As of January 1, 2009, the Oil & Gas Journal estimated Turkey’s proved oil reserves at 300 million barrels, located mostly in the south-east region. Since its peak in 1991, oil production in Turkey has continued its downward trend, reaching 45 thousand bbl/d in 2007. There may be significant reserves under the Aegean Sea, but exploration has been limited by a long-running dispute with neighboring Greece over the sovereignty of territorial waters in the Aegean.

Oilfields in the Hakkari Basin are old and expensive to exploit, and production costs in Turkey are considered quite high. In July 2003, Australia's Amity Oil reported a discovery at Adatepe in Thrace. In 2007, state-owned Turkish Petroleum Corporation (TPAO) announced plans to begin exploration in the eastern Mediterranean, although no work has yet been undertaken. Many view this call for foreign partners to jointly explore the eastern Mediterranean mainly as a direct response to Cyprus's own plans to begin exploration in nearby waters.

Turkey's oil consumption has continued to grow and reached a peak of 690 thousand bbl/d in 2007, far outstripping domestic production levels. In 2007, Russia became Turkey's top supplier of oil, surpassing Iran for the first time. Iran is Turkey's second-largest crude oil supplier, followed by Saudi Arabia with lesser volumes supplied by Libya, Iraq, and Syria, among others.

TPAO competes with the private sector in exploration, production, and refining. TPAO accounts for approximately 70 percent of the country's total oil output. The state-owned firm additionally has preferential rights in Turkey. As such, most foreign companies involved in upstream activities in Turkey work in joint ventures with TPAO.

Turkey is playing an increasingly important role in the transit of oil supplies from Russia, the Caspian region, and the Middle East to Europe. Growing volumes of Russian and Caspian oil are being sent by tanker via the Bosphorus Straits to Western markets, while a terminal on Turkey's Mediterranean coast at Ceyhan allows the country to export oil from northern Iraq via a pipeline from Kirkuk and from Azerbaijan via the Baku-Tbilisi-Ceyhan pipeline.

To ease increasing oil traffic through the Bosporus Straits, a number of Bosporus bypass options are under consideration in Bulgaria, Romania, Ukraine and Turkey itself.

Source: Global Insight

The Baku-Tbilisi-Ceyhan Pipeline, which bypasses the Bosporus Straits chokepoint, is the first of numerous planned or proposed Bosporus bypass pipelines to be constructed.

Another project under consideration is the Samsun-Ceyhan bypass, which would transport oil from Turkey’s Black Sea port of Samsun to Ceyhan on the Mediterranean coast. Turkey’s Council of Ministers gave initial approval to the construction of the line in May 2006. The project is being developed by a 50-50 joint venture between Italy’s Eni and Turkey’s Calik Energy, called the Trans-Anadolu Pipeline Company (TAPPCO). Eni holds an 18.5 percent interest in the Kashagan oil field in the Kazakh section of the Caspian Sea, which would likely be a primary source for the Samsun-Ceyhan pipeline. While the Bosporus is still regarded as a major shipping chokepoint for transit between the Black Sea and the Mediterranean, the Samsun-Ceyhan pipeline will help ease the pressure from the Bosporus in the next decade.

Several other possible Bosporus bypass options are being examined, some of which do not involve Turkey. One proposal that has received significant attention is a pipeline that would pump crude oil from Bulgaria’s Black Sea port of Bourgas to Greece’s Mediterranean port of Alexandropoulos, known as the Bapline project.

The port of Ceyhan has become an important outlet for both Caspian oil exports as well as Iraqi oil shipments from Kirkuk. Turkey is seeking to build up Ceyhan as a regional energy hub, with private investors receiving approval to build several refineries at the oil terminal. The Kirkuk-Cehan pipleline has a capacity of 1.65 million bbl/d.