TURKISH PETROLEUM CORPORATION - Amazon S3s3.amazonaws.com/zanran_storage/ · Organization Chart of Turkish Petroleum Corporation Who We ... altruistic working and contribution to

TURKISH PETROLEUM CORPORATION

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843

560

2006 Summary Information on Income Statement (Million USD)

Consolidated Income

Net SalesOther Income

373 69 7

456 109 6

558 113 61

495 200 31

TPAO Total Domestic Sales Revenue (Million USD)

Crude OilNatural GasService

449

571

732

726

2004

2005

2006

2007*


Consolidated Expenses

430

371

288

Cost of SalesOpexOther Expenses


Consolidated Net Profit

Total Expenses and TaxConsolidated Net ProfitTotal Income

1.403

1.119

284

150

Total International Sales Revenue (Million USD)TPAO

ACGKTMSD & SCP

2004

2005

2006

2007*

384

621

869

35

51

43

28 82

185

435

664

979

* Program

1.678 541

2006 Total Assets (Million USD)

Fixed AssetsCurrent Assets

2.219

Total LiabilitiesMillion USD

Shareholders EquityLong-Term LiabilitiesShort-Term Liabilities

1.790 243 186 2.219

2006 Consolidated Summary Information on Balance Sheet

2004

2005

2006

2007*

2Geological Activities (km )

12.214

10.687

6.752

5.100

147 524 171

209 554 198

288 416 270

368 399 259

Total Capital & Operating Expenditures (Million USD)

Domestic CapexInternational CapexDomestic Opex

2004

2005

2006

2007*

842

961

974

1.026

23D Seismic Activities (km )

Onshore 3DOffshore 3D

1.323 205

595

824 5.419

600 3.500

2004

2005

2006

2007*

2004

2005

2006

2007*

2D Seismic Activities (km)

12.841

18.024

19.211

1.717

814

958

424

1.450

Onshore 2DOffshore 2D

671,8

60,411,9

88,614,2

137,415,1

2004

2005

2006

2007*

Drilling Activities (Thousand Meters)

OnshoreOffshore

13,1 5,8

14,0 9,6

12,9 11,5

14,5 18,4

2004

2005

2006

2007*

Total HC Production (Million Barrels)

18,9

23,6

24,4

32,9

DomesticInternational

* Program

Mehmet UYSALA. Chairman of the Board and A. President

Our highest goal is to meet all Turkiye's oil and natural thgas demand by 2023, “100 anniversary of our Republic."

I have no doubt about TPAO to reach this goal. Only a powerful and experienced company like TPAO can open such bright and achievable horizons in front of our country.

Mustafa Kemal ATATÜRK

Our country is entirely full of treasures and we are like starving people on them. We all are obliged to bring out all these treasures and to find the sources of our wealth and prosperity.

"TO BELONG TO TPAO" and "TPAO LOVE"

"Oil business" is a pleasant love that appears when it infects a person. This love may turn to a "passion" that continues until death, when "belonging to TPAO" is added. Oil worker feels a national pleasure in working for a national company, due to the feeling that " I'm working for my homeland, I'm serving it." and by seeing the contribution of the labor to the country...

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Our Vision, Mission, Values

Strategies, Goals and Objectives

Organization Chart of Turkish Petroleum Corporation

Who We Are

A Statement from the President

Board of Directors

General Management

Domestic Exploration and Production Activities

International Exploration and Production Activities

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6 TPAO Annual Report 2006

Innovations in Technology

Research Center

Human Resources

Health, Safety and Environmental Protection

TPAO Services

TPAO District Managements

Subsidiaries and Associated Company

Finance

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7TPAO Annual Report 2006


Ou

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n To become a regionally effective world - class energy company meeting Turkiye's oil and natural gas demand and to be the most desired company to work with.

Ou

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on To bring out oil and natural gas potential of Turkiye and provide

them for the use of Turkish economy, supply new sources of income via international activities and play an effective role in the energy sector, by also actively participating in Turkiye's process of being an Energy Corridor.

Ou

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es Merit

Effectiveness and efficiency Teamwork and communication Openness to change and innovativeness Environmental awareness Employee satisfaction Share of responsibility, knowledge, experience and delegation Reliability and honesty


GOALS AND OBJECTIVES

TPAO's primary goal is to increase the oil and natural gas reserves and production.

For 2010, TPAO's reserve objective is to have 1.5 billion barrels of oil equivalent which was 558 million barrels of oil equivalent in 2006. From domestic and international fields, TPAO reached over daily average 70.000 barrels of oil equivalent in 2006. In 2010, daily average 300.000 barrels oil equivalent production is another objective of TPAO.

Another goal of TPAO is to increase organizational, operational effectiveness and business efficiency.

TPAO evaluates the achievement of the objectives under this goal with Corporate Performance Criteria. TPAO is determined to improve Wildcat Success Ratio, Reserve Replacement Ratio, Cost per Barrel and ROACE and will accordingly reorganize its business structuring. TPAO gives priority to its objectives about Human Resources, which is the most important asset, and considers continous training and development as the basic principle.

TPAO's another goal is to become an integrated energy company.

By 2010, TPAO plans to diversify its investments in the other fields of oil industry in addition to increasing its activities which are related directly to the security of supply such as transit pipelines and hydrocarbon storage. Having established Alternative Energies Department in 2005, TPAO will intensify its studies especially on hydrogen energy.

STRATEGIES

TPAO's business strategies depend upon three main basis:

1. The Role of Being Turkiye's National Oil Company

It is obvious that Middle East, North Africa, CIS with its vast oil and gas reserves, comprising the two third of the remaining oil and gas reserves of the world, will be the center of gravity for future balancing of supply-demand pendulum and will play the lead role in global oil and gas supply security. Turkiye, as a neighbour and having strong cultural and historical bonds with both the Middle East and Caspian countries, is dedicated to take its role in joining the ongoing projects and supporting all the sincere efforts taking place.

TPAO's strategy in this scope is to serve Turkiye's common interests by carrying out the projects and activities consistent with Turkish foreign policy and security benefits. In order to serve this purpose, TPAO has participated in oil and natural gas production projects in Azerbaijan and Kazakhstan , worldwide projects such as Baku-Tbilisi-Ceyhan (BTC) Crude Oil Pipeline and South Caucasus Natural Gas Pipeline (SCP) and has made great contributions to the concept of turning Turkiye into an Energy Corridor.

2. Continuous Growth and Regional Cooperation Strategy In order to reach its vision set on providing security of energy supply to Turkiye , TPAO realized huge investments to discover oil and natural gas potential of Turkiye. TPAO has increased especially offshore investments in recent years; and has applied risk sharing strategy through establishing consortia with giant oil companies with offshore experience to transfer know-how and technology. TPAO strongly believes that domestic investments will help Turkiye securing its energy supply in medium to long terms.

TPAO plans to enlarge its international portfolio by playing an effective role in the nearby geography especially in the countries in which TPAO is already running operations.

In this context, participation in oil and gas exploration-production projects in Central Asia, North Africa and Middle East is TPAO's priority . TPAO's growth strategy includes acquisition in addition to reserve growth by exploration. TPAO, while progressing towards its objectives is establishing strategic alliances for creating synergy in a win win environment and to share technical and financial risks.

3. Energy Company Strategy

TPAO is determined to reach to its vision of becoming a world-class energy company. Within this framework, hydrogen energy and gas hydrate studies are being conducted within TPAO. TPAO recognized the importance of alternative fuels and is ready to cooperate with all stakeholders in this regard.

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Secretariat to the President

Legal Advisory

Auditing Committee

Defence Secretariat

Advisor to the President

Davut İYRAS

Osman ASLAN

‹smail S‹PAH‹

Şefik VURAL

Vice President

Batman District Management

Adıyaman District Management

Department of Drilling

Department of Well Completion

Turkish Petroleum Int. Co. Ltd.

Murat ALTIPARMAK

Bayram KARA

Besim ŞİŞMAN

Recep ATALAY

Batuhan TÜTEN

Galip ÖZBEK

Vice President

Bureau of The Board of DirectorsLevent TOPÇUOĞLU

Vice President

Department of Exploration

Department of Production

Department of Research Center

Human Resources

Department of Finance

Ahmet Faruk ÖNER

Erol KANMAZ

Ömer ŞAHİNTÜRK

Yahya PEKTAŞ

Fikri NAYIR

Vice President

Thrace District Management

Department of Machinery Supply & Construction

Department of Planning & Coordination

Department of Health, Safetyand Environmental Protection

Board of Searching & Development

Ahmet ADANIR

Adnan EROĞLU

Abdurrahman YAŞAR

Veli ÖZTÜRK

Yusuf AHÇI

Vice President

Department of International Projects

Offices Baku, Libya, Turkmenistan, KTM

Department of Information Technology

Department of Strategy

Department of Alternative Energies

M. Mete GÜREL

M. Ali KAYA

Levent ÖZKABAN

Murat ULU

Oğuz ERTÜRK

A. PresidentMehmet UYSAL

BOARD OF DIRECTORS


Who We Are ?

TPAO, was founded in 1954 by Law No. 6327 with the responsibility of being involved in hydrocarbon exploration, drilling, production, refinery and marketing activities.Until 1983, as an integrated oil company, it was engaged in all the activity fields of oil industry from exploration to production, refinery, marketing and transportation. Today, TPAO is a national oil company involved in merely upstream (exploration, drilling and production) sector.

Where We Operate?

TPAO was structured as having its Headquarter in Ankara and also 3 District Managements in Batman, Thrace and Adıyaman with approximately 5000 employees throughout Turkiye and its branch offices abroad. To ensure energy security supply of the country, TPAO conducts its international activities especially in Caspian Region, North Africa and Middle East. In this context, TPAO carries out its exploration and production activities actively in Azerbaijan, Kazakhstan and Libya. TPAO is also in contact with Syria, Turkmenistan, Georgia, Iraq, Egypt, Ukraine, Indonesia, Russia, Brasil, Algeria and Sudan to initialize new projects.

What We Do?

TPAO has four core activities in the oil sector.

