TURKEY - Energy & Mining
President, Genel Energy
Mehmet Sepil has a Civil Engineering degree and an MSc in Coastal and Harbor Engineering from the Middle East Technical University. He has a 35-year record of delivering extraordinary results in growth, revenue, operational performance, and profitability in projects with NATO, the US, and the Turkish governments, as well as in the private sector. In 2002, he founded Genel Energy, which was the first company to be awarded a PSC by the Kurdistan Regional Government (KRG). The company has built an extensive portfolio of E&P assets in Northern Iraq. Genel Energy has acquired interests in seven E&P blocks. He was the CEO of the company until the merger of Vallares Plc and Genel Energy International in November 2011. Today, he is the President of Genel Energy Plc, a London-listed Anglo-Turkish E&P success story.
The construction of the additional pipeline, which links up to the existing one between Iraq and Turkey, was unthinkable just a few years ago. It is now complete and will initially carry oil from our Taq Taq and Tawke fields with a capacity of 300,000 barrels per day. When compared with the past, we can see that there are more companies in the region now, most of which are making rewarding discoveries. The rate of exploration and production (E&P) growth in Kurdistan and the prospects therein have seen a wave of oil majors move into the region. Therefore, we will be witnessing more small players being replaced or partnering up with large players. When we talk about our company, Genel Energy, having increased the number of assets from five to seven, we are today the largest holder of reserves in the Kurdistan Region of Iraq (KRI). In addition to our best-known oil assets, we have two huge gas assets from which we intend to deliver gas to Turkey by the end of 2017. Genel is the first company to supply gas to local power plants in Kurdistan. Currently, gas is being delivered to Duhok power station. Additionally, conceptual design studies on a gas export pipeline are in progress in the Miran field.
The most outstanding development in 2013 is the signing of an Energy Framework Agreement with the KRG in March followed by a set of contracts between KRG and a recently established Turkish state-run company, TEC. In the meantime, a brand new crude oil pipeline was fully commissioned by the KRG. The infrastructure is ready. In January 2014, oil started to flow through this new pipeline connecting into the existing ITP to the Turkish port of Ceyhan. Today, there are about 1.5 million barrels of oil stored in Ceyhan. Three-way mediations are ongoing between Ankara, Erbil, and Baghdad. I am fully confident that problems will be solved sooner or later. As one can easily predict, contractors in the KRG are looking forward to a lasting solution as they have been investing billions of dollars in this region for a decade now. Therefore, it is essential that they enjoy a stable and amicable business environment in Iraq. Let us not forget that any contract in this region would reflect positively on Turkey’s energy sector. We are especially talking about a vital gas play in our immediate neighborhood. Nonetheless, we can highlight KRG and other East Mediterranean, Caspian, and Asian reserves to the East when the energy security of Turkey and even Europe is considered.
We have two very important producing fields in the region: Taq Taq and Tawke. The Taq Taq field is currently producing 130,000 bbl/d, but by the end of the year we will have increased this volume to 200,000 bbl/d. In Tawke, our maximum capacity is 130,000 bbl/d, and we are planning to increase this to 200,000 bbl/d—300,000 bbl/d is expected to be produced from the Tawke and Taq Taq crude fields overall.
We are known as the pioneer of the E&P sector in the KRI because we have been actively engaged there for more than a decade. Things are a bit different today because we are now a public company and are perceiving the need for diversification. This underpinned our decision to invest in the Mediterranean, especially the western Mediterranean, mainly Morocco and Malta. The decision to become involved in the rest of Africa was made about two years ago, and now we are taking the steps to implement those decisions. The Angolan contract that we recently signed, as well as Morocco, Somaliland, Malta, Ethiopia, and the Ivory Coast, are merely a continuation of our growing forward policy. In most cases, we are looking to geographies where we become the pioneers and have the chance to duplicate our success in Kurdistan. The Angola deal is particularly different because our technical team has found out that the geology is directly analogous to that of offshore Brazil. As a result, the expectations on numbers in this concession are huge.
Until 10 years ago, Africa was known as a continent of hunger and poverty, whereas today it is regarded as a potential economic and political partner. Turkey’s intense engagement with Africa is interesting thanks to the government’s new foreign policy. New Turkish embassies in African countries have resulted in increasing interest for commercial entities in the continent. With Turkish roots and an experienced British CEO, Tony Hayward, it is worth mentioning that we are building a high impact portfolio in challenging geographies such as Africa, the Middle East, and Asia. Genel Energy’s success so far has paved the way for other entities in Turkey to follow the same path, and today we see new companies active in neighboring countries in the E&P sector. We can, therefore, position ourselves as one of the pioneers in this sector.
For 2014, we definitely have higher goals and expectations. We are aiming to boost our production capacity in Kurdistan and concentrate mainly on the delivery of gas to Turkey. Regarding the remaining assets in Africa, we are expecting to post new exploration successes in all the concessions we have.
© The Business Year – May 2014
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