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It’s located just miles away from some of the richest oil and gas fields in the world.
Just off this country’s southern border, a 27-billion-barrel oil field is in production. And further south, a 30-trillion-cubic-foot reserve is pumping out natural gas.
The country is the same size as Texas – with similar geologic formations as those found in the Texas and Oklahoma energy basins. Yet, despite its prime location, this “Ground Zero of the Next Energy Boom” has only drilled 4,400 wells since 1940, compared to over 1.5 million in Texas.
In other words, its massive energy reserves are almost entirely untapped.
Fair warning, though… this country’s true potential will be unlocked very soon. And two companies promise to be at the forefront.
Confirming Turkey’s Vast Potential
Last year, I visited Cyprus during the financial meltdown that was taking place.
The primary reason for my trip was to research the potential for gas development off the coast of Cyprus, in the Mediterranean.
Well, I confirmed that Turkey boasts massive oil and gas potential – both onshore and offshore.
Turkey controls half of Cyprus and has been clear about its intention to claim the potentially huge discoveries that may be found off the coast.
Noble Energy (NBL) is developing the Leviathan and Tamar gas fields off the coast of Israel. As I alluded to above, the fields are estimated to contain more than 30 trillion cubic feet of natural gas, putting Israel on the map as the 25th largest in terms of reserves in the world. And those formations are thought to extend north into Turkish territorial waters, as well as onshore into the southern part of the country.
No wonder Royal Dutch Shell (RDS.A) and Exxon Mobil (XOM) – along with a host of minor companies – are champing at the bit to drill for oil and gas, and apply new fracking technology on Turkey’s land…
The Next Big Energy Juggernaut
The Turkish Petroleum Company is working with Shell on four joint ventures on the Dadas formation in southwestern Turkey.
Geologists compare this formation to the prolific Oklahoma Woodford shale gas play.
Located on the Arabian plate, the formation is also thought to include as much as 100 billion barrels of oil and oil equivalents – hence the deep interest by U.S. and foreign energy majors.
The region has barely been explored, and results from test wells are due to come in over the next few months.
Previous test results showed hydrocarbon formations and have struck oil and gas – but not in commercial quantities. The newer tests will incorporate more recent advances, such as fracking, which should result in much better returns.
Bottom line: While Turkey is currently a net importer of both oil and gas, it has the potential to become the next global energy juggernaut. It’s located between Europe, Asia, and the Middle East – with easy delivery routes by land and sea.
Indeed, Turkey could be a future source of energy for a starving Europe that’s reliant on places like Russia for more than a third of its energy needs.
To top it off, Turkey has some of the most favorable tax treatments for exploration and production – with a 12.5% royalty to the government and a flat 20% corporate tax rate.
Ultimately, if the reserve estimates are proven correct, the big winners here will be the major oil companies – led by Royal Dutch Shell, which could possibly be sitting on the biggest find on its books.
And “the chase” continues,
Don't expect many jobs in decommissioning installations, they're heading for Turkey once checks are completed to ensure no foreign marine species can be introduced into Turkish waters. Just in case the powers that be deny this, these checks are currently under way on installations scheduled for cessation of production this year.
'Kill the cable, kill the cable,' shouted the security guard as he burst through the double doors into the media room at the Intercontinental Hotel in Riyadh, followed by Saudi police. It was too late.
A private meeting of Opec leaders, gathered this weekend in Riyadh for the cartel's third meeting in its 47-year history, had just been broadcast to the world's media for more than half an hour after a technician had mistakenly plugged the TV feed into the wrong socket. The facade of unity that the cartel so carefully cultivates to a world spooked by soaring oil prices was shattered.
Sometimes, such innocent mistakes can have far-reaching economic and political consequences. Commodity and currency traders said this weekend that oil prices would surge again tomorrow - possibly breaking the $101 per barrel record set in the late 1970s - while the already battered dollar would fall further on the back of the unintentional broadcast.
On Friday night, during what the participants thought were private talks, Venezuela's oil minister Venezuela Rafael Ramirez and his Iranian counterpart Gholamhossein Nozari, argued that pricing - and selling - oil using the crippled dollar was damaging the cartel.
They said Opec should formally express its concern about the weakness of the dollar when the cartel makes its official declaration at the close of the summit today. But the Saudis, the world's largest oil producers and de facto head of Opec, vetoed the proposal. Saud al-Faisal, the Saudi foreign minister, warned that even the mere mention to journalists of the fact that leaders were discussing the weak dollar would cause the US currency to plummet.
Unfortunately his words and those of everyone at the meeting were being broadcast via a live television feed to a group of astonished reporters.