• Exploration, Drilling, Well Completion and Production

• Natural Gas Storage

• Participation in Oil and Natural Gas Pipeline Projects

• Oil Trade and Transportation (TPIC, TPAO Subsidiary)

Turkiye's unique national oil company


Decreasing the sum of invoices we pay to oil and natural gas, and guaranteeing the security of energy supply is Turkiye's “musts”. Parallel to increasing strategic importance of energy, with its activities, our company's strategic importance is also increasing. Turkiye does not have another TPAO.

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t “Realization of firsts, altruistic working and contribution to our

country's economy” is a brief and plain summary of TPAO's history

over 50 years. TPAO, with the production-investment acceleration

achieved since 2003, has reached goals and numbers conformable

with “its establishment philosophy”, and aimed higher goals.

Global oil production-consumption balance has a small flexibility.

That is the reason for estimated increase in oil prices in the near

future. Increasing import figures and security of energy supply are

two major problems in front of Turkiye. In terms of security of energy

supply, besides East - West / North - South transitive pipelines,

Turkiye shall become a huge energy hub with loading-discharging

terminals, refineries, petrochemistry and LNG facilities. The roles of

our company in both issues until now and in the future are of extreme

importance.

TPAO's activities have bounced by extending in unexplored basins of

our country and especially offshore. We have left the 70.000 bpd

production record achieved in 1990's behind. As it is well known, one

of the indicators of being a big oil company is producing 100.000 bpd.

Now, TPAO is in the position of playing in the league of big oil

companies.

In the last quarter of 2007, TPAO will realize another first in its history

with its production number over 100.000 bpd. Our highest goal is to

meet all Turkiye's oil and natural gas demand by 2023, th“100 anniversary of our Republic”. I have no doubt about TPAO to

reach this goal. Only a powerful and experienced company like TPAO

can open such bright and achievable horizons in front of our country.

We have come to this point we all proud of, with the efforts of our

employees. We will accomplish our “highest goal” altogether, again

with greatest efforts.

In the year 2006, domestic activities, besides offshore, has been

directed to new areas such as Pervari, Silopi, Suriye border, over

thrust zone, northern Diyarbakır, Hatay and Burdur-Isparta. Hopa-1

well at 1.500 meter water depth in Black Sea, completed in January

2006, the first deep water well drilled by TPAO-bp-CHEVRON

partnership has been accomplished at 4.700 meters. This is also a

“first” in all Black Sea. TPAO's seismic survey realized in 2006 is equal

to 1/20 of 3D done all over the world.

In 2004, discovery of natural gas at Ayazlı-1 well in Western Black Sea

by TPAO-TOREADOR-STRATIC partnership and intensive seismic

program in Black Sea between 2004-2006 have made Black Sea the

focus of interest of gigantic oil companies. As a result of this interest,

the joint venture operating agreement was signed between

PETROBRAS and TPAO on August 17, 2006. Through this agreement,

the huge investment program (approx. 350 million USD) in Black Sea

is expected to be realized.

Besides licenses for Eastern Black Sea, negotiations for exploration

licenses for Antalya, Mersin and İskenderun bays in Mediterranean

have commenced with leading foreign oil companies who can

contribute to our oil industry with their know-how, technology and

experiences. Hereby, the amount of foreign capital and investment

brought to country has reached undeniable numbers.

In the last years, TPAO has focused on technology investments.

3D Visualization and Interpretation Center, faster drilling rigs with

higher mobilization ability, high technology equipments increasing

laboratory analysis ability are a few examples of investment in

technology. With enhanced analysis ability and high standards, our

research center had been accepted between world's numerous

“accredited centers”. Now, TPAO with its high technology equipments

and experienced professional staff is one of the world's leading oil

companies.


TPAO has added a new block to its existing exploration licenses in

Libya in intensive competitive conditions. In the midst of 2007, serially

drilling of new wells in exploration blocks in this country is planned,

and the possibility of discovering oil in this basin is so high.

Furthermore, TPAO conducts its intensive business development

activities in Middle East, Caspian Region- Russia and South

American-African countries. We have to keep adding new reserves to

existing ones in order to maintain our country's security of supply.

TPAO will continue its activities to acquire new reserves by

purchasing production fields or establishing partnerships.

While TPAO continues its workover services via its subsidiary TPIC, in

Kazakhstan, it also started to offer drilling services in Georgia and

Syria. Fuel-oil export to Iraq has reached 1,4 million tons in 2006.

Decreasing the sum of invoices we pay to oil and natural gas, and

guaranteeing the security of energy supply is Turkiye's “musts”.

Parallel to increasing strategic importance of energy, with its

activities, our company's strategic importance is also increasing.

Turkiye does not have another TPAO. With the help of altruistic efforts

of its employees, TPAO will reach higher goals and keep adding new

years full of achievement to its 53 years successful history.

Mehmet UYSAL

A. Chairman of the Board and A. President

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3The first domestic natural gas storage project with 1,6 billion m

capacity, Silivri natural gas storage plants' provisional acceptance 3has made, and injection of approximately 10 million m natural gas

provided from BOTAŞ to K.Marmara-Değirmenköy gas fields has 3initiated. It has been planned to increase a total of 3 billion m storage

capacity and studies are carried on accordingly.

Natural gas discoveries in Akçakoca, in Western Black Sea have been

prepared for production in a short time period like 3 years. Production

was started in Akçakoca Çayağzı Natural Gas Process Facilities on

May 20, 2007. If world average of 5-8 years to start production in this

kind of projects is considered, altruistic efforts of TPAO employees

can be better understood.

As a result of intensive international activities commenced in early

1990's, today TPAO's international production has exceeded its

domestic production amount. In Caspian Region through consortiums

with international leading oil companies exploration and production

activities in 3 capacious projects are carried out in Azerbaijan, namely

Azeri-Chirag-Guneshli, Shah Deniz and Alov Projects. Production

activities also continue in the fields of Kazakhstan. Oil transported to

Ceyhan through Baku-Tbilisi-Ceyhan (BTC) pipeline, is being loaded

to oil tankers since June 2006.

Azerbaijan Shah Deniz natural gas project has initiated partial

production, and the construction of the South Caucasus Natural Gas

Pipeline through which natural gas will be transported, is completed.

Shah Deniz's second phase production will be transported to Europe

over Turkiye. In this respect, TPAO has made great contributions to

efforts of our country's being the “Energy Hub” goal.

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Yusuf YAZARMember of the Board

Cumali KINACIMember of the Board

İsmet SALİHOĞLUMember of the Board

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M. Mete GÜRELVice President

Murat ALTIPARMAKVice President

Ahmet ADANIRVice President


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Ready to host the world in İstanbul for the th

20 World Petroleum Congress in 2011...

This time İstanbul

TÜRK YEİ

• Natural Energy Corridor• Neighbouring the Oil Pool • A Major Player in the Region • Numerous Business / Cultural / Vacational Opportunities

İSTANBUL

• • Signature of Civilizations / Cultures / Religions• Over 15.000 Five / Four Star Hotel Rooms• Easy / Economical Access• Multiple Congress Venue Options

A Unique Location on Two Continents

İSTANBUL

Literally on two continents!

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In accordance with TPAO's vision, mission and strategies, exploration activities were intensified especially on offshore in 2006 in addition to the Thrace and South Eastern Anatolia.

Nowadays, oil and natural gas as the most strategic energy raw materials, are of crucial importance to meet the world's energy requirement and also they play a significant role on energy security supply of all countries. These strategic energy resources have great effects on national and international politics, security, development, competition, prosperity and political consistency or inconsistency.

Taking into account these realities, TPAO set its strategic objectives as follows;

• To carry out intense exploration and drilling activities on offshore areas in recent years in addition to onshore areas in order to meet our country's increasing oil and gas demand through domestic and also international reserves,

• To take every necessary step for bringing newly discovered fields on production, according to the results of these exploration activities,

• To minimize the production decline observed in the mature oil and natural gas fields by using new technologies and to produce and operate our hydrocarbon reserves in a more efficient and economic manner,

Adana

B.Menderes

Western Black Sea

Western Black Sea (Offshore)

West Toroes (Beydağı Autochtonous)

Darende

Eastern Black Sea (Offshore)

East Toroes (Saimbey Autochtonous)

Edremit Graben

Erzurum

Gediz

South Eastern Anatolia

Haymana

Manavgat

Mudurnu - Göynük

Mut

Muş

Central Black Sea

Central Toroes (Akseki Autochtonous)

Sivas

Tekman

Thrace (Anatolia)

Thrace (Offshore)

Thrace (Onshore)

Tuzgölü

Çankırı

İskenderun (Offshore)

İskenderun (Onshore)

Consession Number

• To broaden exploration activities on domestic and international basins, having probable hydrocarbon reserves.

In accordance with our exploration strategies, besides onshore activities carried out in the Thrace and South Eastern Anatolia, an intensive exploration program was carried out offshore in 2006.

Especially, following Ayazlı gas discovery in the Black Sea in 2004, additional exploration well drilling programs were carried out and drilling operations were performed offshore Akçakoca. In addition, 2D and 3D seismic surveys were realized to expose the hydrocarbon potential onshore lying along the territorial waters of the Black Sea.

Designation of hopeful structures as a result of exploration studies have great importance for TPAO's future exploration objectives. For revealing such potentials by diversifying investment risks and using the latest technology, TPAO aims at accelerating joint venture relationships with foreign oil companies in 2006 as well.

In addition to well known fields, TPAO has continued its exploration and drilling activities to determine hydrocarbon potential of new fields such as Pervari (Siirt), Silopi, Erzurum, Bafra, Ayvalık, Hatay and Yuvaköy (Burdur-Isparta).

Greece

Exploration Regions in Turkiye

Russia

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Atwood Southern Cross Semi Sub Drilling Platform A View From the Black Sea

In the last two years, a total of 32.582 km of 2D offshore and 25.419 km of 3D offshore seismic survey were realized. With

evaluation of acquired geophysical data, it is planned to intensify

drilling activities on offshore fields in the coming years. With

these studies, it has been targeted to give a further fillip to the

country's economy by probable oil and natural gas discoveries.

Total amount of offshore seismic surveys realized in the last two

years is much more than performed throughout TPAO's history.

This situation confirms the importance given to offshore

hydrocarbon explorations in recent years.

