Turkey's 2007 domestic production produced only 8.7 percent of the nation's crude oil annual requirements of 200 million barrels and a mere 2.6 percent of its annual natural gas needs of 22.4 billion cubic meters. Turkey's state-owned Turkiye Petrolleri Anonim Ortakligi (Turkish Petroleum Corp.) and foreign operators Royal Dutch/Shell and Exxon Mobil account for the majority of Turkey's oil production. While TPAO currently pumps about 80 percent of Turkey's production, operating more than 45 oil fields in the Siirt, Diyarbakir, Gaziantep and Adana southeastern provinces, its current production remains the proverbial drop in the bucket, about 44,000 barrels per day vs. imports of 724,400 bpd.

The increase in Turkey's natural gas imports has been particularly marked, rising from 15.7 billion cubic meters per annum in 2004 to 35.8 bcm just four years later, a 65-percent increase. The result has been a serious drain on the country's balance sheet, and Ankara has been pursuing a three-fold strategy to lessen its energy bills -- cutting new deals with regional suppliers, broadening its exploration for indigenous sources of oil and gas and striving to position itself as an energy transit hub. Of these, the highest priority is developing indigenous energy reserves, but rising fiscal pressures from the global recession are intensifying all efforts.

The dollar is now at a record high against the Turkish lira, with the lira already having weakened nearly 15 percent against the dollar since the start of the year. Turkey's exports have been decreasing for five months and last month had dropped by 35 percent compared with February 2008. Unemployment recently jumped to 15.4 percent, and in a recent interview in Hurriyet, Professor Seyfettin Gursel, director of Bahcesehir University's Center for Economic and Social Research, predicted that more than 3.5 million Turks, 17 percent of Turkey's non-agricultural labor force, will be jobless by the end of 2009. In one of the few glimmers of good news, Turkey's statistics authority reported that last month the consumer price index fell 0.34 percent, while the country's annual inflation rate dropped to 7.73 percent.

Amid the economic doom and gloom, on March 5 the newspaper Cumhuriyet quoted TPAO Director General Mehmet Uysal as stating that Turkish Black Sea reserves will meet Turkey's need for oil for the next 40 years, ending Turkish dependency on foreign countries for energy. Uysal remarked: "(Turkish) Black Sea oil reserves may be as high as 10 billion barrels, along with 1.5 trillion cubic meters of natural gas reserves. By 2023 Turkey will not be importing oil and natural gas." If Uysal's figures are correct, then they dwarf those of the U.S. government's Energy Information Administration, which in 2006 listed Turkey's proven oil reserves as 300 million barrels and its proven natural gas reserves as 8.4 bcm.

The news caps a five-year exploration effort by TPAO and its joint venture partners, among them Toreador Resources Corp. and Stratic Energy Corp., which in early 2004 began a massive exploration program for indigenous natural gas deposits both onshore and offshore.

The extensive seismic program carried out in the Black Sea made TPAO and other oil companies focus their attention there, with TPAO and its partners focused on exploring and developing hydrocarbon reserves in its Akcakoca concession.

The original well in the area, the Akcakoca-1, had been drilled by the joint venture and discovered gas, but was subsequently plugged and abandoned. The consortium subsequently used the Akcakoca-1 data along with seismic test data, beginning in late 2004, to drill a series of successful gas wells, starting with the Ayazli-1 and continuing through early 2006 with the Akkaya, Dogu Ayazli and Bayhanli discoveries and development wells. By December 2006, the joint venture partners had drilled their 10th successful well, Akcakoca-3, in the South Akcakoca Sub-Basin Black Sea concession. TPAO has also reached out to other foreign companies -- the same year as Akcakoca-3 was drilled, TPAO signed a $350 million Joint Venture Operating Agreement with Brazil's Petrobras for further exploration and development in the Black Sea.

The Black Sea is not the only site of TPAO's offshore interest, as the company also has been exploring for oil and gas along Turkey's Aegean and southern Mediterranean coasts. TPAO's activities have been constrained by complex territorial disputes with Greece over the Aegean and contested island territorial waters, including Cyprus. Last November the Norwegian seismic survey vessel Malene Ostervold, chartered by TPAO to survey the southeastern waters 80 miles south of Greece's Megisti Island (Turkish "Meis" and "Kastelorizo" in Italian), a few kilometers away from Turkey's southern coast, escorted by the Turkish navy's TCG Gediz frigate, encountered the Greek PG Polemistes gunboat sent to the area. After the Greek Foreign Ministry protested to Oslo, the two vessels left the area.

TPAO is also conducting exploration in a Mediterranean block off Turkey's Mersin and Hatay provinces, which also has long been subjected to contesting territorial claims by Syria.

Diplomatic protests aside, Ankara Uysal's news can hardly come too soon, as last year natural gas prices in Turkey soared by nearly 80 percent over 2007 in conjunction with oil prices, which peaked at $147.27 per barrel in July.

While little in the Middle East is certain, given the financial hemorrhaging that last year's energy prices inflicted on Turkey, it is certain that TPAO will move as quickly as possible to exploit its finds in the Black Sea, even while engaging in "frank and candid" diplomatic discussions with both Athens and Damascus about its Mediterranean reserves.

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