Patrick Target and YLE Fellows

Young Leaders in Energy Fellows Erdem Girgin, Duygu Okesli, Duygu Sever and Sila Bozok asked Mr Patrick Target for his opinion on oil prices,  perspectives of energy industry in Turkey and for a future career advice.





YLE: What do you think about the recent development in oil prices, and what are your expectations?

Patrick Target: Forecasting oil prices is extremely difficult for anyone. World demand for oil is between 95 and 100 million barrels per day. The actual over supply now is relatively small. It’s in 1%-2% range, a little over 1 million barrels per day. That’s a fine balance between supply and demand. So any upset in the demand side growth, like China’s economic performance, which may affect demand, can affect this balance. On the supply side, for instance if one of the supply countries reduces exports, like Libya, or comes back into the market, like Iran, it can make a huge difference to the market balance and the price. The narrow supply and demand balance can easily be affected by geopolitics, social events and natural disasters. Therefore it is very difficult to predict which way it will go. What I can say from the oil industry side is that all oil companies right now are focused on reducing costs.

YLE: What should be done in order to attract foreign direct investment to Turkey in terms of drilling?

Patrick Target: I think, the key thing for attracting new investment to Turkey is its exploration track record. If there is a major find, it will generate a lot of interest in Turkey. I’m not an expert on drilling in Turkey, but in recent years, the geological results for oil and gas exploration have been modest. Some of our competitors have been drilling in Turkey for over sixty years. There was a lot discovered in the 1960s. But the geology is the key issue for attracting new investment in exploration, and recently there have not been many large discoveries. Generally, Turkey has good oil and gas terms and in fact, oil and gas companies are coming to Turkey. About 5-6 years ago there was interest in the Turkish Black Sea deep water. Big exploration companies were attracted by big prospects. But these were very expensive to drill, and there was not much success. So now the investment in exploration tends to be from mid-range or smaller companies. These companies are effective in keeping operation costs low, and often they’re flexible to try new exploration ideas.

YLE: Assume that one day you become the Energy Minister of Turkey. What would be five main topics that you would be focusing on?

Patrick Target: It’s very unlikely I could ever be the Energy Minister of Turkey! I admire the energy ministers I’ve had contact with so far. They have been very knowledgeable. I believe that the main topics that need to be addressed are these.

The top issue is diversifying energy supplies in Turkey. If you only get supplies from a few sources, then there is always a risk of disruption, and a lack of negotiating strength. This means diversifying the type of energy and where it comes from.

The second thing is de-bottlenecking, or taking out the constraints in the transmission systems: that is both the gas and electricity transmission systems. It’s very important. If you can’t get gas and electricity efficiently from one side of the country to the other, then it’s very difficult to have an efficient, reliably supplied market.

I think implementing the natural gas law and the electricity law is absolutely crucial to attract diverse suppliers. Turkey needs a competitive energy market, and especially in gas and electricity. At the moment, we don’t participate in those sectors, but we have observed the market, and know that it’s actually quite difficult to do business. In my view the future of reliable and competitive energy supplies depends on putting in place a fair market by fully implementing those laws.

All competitive markets need a referee to keep trading fair. If it’s not fair, it won’t be competitive for long. So having a truly independent market regulator is very important. The independent regulator must ensure that the playing field is fair for everyone so you really get competition.

Finally, Turkey needs storage for all types of energy. Storage provides security and reliability when external supplies are interrupted. It is fundamental to any countries energy strategy. But as well as the physical storage assets, the commercial structure is needed which can make a storage business operate. It is essential that price signals in the market can be used by storage operators so they know when to put energy into store and when to put it into the market. Storage is also fundamental to allow markets to operate efficiently.

YLE: Last but not least, what would be your main advice for young energy leaders and people like us who are thinking a career in the energy sector?

Patrick Target: I think the energy sector is a fantastic field to work in; it’s wonderful. I have enjoyed it my whole career and I don’t intend to quit. Energy is central to human survival, like water and food. It needs talented and knowledgeable leaders to be involved in every country.

For young leaders, I think it is important to know what you are talking about, so you can take informed decisions. So get experience. Getting knowledge from on-the-job experience is really important, so it’s not just from textbooks. Whether you are working in oil and gas, the process industry or the power sector, it doesn’t matter. Or if you’re a lawyer, or an engineer, an economist, financier, or political scientist… get real energy experience.

The second thing about experience is that it should be broad. It makes a young leader powerful, when they are not just an expert in, say, electrical engineering, or contract law, but have the experience across the whole range. So if you’re an engineer you should understand what the economics of a project mean. If the economics are not good, you go back and re-engineer it. You need to understand the commercial aspects, because companies are in business to make money. But we also need to understand how a project fits with the law and responsibilities in the community.

Understanding how all the aspects of a project fit together, is what makes a project work. Law, finance, economics, engineering and social responsibility; those are very important foundations for young energy professionals to base their careers on.

Good luck with getting your experience!