WE ARE EXPLORING ALL OFFSHORE FIELDS OF TURKIYE

Exploration Activities in the Mediterranean

Farm-out Blocks

Throughout 2006, interpretation studies of 2D seismic lines in the

Antalya, Mersin and Iskenderun Bays were continued. It was

decided to be initiated a farm-out process in 2007 for East-

Mediterranean Offshore and preparations were completed by the

end of 2006. In this scope, negotiations were initiated with the

relevant foreign companies for the offshore blocks in the Antalya,

Mersin and Iskenderun bays.

In 2006, 3.900 km of 2D seismic data was acquired from the east,

south and west side of Cyprus. Interpretation of these data

provided us preliminary information for Syria and Lebanon

offshore, which was planned to be a part of farm-out process in

2007, and also for the area situated in the west of Cyprus.

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Together with great perseverance, enthusiasm and expectations

on onshore, TPAO has given priority to realize exploration, drilling

and production investment programs at onshore fields such as

Silopi, Pervari, Black Sea onshore and around the border of Syria.

The purpose of conducting these activities with determination and

patiently in the following years is a part of TPAO's mission.

Offshore drilling operations are being carried out intensively at

the peak level. Within the scope of TPAO-TOREADOR-STRATIC

joint ventures , 10 offshore wells were drilled in the Western

Black Sea, in 2006.

In 2006, TPAO performed 33 23/30 crew/month geological field 2survey with 6.752 km of areal coverage in 16 different oil

exploration zones by 2 seismic crews, one mobilized and the other

immobilized, at Thrace, Marmara, Aegean, Black Sea,

Mediterranean, Central, Eastern and South Eastern Anatolia

Regions.

Seismic Interpretation Studies

A View from Geological Field Surveys

GEOPHYSICAL FIELD SURVEYS IN 2006

424 km

1.717 km

2824 km

25.419 km

13.836 shots

2D Onshore Seismic

2D Offshore Seismic

3D Onshore Seismic

3D Offshore Seismic

Gravimetric – Magnetic (Onshore)

Vibro Trucks in Field

424824

1.717

5.419

10.000

8.000

6.000

4.000

2.000

0

8141.323

12.841

205958

595

18.024

2004 2005 2006

2(Km, Km )

Seismic Activities

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In 2006, TPAO realized most of its drilling activities at Thrace, South Eastern Anatolia Regions and Black Sea offshore as well as new areas. Although drilling of 45 wells were planned in 2006, drilling activities were realized in 71 wells according to good results and developments obtained and drilling of 63 wells were completed.

In 2006, 39.169 m in 26 exploration wells, 31.392 m in 22 wells (10 offshore) joint exploration wells (TPAO's share is 16.758 m), 32.273 m in 23 production wells, totaling to 71 wells with 102.834 m (TPAO's share is 88.200 m) were drilled.

TPAO accelarated its oil and natural gas exploration and drilling activities 3 folds at onshore and offshore fields in the last three years. In addition to the explored basins, TPAO has continued its exploration and drilling activities at the unexplored basins such as Pervari, Silopi, the border of Syria, Diyarbakır, Hatay and Burdur-Isparta and as a result, it has acquired significant data to determine hydrocarbon potential of those fields.

From 1954 to 2006, TPAO drilled a total of 2.395 wells, 37 of which were deviated and 24 of which were horizantal drillings.

DRILLING ACTIVITIES

Drilling Activity

DEEPEST WELLS DRILLED BY TPAO

Based on the wells which were completed during the year.

Drilling Activities

OIL

Oil discoveries were realized in D. Sınırtepe-1 (Nusaybin),D. Karakuş-1 (Adıyaman), G. Şelmo-1 (Batman), Yanarsu-3 (Batman) exploration wells in the South Eastern Anatolia Region and G. Kırtepe-1 (Diyarbakır) joint exploration well drilled by TPAO-PERENCO joint venture. D. Sınırtepe-2 (Nusaybin) appraisal well was completed as “oil well”.

NATURAL GAS

Natural gas discoveries in Batı Sinekli-1, Karatepe-1, İncilibayır-1, Yeşilgöl-O1, Hamitabat-O1 exploration wells were realized in the Thrace Region. Batı Sinekli-O1 appraisal well was completedas”gas wells”.

In addition, B. Velimeşe-1 and Reisdere-1 exploration wells drilled by TPAO-AMITY OIL joint venture in Thrace Region were resulted with natural gas discoveries. D. Adatepe-4 and Adatepe-6 appraisal wells opened jointly by AMITY OIL were completed as “gas wells”.

Natural gas discoveries in Akkaya-1/A and Bayhanlı-1 wells drilled by TPAO-TOREADOR-STRATIC joint venture in the Western Black Sea were realized. Akkaya-2,3, Ayazlı-3/A, D. Ayazlı-1,2, Akçakoca-3 wells were completed as “gas wells”. Hereby in 2006, D. Ayazlı and Akçakoca fields were discovered.

DISCOVERIES

Number

Well Number

Meter

Thousand Meters

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TPAO-TOREADOR

Within the framework of TPAO-TOREADOR Joint Exploration and Development Agreement, approximately 410 thousand barrels of crude oil were produced at the Cendere Field (Adıyaman),in South Eastern Anatolia Region in 2006. Within the scope of field

2development activities, 50 km of 3D seismic survey and interpretation studies were completed, Cendere-21 appraisal well was decided to be drilled and as a result, drilling of the well was realized and the well was completed as "oil well with high water cut".

TPAO-PERENCO

Within the framework of TPAO-NVT PERENCO JV Agreement, oil production from Kastel, Karaali and Yalankoz Fields in South Eastern Anatolia Region have been continuing. Within the area situated in eastern part of License AR/TPAO/3341 covering G.Kırtepe-1 and Hançerli wells in the northern west of Diyarbakır,

th7 Amendment was signed between TPAO and PERENCO on February 20, 2006 and within the specified area, 50 % interest was transferred to PERENCO. In this scope, G. Kırtepe-1 well was drilled and completed as “gas well”.

ONSHORE

JOINT DOMESTIC EXPLORATION, DEVELOPMENT and PRODUCTION ACTIVITIES

Joint Oil Activities with International Companies

TPAO-AMITY OIL

In the joint venture fields with AMITY OIL, studies were continued in 2006. Natural gas discoveries in B. Velimeşe-1 and Reisdere-1 exploration wells drilled by TPAO-AMITY OIL joint venture in Thrace Region were realized. D. Adatepe-4 and Adatepe-6 appraisal wells opened jointly by AMITY OIL were completed as “gas wells”. A total of 8 wells, 6 exploration and 2 appraisal wells were drilled in the joint venture exploration and operating fields with AMITY OIL and re-completion studies were continued in the production fields.

TPAO-CHEVRON-PERENCO

Within the framework of TPAO-CHEVRON Joint Exploration and Development Agreement, activities in Silopi field were continued with the participation of PERENCO as of January 2006. Upon the execution of I. Amendment on November 9, 2006, the partnership turned out to be among TPAO, CHEVRON and PERENCO. Silopi-1 well was started to be drilled in November 2006. In 2007, it has been decided that Cudi-1 well shall be drilled and II. Amendment regarding TPAO's operatorship shall be prepared.

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OFFSHORE

TPAO-PETROBRAS (Kırklareli and Sinop Projects)

Within the scope of Central and Western Black Sea farmout

activities, Joint Exploration and Operating Agreements for

Kırklareli and Sinop subblocks, were signed with PETROBRAS on

August 17, 2006. Following the execution of the agreements,

existing 2D seismic lines were interpreted in 2006. As a result of 2these interpretations, 2.565 km of 3D seismic acquisition were

completed in 2007. Besides, it was also decided to be acquired21.000 km of 3D and 500 km of 2D seismic data from those areas.

TPAO-TOREADOR-STRATIC (Western Black Sea Exploration,

Production and Development Project)

Within the scope of TPAO-TOREADOR-STRATIC joint exploration

project, exploration, production and development activities have

been carried out within 12 miles in II. Region of Western Black Sea

Offshore.

In order to determine the hydrocarbon potential of Ereğli-Alaplı

basin, 1.000 km of high resolution seismic data was acquired and

4 ground surveys were realized. In addition, studies about the

transfer of operatorship planning to be realized in the first

quarter of 2007, were started.

Southern Cross Semi-Submersible Drilling Platform of Atwood

Company was hired for Akçakoca and Gülüç wells due to the water

depth and as a result of drilling of Akçakoca-3 well, natural gas

discovery was realized. Reservoir modeling studies of Akçakoca

field have been continued.

Akçakoca Drillings in Western Black Sea

Location Layout of Akçakoca Production Platforms

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Furthermore, the wells drilled in D. Ayazlı field were included in

the production program and D. Ayazlı Platform after Akkaya and

Ayazlı Platforms was also added to construction and installation

agreement of the tripod production platforms signed with

Momentum Engineering Co.

In 2006, within the scope of development activities of Western

Black Sea Field, the construction of onshore and offshore

pipelines were completed and Akkaya and D. Ayazlı production

tripods were installed to their locations. The construction of

Akçakoca-Çayağzı Natural Gas Process facility was completed

and the first commercial natural gas production was started on

May 20, 2007.

. Ayazlı-1 Installation of D Production Tripod

Çayağzı Natural Gas Process Facility

ACTIVITIES

Completion

Re-Completion

Production String Failures

Log Operations

Cementing

Acidizing

DST Operations

2004

23

79

2.543

175

120

77

28

2005

23

101

3.110

169

150

90

35

2006

34

96

3.431

293

254

78

72

In line with all of these exploration and production activities, Well

Completion Services were supplied with 11 workover and 7

rodpuller totaling to 18 rigs. A total of 34 wells were completed, 96

wells were re-completed and production string failures of 3.431

wells were dispelled in Districts.

Also, the activities in Kazakhstan were carried out with Ideco-11

rig in the name of TPIC.

During the year, 116 Open-Hole, 177 Cased-Hole totaling 293

Logging Operations were realized with 5 Digital, 2 Analog Logging

trucks and 2 Digital Skid Units.

WELL COMPLETION ACTIVITIES

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Oil Production Pump

Regional Distribution of Domestic Crude Oil Production in 2006

BATMAN 66 (6.865 Thousand Barrels)

%

ADIYAMAN 33 (3.440 Thousand Barrels)

%

THRACE 1 (140 Thousand Barrels)

%

In 2006, TPAO produced 10.444.830 barrels (1.535.009 tons) of crude oil from its fields, which constituted % 71 of the total crude oil production of Turkiye.

