’s increasing expenditures for crude oil imports.
By means of TPIC, a TPAO Subsidiary, TPAO has continued its activities in 3
onland concessions in Egypt and 2 discoveries were reported from these fields
during the studies. TPAO has also maintained its contacts with the Central Asian
and Caspian Region’s States with regard to hydrocarbon exploration and
production since the former Soviet Union was disintegrated. In this frame and
apart from its current activities in Kazakhstan and Azerbaijan, it has also started to
evaluate the hydrocarbon potential of the Turkmenistan, Uzbekistan and
Kyrgyzstan basins.
In this respect mentioned above, the joint venture company was established
between TPAO and the Ministry of Geology and Earth Protection of the Republic
of Kazakhstan and an agreement was signed between two parties on January 9,
1993. 7 Exploration Licenses in the western territory of Kazakhstan, which
corresponds to an area of 26365 sq kms. were granted to KAZAKHTURKMUNAI
Ltd. Joint Venture Company. This Company has the rights of oil and gas
exploration, development of the discovered hydrocarbons, their production and
exploitation as well as the authorization to take part in their exports and sales.
TPAO’s share in this Joint Venture is 49%.The said Joint Venture furthermore
signed a contract with the Republic of Kazakhstan for Petroleum Exploration,
Development, Production and Marketing on the date of May 31, 1994. Since the
establishment of this Joint Venture, 13 hydrocarbon fields have been discovered in
those 7 licensed areas, and among them, experimental production activities have
started in the Bekbolat Field since August 1994.
The activities in Azerbaijan which started in 1993 were accelerated in 1994, and a
consortium of foreign companies in which TPAO has taken part was founded
before The Joint Development and Production Sharing Agreement was signed on
September 20, 1994 in Bakü, covering the Azeri, Çirali and the Deep Portion of the

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Gunesli Fields. While TPAO’s share for the whole project was 1.75% in the initial
phase, it was raised to 6.75% by the agreement signed on April 12, 1994.
The draft of an Exploration and Production Sharing Agreement which we prepared
with the other foreign partners for another important field in Azerbaijan sector of
Caspian Sea has been submitted to SOCAR Management and relevant
negotiations are still in progress in this regard.
The evaluation studies for two known hydrocarbon fields in Western Turkmenistan
started late in the year of 1993 in coordination with the Turkmenistan Petroleum
and Gas Ministry. The technical and economical reports prepared by Turkish
Petroleum Corporation at international standards were delivered to the Turkmen
authorities at the beginning of this year and a healthy beginning period in our
relation could be obtained. By a new protocol which was signed between TPAO
and Turkmenistan Petroleum and Gas Ministry soon after this initial phase, the
Southern Caspian Sea Basin, North Turkmenistan, Kopet Mountains and Amu-
Derya Basin are selected as the joint areas of interest. By the technical and
economical evaluation studies to be carried out for these areas with respect to
hydrocarbon exploration and production, the joint operations and investments will
be initiated at the exploration and production licenses which shall be determined at
the end of these processes.
Another agreement has been executed, with regard to making joint technical
studies in Northern Tunisia, as a result of the negotiations being held with the
Tunisian National Petroleum Company (ETAP). In Algeria, however, our
endeavors for establishing a corporation together with ARCO and the Algerian
National Petroleum Company (SONATRACH) are still going on.
VI-CONCLUSION
Beside the considerable hydrocarbon exploration and production potential, Turkey
has a great challenge in the fields of transportation and marketing for
hydrocarbons since it is situated on the way to western European market with
regard to hydrocarbon resources of Central Asia and the Caspian Region, as well
as the needs of hydrocarbons in local markets in line with the future energy
projections.
I also would like to specify and declare that Turkey is ready to propose various
opportunities related to the frontier or semimature areas for hydrocarbon
exploration. Although the frontier areas are at the very early stage in exploration,
they are ready to compete with their counterparts in regional market, together with
the reliable legal and political background and encouraging incentives given
through the governmental policies in the country.