ÇAĞRILI KONUŞMALAR / KEYNOTES Invited Speeches ... - TPJD

Two Way Competition, Resource vs Market
Metin Korucu
Turkish Petroleum Corporation, Exploration Department, Ankara
As we all know, Turkey is in the proximity of two oil and gas rich regions, namely CIS and Middle
East. Considerable volumes of those resources produced in these areas have already been
contracted by the relevant resource rich countries. These countries are working on the alternative
evacuation options for their remaining resources by considering an optimum balance between
maksimizing the monetary values of their resources and keeping a political equilibrium among
the major players. Having such vast resources, both areas are under close attention of major
consumers, global players and other resource rich rivals. While the consumers are struggling for
their energy security, sustainability and diversification, the rivals (other producers) are trying to
increase their powerfull strategic position as a supplier and at least keep the current status quo of
the energy dependency of the consumers. In this context, there are ongoing substantial bilateral
and multilateral discussions among the regional / global players leading to important political
developments in the region, which would also ultimately define the routes of the resources in
line with the strategies of the relevant players. One of the most viable evacuation route for CIS
and Middle East natural gas backed by Turkey, EU and USA is the “Southern Corridor” concept
which is quite important for Turkey as both transit and market country. Within the scope of this
concept, there are ongoing substantial efforts among the relevant parties in order to materialise
projects where the implementation of those projects are linked to a number of dependants
including but not limited to the progress in the upstream sector of producing countries, political
developments, interaction with rivals and market demand. Azarbaijan, Turkmenistan, Iran and
Iraq are the potential candidates for resource supply to South Corridor, where, as a whole, they
can supply more than that of the natural gas demand. However, there are a number of obstacles
which differs for each state, although the progress achieved among them is much pronounced
in Azerbaijan as compared to the others. Azarbaijan resources, though triggering the “South
Corridor” concept, are mostly from deepwater and volumetric estimations are not likely to
supply standalone the required volumes. So, further volumes will be needed from the other
countries stated. In addition to the imposed sanctions and ongoing political pressures, some of
the obstacles that Iran is confronting are high domestic demand, decision processes, insufficient
infrastructure and export capacity, lack of investment and philosophy of the “Buy-back” model.
The obstacles for Iraq could be summarised as, the ongoing internal disputes, regulationsbureaucratic
issues, lack of infrastructure and export capacity, majority of the resources are
associated gas which is dependent on the agressive field development performances and the
nature of the service agreements. The landlocked state Turkmenistan, although to some extent
is rebounding its production recently, substantial amount of investment and work are required
in upstream to increase production further. The eastern fields need to be connected to west
since the resources in the west are limited as compared to the east and further potential in the
west is dependent on the success in offshore exploration activities. Ongoing disputes with the
Caspian littoral states, apetites in the fiscal terms for international investment and balancing the
political interaction with the neighbouring countries are the other issues awaiting resolution for
Turkmenistan. Obviously there is gas in the region available for export to Turkey and to further
west. Keeping in mind the obstacles mentioned above, early entrant(s) to the resource areas
will likely to secure more volumes and smaller volumes might left for the late comers. However,
other side of the medal says, demand is not infinite and early exporters will book more volumes
and enjoy the benefits, whereas other(s) need to wait to monetise their resources or to find
other solution(s). In line with this two way competition equilibrium, timing and scheduling of
the critical steps necessary for cross country gas export project(s) will be very crucial so that,
major stakeholders should consider this highly sensitive equilibrium and adopt their strategies
accordingly.
Keywords: Turkey, Azerbaijan, Turkmenistan, Iran, Iraq, Energy, Natural Gas
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