The total of production wells numbered 777 in 2006 up from 752 in the early 2006 with the addition of 25 new and 24 re-completed wells and abandonment of 24 wells.

Significant amount of water is being produced from our oil fields with the produced oil. In 2006, 80.607.915 barrels of water produced with oil was injected into safe zones in different fields by 65 water injection wells.

To conserve water injection capacity of the water injection wells, which is a very important item in continuation of oil production, the necessary operations were applied regularly during the year.

DOMESTIC CRUDE OIL PRODUCTION

Within its policy of keeping the production at the maximum level,

TPAO continued its domestic reserve development and

production activities in 2006. Declining oil production from heavy

oil reservoirs poses a technical challenge. Several reservoir

studies are embarked on to offset the production decline and top

the upside potential.

Thanks to perseverance and efforts of our employee, total

domestic and international oil production reached over

70.000 bpd, in 2006. It is expected to reach the peak level of our

history with 101.000 bpd of oil production through the existing

reserves in 2008.

101.000 bpd96.400 bpd

70.000 bpd

51.000 bpd

40

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2000 2006 2008 20102002 2004

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Domestic Oil Production

Domestic Akçakoca BOE

Est. Domestic N.Gas Production of New Wells BOE

Int.-Azerbaijan-ACG

Domestic Natural Gas Production BOE

Est. Domestic Oil Production of New Wells

Int. Kazakhstan-KTM

Int.-Azerbaijan-SD-1 BOE

Domestic and International Hydrocarbon Production by Years

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Batı Raman statistics show that since the carbon dioxide (CO ) 2

injection start up in 1986, cumulative injection into the field has 3reached 7,8 billion m and in order to sustain this amount of

3injection, 6,2 billion m CO was produced from Dodan Field. 2

By the end of 2006, Batı Raman recovered cumulative oil reserves was 93,9 million barrels, where 57,9 million barrels came from CO injection secondary recovery process. In 2006, 478,4 million 2

3 3m of CO gas was injected, 379,2 million m of this amount was re-23produced and 137,4 million m of this produced gas was re-

injected into the reservoir.

Within the scope of water alternating gas injection in low pressure regions of the field where emulsion problem is controllable application, water injection aimed to improve CO sweep 2

efficiency was continued in 2006, in total 368 thousand barrels of water alternating with gas was injected into 12 different wells.

Within the scope of field development program, alternative acid operations were planned in 2006 to 3 lateral wells which the acidizing operation couldn't be performed right after the drilling in 2005 because of the wells' different trajectories. Among those wells, in 1 lateral well, lateral section was entered with tubing and acid was injected to lateral and vertical section and the multilateral well was acidized from the beginning of lateral section with bullhead treatment. The expected production rate was reached with these operations. In 2006, drilling operations of 7 new vertical wells were completed as “in-fill” wells.

In order to extend the life of the project by drying and pressurizing the produced CO gas for re-injection, the installation studies of 2

the second recycle system have been continued.

BATI RAMAN FIELD ENHANCED OIL RECOVERY PROJECT

Raman Field Production Enhancement Project was started in 1994 and operations to increase oil production have been continuing periodically. 12,5 millions barrels of additional oil was produced by means of this project.

3 new wells were drilled in the field to increase oil production in 2006 and well number reached to 229. 7 wells were chosen for pilot polimer gel injection to reduce water-cut and these wells were prepared for the application in 2007. 3 wells were acidized and flow rates of 12 wells were increased. 6 temporarily abandoned wells or wells in rest were put into production by workover operations. As a result, approximately 142 thousand barrels additional oil was produced by these operations, in 2006.

RAMAN FIELD PRODUCTION ENHANCEMENT PROJECT

History of Batı Raman Field Production and Injection

100.000

10.000

1.000

100

Raman Field Production Enhancement Project

8.000

7.000

6.000

5.000

4.000

3.000

2.000

1.000

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CO /WAG feasibility at the Batı Kozluca Field was investigated 2

through a reservoir study and promising results led to invest for the application. CO injection was initiated in May 2003 by 2

6 injection wells.

By the end of December 2005, cumulative gas injection reached 3116,5 million sm . The injection process is still underway.

In order to increase the effect of CO injection, additional 6 new 2

wells were drilled at the B.Kozluca Field.

BATI KOZLUCA FIELD WATER ALTERNATING GAS (WAG) PROJECT

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B.Kozluca Field Monthly CO Injection Project2

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Within the scheme of Garzan Water Injection Project re-started in 1992 after a long halt since 1983, cumulative water injection through 10 wells reached 26.122.113 barrels in Garzan-B field by the end of 2006, where annual injection was 1.450.350 barrels.

In Garzan-C field, cumulative water injection through 4 wells reached 24.383.573 barrels where total annual injection was 705.226 barrels.

By Garzan Water Injection Project, approximately 22,5 million barrels and 11,3 barrels of additional oil were produced respectively, at the Garzan-B and Garzan-C fields.

GARZAN FIELD WATER INJECTION PROJECT

In 2006, TPAO's cumulative natural gas production was 3412.615.946 sm . The natural gas produced in Thrace Region was

sold to 70 local companies, the gas produced from Çamurlu field

in Batman Region was sold to a regional boarding school and to

two companies in the region. In Adıyaman Region, the released

gas from produced oil was sold to one company.

The oil equivalent of the gas output is 2.427.152 barrels. Thus,

TPAO's cumulative hydrocarbon production was realized as

12.871.982 barrels, by the end of 2006.

DOMESTIC NATURAL GAS PRODUCTION

Regional Distribution of Domestic Natural GasProduction in 2006

BATMAN 2 3(10.158 Thousand sm )

%

ADIYAMAN 1 3

(3.650 Thousand sm )%

THRACE 97 3

(398.808 Thousand sm )%

Hamitabat Gas Gathering Station

K. Marmara Natural Gas Process Facilities

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Within the scope of Natural Gas Storage and Reproduction Services Agreement signed between TPAO and BOTAŞ on July 21,

31999, the total gas storage capacity will be 1,6 billion m of which 3 31,3 billion m in Kuzey Marmara Field and 0,3 billion m in

Değirmenköy Field. According to the agreement signed with BOTAŞ, the natural gas will be injected to the fields with

3maximum rate of 12 million sm / day during summer season and will be re-produced from the fields with maximum rate of 15

3 million sm / day during winter season.

In Kuzey Marmara Field, in addition to previously drilled 5 offshore wells, drillings of the required 6 extended reach wells were completed in the midst of 2004. Taking production rates and evaluations into consideration, it has been observed that the performances of ERD wells are better than expected in terms of storage.

In addition to previously drilled 4 onshore wells in order to use Değirmenköy Field as a natural gas storage field, drilling and test flows of 5 deviated wells were completed by the end of 2003.

The Project Surface Facilities consists of Kuzey Marmara Field, Değirmenköy Field and Shared Facility. Engineering, Procurement, Installation and Commissioning (EPIC) Contract for construction of Surface Facilities was signed between TPAO and Lurgi Oel Gas Chemie GmbH–Fernas Cons. Ltd. Co. Consortium. By February 2007, the facilities were started up and provisional acceptance was realized.

TPAO BROKE NEW GROUND IN TURKIYE WITH KUZEY MARMARA AND DEĞİRMENKÖY FIELDS UNDERGROUND NATURAL GAS STORAGE PROJECT...

Silivri Natural Gas Storage Facilities

Değirmenköy Gathering Point

K. Marmara ERD Wells

Today, TPAO's Primary Business Development Fields for the next 5 years, are determined as Middle East, North Africa and Caspian Region, having two-third of the world's proved oil reserves.

Current Projects Current Projects / New Ventures New Ventures

Since the early 1990's TPAO, with her international activities, has

become one of the important actors in the region. TPAO's

international production in 2006 has exceeded her domestic

production amount. The greatest portion of the international

production is from Azeri-Chirag-Guneshli Project in Azerbaijan.

Upon putting BTC crude oil pipeline into operation in 2006, TPAO's

production in Azerbaijan is expected to increase and reach peak

levels in 2009-2010.

As a shareholder of Shah Deniz Project, TPAO has also started in

March 2007 her first international natural gas production after

completion and putting into operation of SCP natural gas pipeline

in 2006 winter. With this production, TPAO will have started to

meet a part of Turkiye's domestic gas demand from abroad.

TPAO's production is continuing also in her fields in Kazakhstan

and while efficiency achieved during operations carried out with

KazMunayGaz is satisfactory, we have further expectations.

In 2006,in order to increase her reserves, TPAO has investigated

many opportunities in Libya, Kazakhstan, Syria, Brazil and

Ukraine and conducted business development activities by

putting in tenders.

In and beyond 2007, TPAO will exploit her reserves in the regional

geography, and focus on certain countries of which priorities were

determined as a result of global survey conducted throughout

2006, and work harder to increase her reserves. Because of the

necessity of adding new reserves and bringing them online

immediately to achieve the goal of 300.000 bbl/day oil equivalent

production, International activities become more and more

important. TPAO has to add soon new reserves and bring them

online. TPAO, being aware of her strategic importance for

ensuring Turkiye's security of supply, has set its roadmap and

action plan for objectives in and beyond 2010.

Caspian Basin is one of the oldest hydrocarbon reserves in the world and it is also the main source of revenue for Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan with its great proven reserves.

It is estimated that, Caspian Region holds 4 % of the world oil reserves and 6% of the gas reserves.

In the 1990's, in line with changes and developments, the Caspian Region became an focus of interest for the western countries that are searching and alternative for the Middle East Oil. Being the world's biggest inland sea, Caspian is following the Middle East and Siberia-North Pole Regions with its oil and gas reserves and strategic position for transportation.

Because of the cultural and historical ties, Caspian Region has a special importance and value for Turkiye. Due to its significant role in transportation of energy resources to western markets and settling stability in the Region, Turkiye will increase its strategic and geopolitical power in the field.

