American energy giant Exxon Mobil is holding talks with Turkey to explore the country’s shale deposits in its southeast and northwest regions – Reuters reported today. Turkey’s shale deposits hold 4.6 trillion cubic meters of gas and 94 billion barrels of oil, according to the U.S. Energy Information Administration.
Turkey is planning to reduce its energy dependence – mainly on oil and gas imports from Russia and Iraq – by 2023. It is trying to achieve this by developing domestic resources including nuclear, coal, solar and wind energy as well as opening the country to foreign unconventional energy investors.
The country, through its state-owned TPAO oil entity, spent more than $1 billion on onshore and offshore exploration in 2013 and plans to spend a similar amount this year, according to government officials. Turkey may increase its exploration budget as much 13-fold in the future, Bloomberg reported earlier this year.
Shell, Petroleo Brasileiro SA (PETR4) and Chevron Corp. are already exploring in the Turkish portion of the Black Sea as well as in the Thrace basin in western Turkey. San Leon, on the other hand, pulled out of Turkey in April 2014 to concentrate their efforts on offshore exploration in Poland’s Baltic region.
Exxon Mobil held talks over partnership with TPAO in 2012 but at the time failed to reach an agreement. Turkish officials claim that the talks are now likely to conclude successfully.
Turkey is attractive to explorers not only due to its sizeable reserves. Unlike in the UK and other European countries, Turkey hasn’t seen any domestic environmental protests because much of the land with potential deposits is sparsely populated.
What is more, the country’s new petroleum law, passed last year, removed territorial restrictions on exploration and opened the country for international companies. The maximum tax rate excluding royalty payments was cut to 40 percent from 55 percent and the tax is to be paid after the investment, not upfront as before, according to Fulya Ilbey, a managing director at InfraStrategies consultancy in London.
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