STAVANGER, Norway, May 16 (UPI) -- Norwegian energy company Statoil said Monday it signed an agreement with a Canadian exploration company to help explore the shale gas potential in Turkey.
According to the terms of an agreement, Statoil takes a 50 percent stake in the Barnali license in northwestern part of Turkey, while Toronto-listed Valeura Energy keeps the remaining shares and stays on as the operator in an area known to produce gas for nearly 100 years.
Statoil agrees to help finance the exploration in an area that Valeuera said has a "significant upside potential" using hydraulic fracturing technology. Formations in northwestern Turkey, while strong for conventional natural gas production, have seen minimal develop in the past. Valeura said unlocking the shale potential in the area has been a priority for at least five years.
"Partnering with a global leader like Statoil validates the potential of our assets and the progress we have made to understand the basin and to develop its tight gas resources," Valeura President and CEO Jim McFarland said in a statement.
The work program outlines a minor exploration plan, with one well possible by the end of this year. The region in question is considered frontier territory, though Statoil said it has the potential for a high reward with a low commitment.
"We are optimistic with regards to the potential," Erling Vagnes, a Statoil vice president in charge of exploration, said in a separate statement. "If successful, this is an opportunity that will play to Statoil`s strengths in drilling and reservoir management."
For Turkey, the country aims to take advantage of its position at the crossroads of Central Asia and Eastern Europe. The country hosts several oil and natural gas transit arteries and is positioned to help diversify a European market dependant on Russia gas with the development of a network of pipelines dubbed the Southern Corridor. Statoil is a minor shareholder in the Shah Deniz gas reservoir offshore Azerbaijan, which would feed that network.