Turkey 2014 | ENERGY | INTERVIEW

TBY talks to Besim Şişman, CEO and Chairman of the Board (Acting) of the Turkish Petroleum Company (TPAO), on exploration opportunities in Turkey, the foreign investment environment, and getting a foothold abroad.

Besim Şişman
Born in 1966, Besim Şişman graduated with a BSc in Petroleum Engineering from Istanbul Technical University. He started his career at TPAO as a log engineer and worked in different areas, including as a completion engineer, technical operations supervisor, leading engineer of work-over operations, Manager in the Well-Completion Department, Adıyaman Deputy District Manager, and District Manager. He served as a Member of the Board and Vice-President through 2009 and 2013. He is currently working as CEO and Acting Chairman of Board.

What growth potential does TPAO see in Turkey?

TPAO certainly has further room for growth, and we plan to be worth around $50 billion to the state by end-2013. We are looking to transform the company and become more flexible in quick decision-making. This requires a partial overhaul of Turkey's regulatory environment. Firstly, however, we must be perfectly clear about what we could do to improve, and only then approach the government regarding its own responsibilities in the equation. Over the past 10 years, GDP has risen from around $250 billion to approximately $800 billion. In parallel with this growth, TPAO's total investments and total revenue have jumped to $8.2 billion and $18 billion, respectively, over the past decade. What's more, only around 15% of potential offshore reserves have been explored, which is negligible. For instance, TPAO holds the most licenses in the Mediterranean Sea, which is an area of approximately 150,000 square kilometers, as well as owning 40% of the Black Sea coastline. There is also great potential in this respect, both conventional and unconventional, especially in the southeast and the Thracian region of Turkey, where our colleagues from the exploration department are currently working. A small team is set to commence drilling in the Thrace Basin in early 2014. Turkey, according to a recent report by the International Energy Agency (IEA), has a production potential of 20 trillion cubic feet (tcf) of shale gas and oil, indicating that this area deserves very some serious attention.

What makes the Black Sea an attractive opportunity for foreign oil companies?

The Black Sea has many sound leads and prospective indices, as well as robust oil and gas infrastructure. Basically, it is an attractive region simply because of its sheer core potential. We want to cooperate with other companies in the region to fully develop it. There is also notable potential in the Black Sea region. So far, only five deep-sea wells have been drilled. In the North Sea, the full extent of oil reserves was only discovered after drilling 35 wells. Turkey has spent around $400 million gaining seismic data from the Black Sea, subsequently inviting multinationals such as Shell, ExxonMobil, and Petrobras to offer their opinions. We have developed lasting relationships and begun work on wells. We incurred a capital expenditure of $250 million on one well, while the other participating companies accounted for the remaining $1.3 billion.

How would you characterize the importance for Turkey to partner with foreign investors?

We have developed a number of solid projects with Shell in the Western Black Sea, and also close to Antalya on the Mediterranean coast. We are also working solo on a project near Iskenderun, where we have started drilling, and are planning around 10 wells in the Mediterranean over the next four to five years. In the past we drilled a number of wells near Iskenderun and Mersin, at the time having seen some oil and gas potential, but we are keen to revisit the area to reassess the feasibility of production. Meanwhile, we are also working on the licensed blocks of Northern Cyprus. Israel, too, has made discoveries in Southern Cyprus and in 1Q2014 offshore development is set to commence. We have a very sound partner in Shell, and want to work together on the transportation of gas through Turkey. Participation in this project could also serve to improve our relations with Israel. It would also further relations with Cyprus, especially in terms of water and electricity. In this context, we may also talk of Iraq, where we have four firm ongoing projects, with two apiece in oil and gas. The technical conditions in that market are challenging, but we have committed to a significant investment of $6 million.