Infrastructure Assets

Petroleum Sales and Pipeline Infrastructure

The Group has 81.5 per cent. ownership of, and operates, a natural gas gathering grid and associated sales lines, as shown in the image below. Natural gas is delivered directly to 49 regional industrial purchasers. The Company has individual sales contracts with these clients with prices referenced to the BOTAS Level 2 Wholesale (Processing) gas price (“BOTAS Reference Price”). Historically the Company has realised a discount to the BOTAS Reference Price of approximately 2 per cent.  The Company’s realised price has averaged approximately US$6.70/Mcf over the last two years.

The Company produces a small amount of oil and condensate. These liquids are trucked directly from the individual well sites to the Ophet storage facilities before being barged to the Tupras refinery east of Istanbul.  The Company typically realises an oil sales price similar to, or better than Brent Oil pricing.

The Company’s natural gas infrastructure is currently underutilised and has the capacity to handle approximately 50 MMcf/d. This is sufficient capacity to allow for growth in the Company’s conventional production and for the appraisal of the deep, tight gas play and any potential early development project. If the deep, tight gas project is successful then the Company will require access to infrastructure beyond the capacity of its existing grid. There are multiple options for increased capacity with proximal pipeline infrastructure capable of several Bcf/day. These include tie-in to the regional gas distributor GAZDAZ, an existing export line to Greece, the major line from Russia to Istanbul, and the TANAP line which delivers gas into Western Europe via the Trans-Adriatic Pipeline (TAP).