Turkey - Thrace Gas Exploration Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-3563-TU REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOP>"rxt TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO US$55.2 MILLION TO THE TURKIYE PETROLLERI ANONIM ORTAKLIGI WITH THE GUARANTEE OF THE REPUBLIC OF TURKEY FOR A THRACE GAS EXPLORATION PROJECT June 6, 1983 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit Jan. 1980 /1 Jan. 1981 January 1982 March 1983 US Dollar - TL 70.0 TL 91.00 TL 127.00 TL 195.00 Turkish Lira - US$ 0.014 US$ 0.011 US$ 0.008 US$ 0.0C5 /1 Since January 1980, the rate is being adjusted for the differential inflation between Turkey and its major trading partners. TL 190/t1 was used for Parts III and IV of this report. F]:SCAL YEAR Republic of Turkey March 1 to February 28 (through 1981) March 1 to December 31 (1982) Janlary 1 to December 31 (from 1983) WEIGHTS AND MEASURES 1 Metric Ton 1,000 Kilograms (kg) 1 Metric Ton 2,204 Pounds (lbs) 1 Meter 3.28 Feet 1 Kilometer 0.621 Miles 1 Cubic Meter 35.5 Cubic Feet (cft) 1 Barrel (Bbl) 0.159 Cubic Meter 1 Metric Ton of Oil (250 API) = 6.7 Barrels 1 Normal Cubic Meter 33.42 Standard Cubic Feet of Natural Gas 1 kcal (Kilocalorie) 3.97 British Thermal Units (BTU) 1 ha (Hectare) 2.47 Acres kW (Kilowatt) 1,000 Watt MW (Megawatt) 1,000 kW kWh (Kilowatt hour) 1,000 Watt hours GWh (Gigawatt hour) 1,000,000 kWh MMSCF Million Standard Cubic Feet MMSCFD Million Standard Cubic Feet per Day BCF Billion Cubic Feet TCF Trillion Cubic Feet MMT Million Metric Tons TOE Tons of Oil Equivalent MMTOE Million Metric Tons of Oil Equivalent GLOSSARY AND ABBREVIATIONS API - American Petroleum Institute DSI - State Hydraulic Works GDPA - General Directorate of Petroleum Affairs IPRAS - Istanbul Petroleum Refining Company MENR - Ministry of Energy and Natural Resources MTA - Mineral Exploration and Research Institute SEE - State Economic Enterprise SPO - State Planning Organization TEK - Turkish Electricity Authority TKI - Turkish Coal Enterprise TPAO - Tur-kiye Petrolleri Anonim Ortakligi TPK - Turkish Petroleum Company TSKB - Industrial Development Bank of Turkey  FOR OFFiciAL USE ONLY TURKEY THRACE GAS EXPLORATION PROJECT Loan and Project Summary Borrower: Turkiye Petrolleri Anonim Ortakligi (TPAO) Guarantor: Republic of Turkey Amount: US$55.2 million (including capitalized front-end fee). Terms: Seventeen years including four years of grace, with standard variable interest rate. Project Description: The project objective is to assess the hydrocarbon potential of the borrower's licenses in the Thrace basin and to help strengthen the borrower's ability to design and implement an integrated basin-oriented exploration program. The project includes completion of infill seismic mapping of the entire licensed areas, detailed seismic lines on structures of interest for drilling, drilling of 11 wells, rehabilitation of three drilling rigs and technical assistance, studies and training. Project Benefits and Risks: The volume of gas that the project could potentially make available would have a significant impact on Turkey's balance of payments and on the energy use patterns of consuming industries in the highly industrialized Istanbul environs. While exploration always involves risks, on balance the overall project risk is small, because the minimum size discovery required to provide an acceptable rate of economic return is less than one-tenth the size of the most probable anticipated discoveries. The geological risk is manageable because the basin has proven hydrocarbon production and the proposed exploration program maximizes the possibility of finding new reserves. The economic risk is also small since the basin is near the largest industrial market in Turkey and the cost of transmission of even small additional quantities of gas would be quite low. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.