CASPIAN REGION

KAZAKHSTAN

TPAO conducts her activities in Kazakhstan through her Joint Venture KazakhTurkMunai (KTM) Ltd. in which TPAO holds a 49 % share and KazMunaiGas has 51 %. The joint company has 1 concession in Aktau Region and 2 in Aktobe Region of the Western Kazakhstan.

In 2006, average production of the joint venture was realized as 2.270 barrels/day in Aktau Region and 4.330 barrels/day in Aktubinsk Region.

Since 1993, TPAO has been carrying out her activities in Kazakhstan and intends to grow its portfolio in this country, the focal point of intense with its oil reserves.

By the end of 2006;

Yearly Crude Oil Production : 2,4 million barrelsCumulative Crude Oil Production : 18,2 million barrelsCrude Oil Reserve : 34,8 million barrels

TPAO IS IN THE EAST COAST OF CASPIAN;

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West Yelemes Field

In Azerbaijan, TPAO is currently a participant of 3 exploration, development and production projects. These are; Azeri-Chirag-Guneshli (ACG, 6,75 %), Shah Deniz (9 %) and Alov (10 %) Projects.

Furthermore, TPAO has a share of 6,53 % in the BTC Co. which was established for carrying out all activities of Baku-Tbilisi-Ceyhan Main Export Crude Oil Pipeline Project and 9 % share in South Caucasus Natural Gas Pipeline Project, which will transport Shah Deniz gas to Turkiye-Georgia border.

AZERI-CHIRAG-GUNESHLI (ACG) PROJECT

In 1994, the Joint Development and Production Sharing Agreement for ACG Project was signed in Baku among the State Oil Company of the Azerbaijan Republic (SOCAR) and the business consortium constituted by the foreign companies.

Throughout the ACG Project having 5,4 billion barrels reserve, 548,4 million barrels crude oil (TPAO share; 43,5 million barrels) was produced to date and daily production which was 353,4 thousand barrels at the end of 2006, is foreseen to reach 1,1 million barrels in 2009.

ACG Project was developed in phases. The first oil from Chirag field (the early oil project) was started to be produced in November 1997. The Phase-1 (Development of the Central Azeri Field) was put into production in February 2005. The production of the Phase-2 (Development of the West and East Azeri Fields) were commenced in January 2006 (West Azeri) and in October 2006 (East Azeri). Further oil production of Phase-3 (Development of Deep Water Guneshli Field) was planned to be started up in 2008.

TPAO IS IN THE CASPIAN SEA; AZERBAIJAN EXP.-PROD.&TRANSPORTATION PROJECTS

Azeri CWP and PDQ Platforms

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Sangachal Terminal DWG / West Chirag / Phase 3 Chirag EOP West Azeri / Phase 2 Central Azeri / Phase 1 East Azeri / Phase 2

Azeri Field Platforms

ACG Project Shareholders

TPAO6,75 %

SOCAR10 %

bp34,14 %

DEVON5,63 %

CHEVRON10,28 %

STATOIL8,56 %

INPEX10 %

EXXONMOBIL8 %

ITOCHU3,92 %

HESS2,72 %

PIPELINE PROJECTS OF TPAO CONTRIBUTING TO THE ENERGY CORRIDOR

In Turkiye, resides in juxtaposition to Middle East and Caspian Regions having the major portion of the world oil reserves, the basis and set up for energy corridor was in-placed by the constructions of BTC and SCP Pipelines. After the determination of the Black Sea potential, the triangle of source in the region hopefully will be completed and this source will flow through the Anatolia axis to reach the market in due time with confidence.In this perspective; TPAO being aware of its responsibility, has been trying to meet the national oil and gas demand. TPAO will continue her efforts towards increasing her activity and control through the East-West Energy Corridor.

BAKU-TBILISI-CEYHAN MAIN EXPORT CRUDE OIL PIPELINE (BTC) PROJECT

Through the BTC Project, the transportation of oil produced in Caspian Region, especially from ACG Project in Azerbaijan to the world markets, in a safe, secure and environment friendly way is targeted.

Within the scope of the Project, an approximately 1.768 km long pipeline with 42”-46”-34” diameters and necessary facilities with a nominal capacity of 50 million tons/year, starting from Baku-Azerbaijan passing by Tbilisi-Georgia and ending at Ceyhan-Turkiye, has been constructed. The physical construction was started in April 2003 in all three countries and was completed by end of May 2007 then first tanker carrying Azeri oil (part of which was TPAO's share of ACG oil) started loading in early June 2006. On July 13, 2006 the inauguration of the BTC pipeline was realized in Ceyhan terminal.

thBy 6 of April 2007 a total of 130 tankers carrying about 100 million barrels of Azeri oil have sailed from BTC Ceyhan Marine Terminal. Project is expected to reach its nominal capacity of 1 million bbl / day in April 2007.

BTC Project Shareholders

TPBTC/TPAO6,53 %

SOCAR25 %

bp30,10 %

CHEVRON8,90 %

STATOIL8,71 %

INPEX2,50 %

CONOCOPHILLIPS2,50 %

ITOCHU3,40 %

HESS2,36 %

TOTAL5 %

ENI5 %

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Tanker Loading at Ceyhan

Inauguration of the BTCThe

SHAH DENIZ PROJECT

The Shah Deniz Structure is in the offshore South Caspian Sea, 70 km southeast of Baku and 70 km southwest of Azeri-Chirag-Guneshli field. The concession has an areal coverage of

2approximately 860 km .

In 2001, the Minimum Obligatory Work Program of the Exploration and the Extended Exploration Periods were completed. The Sales and Purchasing Agreement (SPA) between BOTAŞ and SOCAR for the discovered natural gas and Intergovernmental Agreement between Turkiye and Georgia were signed.

According to the SPA, 6,6 bcm / year of natural gas (at plato level) will be delivered to Turkiye for 15 years. Project will also supply gas to Azerbaijan, Georgia and to BTC as fuel. The construction has been started with the decision taken for Shah Deniz Stage-1 field development and construction in 2003.

For the existing case, there are four production wells. They were tied back to the drilling and production platform TPG500 and their well completion operations are still continuing.

The Overall realization ratio in the Project, having 625 bcm natural gas and 750 million barrels condensate reserves. Continuous production from the project using one well is planned to be initiated in the first quarter of 2007.

For Stage-2, construction decision is estimated to be taken in 2009 and the first gas delivery is in 2012.

Shah Deniz Project Shareholders

TPOC/TPAO9 %

bp 25,50 %

STATOIL 25,50 %

AzSD Ltd. 10 %

TOTAL 10 %

LUKOIL 10 %

NICO 10 %

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SOUTH CAUCASUS NATURAL GAS PIPELINE (SCP) PROJECT

With the SCP Project, the transportation of Shah Deniz natural gas to Georgian-Turkish border is planned. The SCP passing through the same corridor with BTC is about 690 km in length and 42” in diameter. The pipeline has a capacity of transporting 8,1 bcm/year of natural gas to Turkish border with one compressor station in Sangachal in line with the terms of AGSC-BOTAŞ Sales and Purchasing Agreement (SPA). However, this capacity will be able to be expanded to 22 bcm / year.

After commencement of construction of the pipeline physically in 2004, construction activities have been completed, and pipeline

th has been ready to transport gas since 26 November 2006. In parallel with production activities of Shah Deniz, the pipeline will begin continuous operations. Project has a potential to transport the gas that will be produced from the Caspian Region in the future to Europe via Turkiye.

TPAO's total production share of current assets, (KTM, ACG and SD Projects) is expected to be 18,4 million barrels of oil equivalent of a yearly average of 50.500 b/d during 2007.

ALOV PROJECT

Alov Exploration Project covers the Araz-Alov-Sharg prospective

structures in the Middle of the Southern Caspian Sea, acquiring

385 bcm of natural gas and 5 billion barrels of oil.

EDPSA was signed in 1998 and TPAO joined to the Project by an

“Agreement on Participating Interest to be Vested” on

July 29, 1998. For the Alov Project, the minimum contractual 2commitments are 1.400 km of 3D seismic survey and drilling of

three exploration wells for the three-year exploration period. The

drilling of first exploration well is waiting for the determination of

status of Caspian Sea and also for rig slot availability afterwards.

Alov Project Shareholders

TPOC / TPAO10 %

SOCAR OIL AFFILIATE

40 %

STATOIL 15 %

bp 15 %

ENCANA 5 %

EXXONMOBIL 15 %

SCP Project Shareholders

TPSCP/TPAO9 %

bp25,50 %

STATOIL25,50 %

AzSCP Ltd.10 %

TOTAL10 %

LUKOIL10 %

NICO10 %

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Sangachal Terminal

LIBYA

Within the framework of TPAO's foreign investment strategies,

Libya, with her rich oil and natural gas potentials, has a significant

importance as a target country. TPAO's activities in Libya have

been continuing in three exploration concessions.

Block NC188-NC189 Exploration Project

An Exploration and Production Sharing Agreement (EPSA),

signed between Turkish Petroleum Overseas Company (TPOC)

and the National Oil Company of Libya (NOC) on Blocks NC188

(Ghadames Basin) and NC189 (Sirte Basin) came into effect in

2000. The Agreement calls for exploration period of 5 years and

commitments of drilling 5 exploration wells and seismic

acquisitions in the Blocks mentioned above.

TPOC opened a branch Office in Libya and commenced her

activities after the ratification of EPSA. Furthermore, as a

common practice in exploration activities for reducing risk, TPOC

signed a partnership agreement with ONGC-Videsh Ltd. (OVL), a

subsidiary of the Indian National Oil Company (ONGC). The

agreement came into effect in 2003. The participating interests of

parties are 51 % for TPOC (operator) and 49 % for OVL.

The existing well and reprocessed seismic data in both Blocks

were evaluated and new seismic acquisition surveys and related

data processing were carried out in 2002. Following the

interpretation of new seismic data, 2 exploration wells (A1-NC188

and B1-NC 188) were drilled in 2004 to determine the

hydrocarbon potential of the prospects in the concession NC 188.

In 2005, seismic data was re-processed to determine the

hydrocarbon potential in Sirte Basin (NC189 Block) and

geological, geophysical and pre-drilling activities were

completed for scheduled wells.

Three-year extension of the exploration period starting from June

12, 2006 was granted by NOC in order to complete the remaining

exploration commitments of drilling three wells in the NC189

concession. TPOC expedited its activities to drill the remaining

three exploration wells.

Block 147/3-4 Exploration Project

In “2005 Exploration Bid Round” organized by NOC, Block 147/3-4

in the Murzuq Basin was awarded to TPOC.

EPSA was signed between NOC and TPOC and came into effect in

December 2005. Minimum exploration commitment for the Block

consists of drilling two exploration wells and acquisition of 2D and

3D seismic data.

The seismic data processing of 2D lines and interpretation were

completed. Technical studies to assess the hydrocarbon potential

and prospectivity of the block were continued in 2006.

Block 147/3-4 Activity

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EGYPT

SUDANCHAD

MEDITERRANEAN SEA

LIBYA

Libya

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Block 147/3-4 Activity

NEW VENTURES

THE MIDDLE EAST Due to the vital importance of crude oil, as a raw material for Industrialization, Middle East is always on the agenda with its oil reserves.

Middle East has approximately 62 % (Saudi Arabia 25 %, Iraq 11 %, United Arab Emirates 9 %, Kuwait 9 %, Iran 8,5 %) of the world oil reserves.

SYRIA

TPAO is continuing to negotiate for oil and gas exploration-development and production investments in Syria.

In this scope, the Memorandum of Understanding (MOU) was signed between TPAO and Syrian National Oil Company (Syrian Petroleum Company) in Damascus on November 9, 2005.

In accordance with the terms of this MOU, a joint company is planned to be established to develop and carry out exploration-production projects at designated concessions.

IRAQ

TPAO has been continuing her contacts with the Ministry of Oil of Iraq since 1994, for exploration and production opportunities in Iraq. TPAO has continued business development activities with Iraqi Ministry of Oil and foreign oil companies but no important progress has been recorded in this respect due to the political uncertainties and security issues that have been prevailing since March, 2003.

Iraq

Syria

Turkmenistan

TURKMENISTAN

TPAO has been carrying out oil and natural gas exploration and development studies on onshore and offshore areas of Turkmenistan, since 1993.

In 2005, parallel to the latest developments in Turkmenistan, TPAO's strategies were uploaded as participation in the Projects of re-developed oil fields and participation in Trans-Caspian Gas pipeline in case the Project comes into agenda.

AFGHANISTAN

TPAO's technical studies are continuing for exploration, development and production of oil and natural gas.

NORTH AFRICA

The continent of Africa has been known as the third largest oil field in the world, behind the Middle East and America. Africa's oil production accounts for approximately 11 % of the world. Behind North Africa (Libya and Algeria) Western Africa is also rich in oil with her 139 billion barrels proven oil reserves. More than 60 % of oil is produced in offshore fields in the continent of Africa. Oil rich countries are; Nigeria (2,5 million barrels/day), Angola (1 million barrels/day), Congo Brazzavilla (280 thousand barrels/day), Guinea (270 thousand barrels/day), Gabon (270 thousand barrels/day).

Besides her oil reserves, Africa is also fourth largest gas region in the world behind the Middle East, Russia and Far East. Except the natural gas rich fields in the Northern Africa (Libya, Algeria and Egypt) the natural gas reserve of the South Africa is estimated as

3 3around 12 trillion m , of which 7 trillion m in Nigeria and 5 trillion 3m in other countries.

OTHER COUNTRIES

In addition to the activities mentioned above, TPAO has been continuing to search and negotiate for business opportunities in other hydrocarbon rich regions such as Russian Federation, Ukraine, Algeria, Egypt, Indonesia, Sudan, West Africa and South America.

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Through the latest technologies, applied in oil industry, TPAO has been developing its strategy in line with

competition in the market and continuing its activities in an efficient, cost effective and time saving

manner.

Within the scope of using advanced technology, 240 active

channel 2D seismic recording system was updated to 1440 active

channel 3D seismic recording system. Through this system, shot 2number per km was reduced and also cost reduction and time

savings were obtained. In parallel to accelerated exploration

activities, data processing capacity of seismic crews was

expended through updating technology in Seismic Data Process

Center. 3D Visualisation and Interpretation Center was put into operation

in May 2005 in order to minimize the risk factor in hydrocarbon

exploration and to carry out integrated and more effective seismic

data surveys in the interpretation systems through the goal of

raising the discovery success ratio in new oil fields. Data Bank

installation studies were initiated for an easy access, sharing and

protection of data used for exploration activities. The field geology

crews were equipped with GPS and tablet PC in order to study in

an efficient and effective way.

INNOVATIONS IN TECHNOLOGY

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TPAO is continuing its drilling activities in Western Black Sea

within the context of joint exploration and development projects

by intensifying its exploration activities on offshore.

Within the framework of joint activities with bp, TPAO completed

the first deep water drilling in the Eastern Black Sea and TPAO

gained the first experience in deep water drilling technology. It is

trying to determine the offshore hydrocarbon potential of the

Black Sea and create adding values to the national economy

through new oil discoveries.

DEEP WATER DRILLING TECHNOLOGY

For providing mobilization, cost reduction, time saving and faster

drilling, 800 HP MR-7000 mobile rig with the drilling capacity of

2.500 meters was delivered on behalf of TPAO in April 2007, 1.500

HP AC Drive electrical onshore rig with the drilling capacity of

5.000 meters will be delivered to TPAO in 2007.

Besides, within the scope of F-320/3 Rig Upgrading Program ;

main equipments of Mast, Substructures, Electrical Drawworks

and Rotary Table were upgraded to 2000 HP AC Drive Electrical

Rig with the drilling capacity of 6.500 meters was produced by

National Oilwell Varco (USA) .

TPAO RIGS ARE BEING UPDATED

SoilMec MR 7000 Mobile Drilling Rig


Atwood Southern Cross Semi Sub Drilling Platform

3D Visualisation and Interpretation Center

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LOGIQ System and Insite Tools were developed to collect more

data from the formations through implementation of new

technology. Through LOGIQ system, well logs can be monitored

over the satellite and interpreted simultaneously. This system

facilitates obtaining more data and fast flow of these data to IQ

system. Besides, LOGIQ, operating under windows based system,

is an easy system for the end users.

LOGIQ SYSTEM AND INSITE TOOLS

All oil and natural gas fields are monitorized actively by multi-

disciplinary teams using special softwares which have regularly

updated digital database and by broad communication network

system created among center and fields.

By using reservoir modelling, petrophysical rock properties such

as porosity and permeability distribution of reservoir can be

monitored easily by simulator. Besides, pressure and

gas/oil/water saturation changes by production can be observed

thus regions in the field that do not drained can be determined.

Using different production scenarios best case can be obtained to

get highest recovery factor for the field.

By means of reservoir and well analysis software, production

performance of both field and each well can be observed

historically. Well cross sections, digital logs, well completion

operations and well performance can be monitored

simultaneously. Besides, future production forecasts can be

realized by “Decline Curve Analysis”.

Production estimation of new drilled wells can be done by

evaluating well test data by using advanced software.

Reservoir parameters such as effective porosity, water saturation

which are obtained from log interpretations are the most

important parameters in reserve calculations. For this purpose,

digital log data of the wells are processed with advanced software

and parameters needed for calculations are obtained.

As a result of these technological and scientific studies, new

production well locations, productive zones in a reservoir,

convenient oil-gas recovery methods can be easily determined

and current oil-gas technologies can be re-evaluated.

DEVELOPMENT TECHNOLOGY OF OIL FIELDS

LOGIQ System

Geological Modeling & Reservoir Simulation

Field & Well Monitorizing


In accordance with the policy of following innovations in

technology, TPAO enhanced its technology investments on

exploration, drilling, well completion, production and research

center activities. Especially, TPAO Research Center increased its

analyzing ability with advanced technology. The knowledge power

gained through RD studies and new technology is reflected to the

exploration and production activities and also to laboratory

projects.

New Technologies of Research Center;

•Isotope Geochemistry,

•Digital Core Imaging Analyses,

•Determination of Source Rock Kinetic Parameters,

•Surface Geochemical Prospection-Soil Gas Analyses,

•SEM with Low Vacuum,

•High Pressure Mercury Injection Capillary Pressure

Measurement System at Reservoir Condition,

•GC Analysis to Detemine Oxygen Compounds in Gasoline,

•GC Analysis for PAH (Poly Aromatic Hydrocarbons)

Measurements,

•Computer-Aided Mud-Cement Systems,

•Mobile Laboratory in the Field and the Well Site

RESEARCH & DEVELOPMENT TECHNOLOGIES

Soil Gas Analyses

Mobile Laboratory near the Well Site

Low Vacuum Scanning Electron Microscopy and IXRF EDS 2004 System


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C1- C4 Gas Chromatography Analyses

Research Center provides support for hydrocarbon exploration, drilling, well completion, production and environmental activities through its well-trained and experienced staff and state of art laboratories equipped with modern analytical instruments.

TPAO Research Center, established in 1974, has a capacity to

perform over 400 different types of analyses and tests which are

obtained from 27 different laboratories equipped with modern

analytical instruments. Research and development projects,

applied projects, consulting services and technical training

programs are carried out by its 75 well-trained and experienced

staff in the Research Center.

During 2006, in Research Center, in collaboration with

Exploration (14), Production (6) and International Projects (2)

departments, totally 22 projects were performed; within the

department 15 projects were carried out and 2 university projects

were supported. Within the scope of these projects; 29.085

analyses and 9.327 quality control tests were conducted in the

Geology and Engineering Laboratories. The overall number of

tests and analyses is 38.412. Concerning these activities, 98

reports were prepared. Throughout the year, totally 1.962

man/day of field engineering services and field works were

carried out in domestic and international operations of TPAO.

Production based projects, that were carried out in 2006, are as

follows;

• Enhanced Oil Recovery Project at the Batı Raman Field,

• Water Shut-off Project at the Raman Field,

• Quality of Injection Waters in Production Fields Project.

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Surface Geochemical Prospecting Studies in Murzuq Basin- Libya

Wellsite Studies


It was witnessed to the field survey studies in Salt Lake,

dominantly on surface geochemical prospecting studies and

contributed to the interpretation studies with 32 man / day. Some

of these exploration based projects are as follows;

•The Origin and Source Rock Correlation of Thrace Basin Gases

(Isotope Geochemistry),

•District X Prospect Evaluation Project

•South Eastern Anatolia Eocene Tectonostratigraphy Project,

•Western Black Sea Offshore Project,

•Eastern Anatolia Maykop Project,

•Petroleum Geochemistry of South Eastern Anatolia Asphaltite

and Seepages Project,

•Sedimentology, Reservoir Characterization and Reservoir

Geochemistry in the Raman Oil Field,

•TPOC Libya Murzuq Basin Exploration Project.

•CO Storage in Geological Environment,2

•Underground Natural Gas Storage Project.

During 2006, necessary tasks related to IWCF Membership and

being an Accredited Assessment Center were performed.

Twelve Well Control Courses were arranged for 110 personnel

consisting of engineers and technicians from TPAO and other

technical staff from domestic and international companies. 46

IWCF and 109 TPAO Well Control Certificates were granted to the

successful trainees in 2006.

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Totally 329 trainees, from both TPAO and other companies,

participated in technical trainings, in 12 different subjects at

TPAO Research Center.

RESEARCH CENTER LABORATORY SERVICES

In the Geology Laboratories, analyses were performed mostly

relating with biostratigraphy (micropaleontology, nannoplankton

and palynology), sedimentology (petrography, clay mineralogy,

scanning electron microscope-SEM, lithology, sequence

stratigraphy and reservoir evaluation), geochemistry (gas, oil,

source rock, organic petrography, oil and gas origins, isotope

analyses, kinetic parameters, oil-oil and oil-source rock

correlations, reservoir geochemistry, mathematical modeling,

evidence analyses, oil systems and potential) subjects.

The analyses performed in Petroleum and Natural Gas

Engineering Laboratories cover drilling technology (drilling fluid

and cement program, additives quality control, rock mechanics

and simulation of hydraulic and acid fracturing well bore

stability), production technology (corrosion and scale control,

injection water quality, fuel oil analyses biodiesel production) and

reservoir engineering (basic and special core analyses, reservoir

fluids (PVT) analysis and EOR) subjects.

LABORATORY ACCREDITATION OF THE

RESEARCH CENTER LABORATORIES ACCORDING

TO TS EN ISO/IEC 17025:2005 “GENERAL

REQUIREMENTS FOR THE COMPETENCE OF

CALIBRATION AND TESTING LABORATORIES”

In order to register TPAO Research Center Laboratories as a

dependable, contemporary arbitrator laboratory at an

international level, accreditation studies in accordance with the

TS EN ISO 17025 “General Requirements for the Competence of

Calibration and Testing Laboratories” were completed.

In this study, 11 procedures, 15 instructions, quality hand book,

organization hand book and the other documents were also

prepared in the first half of 2005 and submitted to Turkish

Accreditation Agency (TURKAK). Accreditation of Research

Center Laboratories has been approved by TURKAK Board on

October 16, 2006 for a total of 28 analysis on the following titles;

•Petroleum Products Analyses,

•Natural Gas Analyses,

•Water Analyses,

•Drilling Fluids Additives Analyses,

•SEM/EDS and Clay Minerals Analyses.

X-Ray Difraction Unit

Palynological Analyses

itation CertificateAccred


C H A R A C T E R I Z A T I O N A N D S O U R C E C O R R E L A T I O N O F T H R A C E B A S I N H Y D R O C A R B O N S B Y S T A B L E I S O T O P E GEOCHEMISTRY

Research Center newly equipped with “Gas Chromatography Isotope Ratio Mass Spectrometer” has contributed to determine the origins and to understand the maturities of the gas, oil and condensate samples discovered in Thrace Basin up to date. Besides, in the light of these data, classification and hydrocarbon-source rock correlation studies were initialized. In the following years, significant improvements, especially in gas exploration, are expected to be obtained through the stable isotope data, produced in the Research Center Laboratories.

T H E R M O D Y N A M I C , K I N E T I C A N D G A S PRODUCTION LABORATORY STUDIES FOR GAS H Y D R A T E S F O R M A T I O N / D I S S O C I A T I O N PROJECT

Nowadays, the gas hydrates, also known as “methane ice”, with their widespread presence and also as the future potential for natural gas / methane source, is one of the study areas in R&D activities.

In the world, the gas hydrate studies have two dimensions as the determination of the extension of gas hydrate beds and the research studies concerning production of methane from these beds.

Within this framework, “The Laboratory Studies of Gas Hydrate Formation/Dissociation, Thermodynamics, Kinetics and Gas Hydrate Production” project has been initialized to form a background for future production from gas hydrate beds in the Black Sea. This project is carried out in collaboration with METU.

High Pressure High Temperature Rheometer

Oil Products Analyses


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Capillary Pressure and Resistivity Tests at Reservoir Conditions

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Visit of Orientation Team to Turkiye's First Oil Production Well

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4.000

3.500

3.000

2.500

2.000

1.500

1.000

500

0General Directorate Batman Adıyaman Thrace TOTAL

1.1461.463

650

418

3.677

Number of Staff in 2006

On The Job Training358, 15 %

International Training111, 5 %

Congress, Conf., Sem.72, 3 %

Computer Training74, 3 %

Individual Development116, 5 %

Professional Training1.647, 69 %

Training Activities in 2006


TPAO has been carrying out her activities successfully with her dedicated employees, turning the experiences of 50 years of her existence into a source of reference and knowledge, and also by strong organizational structure, advanced technology and experiences in the international projects.

HUMAN RESOURCES

It's TPAO's belief that success can only be realized through highly motivated individuals and experts. Based on this belief, TPAO continues its studies for the establishment of a dynamic performance system within the context of Corporate Source Management which will carry the Company to dynamic structure and increase the efficiency by evaluating the competences in line with our vision, mission and values and provide the staff with;

• Success on job,• Attitude at work,• Contributions to the success of the organization,• Share of responsibility,• Training and development,

PERFORMANCE SYSTEM

TPAO's staff is very well-informed and experienced; they have many ethical principles, such as merit, effectiveness, team spirit, communication, self-efficiency for coping with the changes and responsibility. These principles will carry TPAO to great successes.

STAFF PROFILE

TPAO, strongly believing that success can only be realized through highly motivated individuals and experts, continues its studies for the establishment of a dynamic performance system within the context of Corporate Source Management.

All corporations need well-equipped employees in order to reach strategic goals and objectives. The aim of training and self-development activities is equipping the employees with knowledge and abilities so they can contribute to companies goals. Within this scope, in 2006, training and development courses have been accelerated for the staff to follow the rapidly changing knowledge and developing technology.

In this context, 2.267 staff in the country and 111 staff abroad participated in various training programs and so, the number of trained staff was totaled to 2.378.

In 2006, technical training courses were accelerated within the scope of Petroleum Academy and orientation trainings were also arranged for the new employee to provide them a new opportunity to familiarize TPAO's culture, working system and activities.

Within the context of this program, new employees in various departments, visited oil fields in the District Managements, carried out on-site inspection and had opportunities to observe the contributions of TPAO to the social life in the region.

CONTINUOUS TRAINING

TPAO believes that self sacrified studies and high performance of employees depend on their life quality. Based on this belief, various social activities have been arranged in order to increase motivation of the employees. Furthermore, it provides communication required for the company culture.

In this context, social activities such as football, bowling, dart, billiard and table tennis tournaments, Children and Spring Festival and excursions were arranged.

Besides, TPAO offered holiday opportunities for the employees in her own Social Complex in Güllük / Bodrum-Muğla.

LIFE QUALITY OF EMPLOYEES

Today, being aware of health, safety and environmental protection means development for the Societies and superiority in competition for the companies.

Care should be taken at maximum level about human health and

life due to industrialization, being means of happiness and social

welfare but bringing various risks such as environmental

pollution, occupational accidents, professional illnesses and

economic damages. Thus, the companies attaching more

importance to employees' health, safety and taking necessary

precautions against environmental and occupational accidents

are always ahead of their competitors in the market.

Considering the protection of the human health and natural

resources among the most significant values, TPAO has

determined its safety and environmental protection policy within

the framework of the below-stated principles as an indispensable

part of all its activities;

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION

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to our employees in the future.Our most significant values are to create a healthy and secure working environment and to leave a clean, safe environment

As Occupational Safety is an indispensable priority of all affairs

and being the inseparable part of the work, Corporation has had

significant contributions to the national economy and paid more

attention to the health of personnel and of those likely to be

affected by relevant activities. With the conscious of the fact that

the happiness of employee is the first priority, it aims at supplying

a secure work place, taking the necessary precautions against

potential hazards and risks thus trying to eliminate them

completely.

As an indication of attaching importance to our personnel, Health

Clinic, where routine health checks were executed, was modified

and a modern laboratory where various analyses were carried

out, a Dental Unit and a Health Emergency Intervention Unit were

added to the system.

Within the year, preventive measures to the occupational

accidents were emphasized and with the principle of developing

qualified personnel, 417 personnel were trained on the topics of

General Occupational Safety Rules, First Aid, Survival at Sea, Fire

Protection and Environmental Protection. The number of

Occupational Accidents was significantly reduced through the

trainings.

HEALTH AND SAFETY

Firefighting Drill

Health Unit

Collection of Spilled Oil by Skimmer

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• Human and health factor, first priority,

• Sustainable improvement through a developing performance,

• Efficient use of resources,

• An effective waste management,

• Respect to environmental values,

• Compliance with legislation,

• Preparation of urgent intervention response procedures,

• Training of employee to develop environmental consciousness,

• Effective communication among employee and society.

On the Way Through Platform

Health, Safety and Environmental Protection activities have been

carried out within the scope of Kuzey Marmara Underground

Natural Gas Storage Project, TPAO - TOREADOR Western Black

Sea Offshore Project, TPAO - bp Eastern Black Sea Offshore

Project, ACG Waste Water Process Project, TPIC-Frontera

Drilling Project realized in Georgia.

Bioremediation process is applied to remove the hazardous

wastes arising from field activities. Then, cleaning method is

carried out to prevent the formation of other chemical wastes.

TPAO concentrated on implementation studies of bioremediation

in 2006. Work on preparation of Environmental Protection Rules

regarding Corporation activities and updating of disposal

management guidelines was continued.

Besides, work on purification of waste water arising from TPAO's

oil and natural gas production activities and environmental

rehabilitation of drilling locations is carried out with great care

and attention.

ENVIRONMENTAL PROTECTION

For preparation of Environmental Impact Assessment (EIA)

reports by TPAO's experts, Class 'A' Certificate was taken from

the Ministry of Environment and Forest in the year 2000 and it has

been updated as per the latest “EIA Sufficiency Communique” in

2004.

In 2006, health, safety and environmental protection studies were

coordinated for TPAO - bp Eastern Black Sea Project, TPAO -

TOREADOR - STRATIC Western Black Sea Offshore Project and

ACG Project. EIA Report for Western Black Sea Offshore Project

was received. Other EIA Projects of TPAO are as follows:

•Şelmo-Batman Crude Oil Pipeline (EIA Preliminary Research),

•Mardin-MARSAN Natural Gas Pipeline,

•K. Marmara and Çerkezköy Ak Enerji Connections to

Değirmenköy - Trakya Glass Industry Natural Gas Pipeline,

• Eskitaş Oil Production Project,

• Kuzey Marmara and Değirmenköy Underground Natural Gas

Storage Project.

ENVIRONMENTAL IMPACT ASSESSMENT (EIA)

Before Bioremediation

After Bioremediation

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Before Bioremediation

SEISMIC DATA ACQUISITION

Seismic Data Acquisition has been carried out by Geophysical

Operations Department with two Seismic Crews. Seismic Crew-1

having 5 M26 HD/623 B P type vibrators enabled GPS system is

operated by “Vibroseis” method.

Seismic Crew-1 has been operating in 3D seismic data

acquisitions with Sercel-408 UL type recorder and it has 12

receiver lines, 120 receiver channels, totally 1.440 active recorder

channel system.

In topographic surveys, Leica GPS 530 system is being used and

required data quality control and preplanning studies are carried

out by EGHAS software.

Seismic Crew-2 is using “Dynamite” as an explosive energy

source. 13 Iveco 6x6 Truck Mounted Drilling Rigs are being used

to locate the energy sources.

Sercel SN-388 type recorder is being used by Seismic Crew-2.

This crew generally operates 2D and 3D Seismic data

acquisitions. For 3D acquisitions, the crew can operate up to 6

receiver lines. This system is planned to be upgraded and

replaced by Sercel-408 XL in 2007.

Seismic Crew-2 has been equipped with Leica GPS system 500 as

topographic instruments, while quality control and preplanning

studies are performed by EGHAS software.

To increase the production rate, quality control procedures have

been applied strongly by both seismic crews.

Furthermore, seismic field design, topographic control, recorder

control and static calculation studies are performed within the

scope of Seismic Data Acquisition Services.

EXPLORATION SERVICES

54

Solving today's oil sector problems, requires innovative technology and integration of many disciplines. TPAO offer services that satisfy your needs by means of the integrated technologies.

Vibro Trucks in Field

Gravimetric and Magnetic Surveys

Non-Seismic Data Acquisition surveys are carried out by one

Gravity and Magnetic Acquisition Crew at Geophysical Operations

Services.

Seismic Data Processing Systems

2D and 3D onshore and offshore data processing have been

realized by Focus and Geodepth softwares pertaining to Pradigm

Company. Also, Thrustline, Long Offset Seismic Software of

Geotomo Company has been used to understand the overlapping

tectonics in South Eastern Anatolia.

NON-SEISMIC DATA ACQUISITION

•2D/3D Conventional Seismic Process,•Refraction Static (Linear and Non-Linear Tomographic Analysis),•Signal Process,•Improvement in Signal to Noise Ratio,•Multiple Attenuation (RADON/SRMA),•DMO,•Pre Stack Time Migration, •2D/3D Pre Stack Depth Migration,•Post Stack Depth Migration,•2D/3D AVO, •VSP Process,•Long Offset Seismic Line Process (2D PSTM and PSDM),•Seismic Modeling.

SEISMIC PROCESS APPLICATIONS

TPAO Annual Report 2006

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Magnetometer


For seismic, well and geological data interpretations, UNIX based

softwares of Landmark and Schlumberger companies have been

used. These softwares are used for advanced seismic

interpretation, mapping and interpretation of well and geological

data. Moreover, reservoir modeling and studies related to

petrophysics are performed.

By using PC-based softwares, seismic, well and geological data

interpretation studies are performed and also, Geographical

Information Systems (GIS) are implemented. Digitalizing maps

and transferring them to GIS are performed with the highest

quality.

Besides, remote sensing analysis has been carried out for

surface geology applications and correction of existing geological

maps.

INTERPRETATION SYSTEMS

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3D Visualisation and Interpretation Center

Landmark and Charisma, Geological-Geophysical Interpretation Systems

GIS AND REMOTE SENSING APPLICATIONS

Through the goal of carrying out remote sensing studies and designing the required maps, ESRI products have been used. Also, ARBIS Project, which was structurally completed in 2005, has been implemented for displaying maps, locations, well and seismic data on PC.

3D VISUALISATION AND INTERPRETATION CENTER

3D Visualisation and Interpretation Center has been used at TPAO in order to minimize the risk factor in hydrocarbon exploration and to carry out integrated and more effective seismic data surveys in the interpretation systems through the goal of raising the discovery success ratio in new oil fields.

DATA BANK

By installing the necessary hardware and software, the project which enables the management and storage of all digital seismic data, well logs and other relevant data and also the archived documents of Exploration Department, in a single and secure environment, was completed in 2006. Training related to the project was accomplished and preparation studies for data transfer and loading are still in progress.

In 2006, technical services, analyses, projects, consulting and training programs were performed on due basis requested by universities, industrial foundations, domestic and foreign oil companies operating at home and abroad.

Mining analyses were carried out under the organization of General Directorate of Mining Affairs, on behalf of the private mining companies, environmental analyses and consulting services were also realized for the courts of justice. Furthermore, various analyses were performed for the crude oil transported by BOTAŞ.

Besides, the experts from the Engineering Division of Research Center carried out engineering and consulting field services in Turkey and abroad. In this respect, drilling fluid services were provided for 19 wells of TPAO, 10 offshore wells of TPAO - TOREADOR Western Black Sea Project, 2 wells drilled by MERTY Company, 1 well drilled by TPIC in Syria and also, 1 well drilled by HEMA Company.

Cement slurry compositions were designed for casing cementing of 44 TPAO wells, 10 offshore wells drilled by TPAO - TOREADOR in Western Black Sea, 4 wells drilled by MERTY Company, 1 well drilled by HEMA Company. In abroad, casing cementing program was prepared for 2 wells drilled by TPIC in Georgia, 1 well drilled by PETOIL in Iraq.

RESEARCH CENTER LABORATORY SERVICES

- Foraminiferal Micropaleontology,

- Palinology,

- Nannoplankton,

- Organic Petrography Laboratory,

Determination of Age and Sedimentation Medium,

Environment,

Reservoir Biostratigraphy,

Paleoclimatology, Paleogeographicy,Paleoecology Analyses,

Bio-Chronostratigraphic Analyses,

Analyses of Well Head and Field,

Palinomorph and Age Determination from Liquid,

Hydrocarbon Samples,

Sample Processing for Visual Kerogen and Whole Rock.

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STRATIGRAPHY LABORATORY SERVICES

Organic Petrographic Studies

- Petrographical Analysis,- Lithological Analysis,- Core Description,- Archive and Documentation,- Clay Mineralogy (X-Ray) Laboratory,- Scanning Electron Microscopy (SEM/EDS) Laboratory,- Sedimentology, a) Facies and Mediumistic Studies, b) Reservoir Defining and Characterization,

•Determination of Relative Abundances and Types of Wholerock and Clay Minerals,•Mining Industry (Roofing Tile, Ceramic, Cement and Clay etc. Sectors),•Medicine (Medical Geology, Pharmaceutical Materials),•Agriculture (Soil and Fertilizer Additives, Artificial Foodders),•Morphological Internal Structure Analyses,•Morphological Investigations of All Sorts of Mineral and Fossil Sampels,•X-Ray Microanalysis Spectrometer Analyses (IXRF2004-EDS),•Determination of Sedimentation Mediums,•Sedimentological Modeling,•Determination of Reservoir Facies and Their Spread,•Determination of Diagenetic Evolution.

SEDIMENTOLOGY AND RESERVOIR GEOLOGY LABORATORY SERVICES

-Pyrolsis (RE-6) Analyses,-Gas Chromotography,-Gas Chromatography Analyses,-Gas Chromotography Mass Spectrometery Analyses (Biomarker Analyses),-Stable Isotope Analyses (EA-GC-C-IRMS),

•Total Organic Carbon (TOC) Measurements in Rock Samples,•Determination of the Type and Potential of the Organic Material,•Determination of the Kinetic Parameters of the Organic Material,•Analysis of Gaseous Hydrocarbons,•Hydrocarbon Distribution Analyses in Oil and Extract Samples,•Analyses of the Soil Gas Used in Surface Geochemical Prospecting Studies,•High Temperature Gas Chromatography Analysis in Oil and Extract Samples,•Saturate and Aromatic Biomarker Analyses in Oil and Extract Samples,•Stable Isotope Analyses of Whole Oil and Saturated-Aromatic Fractions of Oil and Solid Hydrocarbons.

ORGANIC GEOCHEMISTRY LABORATORY SERVICES

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CMS 300 Test System

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Accelerated Solvent Extraction AnalysisDual Cell High Pressure High Temperature Consistometer

- Drilling and Completion Fluids Analyses,

- Cement Slurry Analyses,

- Rock Mechanics and Well Stability Analyses,

•API and High Pressure-High Temperature (HPHT) Filtration

Test,

•Measurement of HPHT Flow Properties,

•Permeability Plugging Test,

•HPHT Tickening Time Test,

•HPHT Dynamic Filtration Test,

•Static Compressive Strength Test,

•Dynamic Pressure Strength Test,

•HPHT Static Gel Strength Measurement,

•Triaxial Compressive StrengthTest,

•Static Deformability Test,

•Dynamic Deformability Test,

•Linear Swelling Test,

•Capillary Filtration Time Test.

DRILLING TECHNOLOGY LABORATORY SERVICES

- Core Analyses,- