On the Cusp of Discovery. Turkey Steps Up Shale Gas Development as Russia Looks On

By Olgu Okumuș, December 14, 2013

to global reserves. But developing its own reserves is important for Ankara as it provides a chance to reposition Turkey in the energy game and reduce the country’s heavy dependence on imports. 

In this shale gas adventure Turkey is finding support from North American players while Russian companies remain passive because they have confidence in their well-established standing in the conventional gas business. But the new North American companies may not leave the country even if frustrated by shale oil and gas reserves, opting instead to make new investments and challenge Russia’s presence in Turkey. 

Transatlantic Support 

In September, media reported that Turkey had started hydraulic fracturing operations to extract shale gas from Dadaş shale field in the Southeast Anatolian Basin near the Syrian border and the Hamitabat shale field in the Thrace Basin near Bulgaria. Turkish authorities promote the use of hydraulic fracturing that has spawned a boom in North America. EIA has likewise announced technical resemblances between the Eagle Ford field in Texas and the Dadaş field. 

Over the last two years, three international medium-sized players – Canada’s TransAtlantic, Austria’s Anatolia Energy, and the U.S.-based Valeura Energy – have had a spotty exploration record in Turkey. Meanwhile, mergers and acquisitions have brought momentum to the Turkish shale gas market. The United States’ Cun Energy acquired Anatolia Energy and its large-scale conventional and unconventional gas license in Turkey. In April 2013, Valeura Energy announced it had been awarded a new exploration license (Banarli License 5104) on a 100-percent working interest basis in the Thrace Basin in northwest Turkey. Since the liberalization of the energy market in the late 1990s, the Turkish market has already brought in domestic players. Among other, Calik and Alpay Enerji A.S. became local partners with North American medium-sized firms. In January, Anatolia Energy announced that its partner, Çalık Enerji San. ve Tic. A.Ş., had commenced drilling at Giremir-1 the initial exploration well on the Sinan License in Turkey, where Anatolia Energy can earn a 50-percent interest. In May 2013, TransAtlantic acquired all of the shares of Arar Energy’s Molla licenses in the southeast region. In September, the Dublin-based San Leon Energy announced it had entered into an agreement conditionally to acquire 75 percent of the issued share capital of Alpay Enerji A.Ş., which holds many conventional and unconventional licenses in Turkey. When San Leon’s Chairman Oisin Fanning said the company expected to monetize Turkish reserves quickly, international media were quick to suggest that the company might use the cash from Turkish investments to fund drilling in Poland.

These acquisitions come after the penetration of Shell into the Turkish shale gas market. In November 2011, Shell formed a partnership with the state-owned TPAO to explore shale gas at Sanbuğday-1 natural gas field in the eastern province of Diyarbakır. Under the terms of the TPAO-Shell agreement, Shell is expected to drill five wells into the Dadaş shale formation. The company is expected to drill three more wells in Diyarbakir in 2013. Shell Upstream international director Andy Brown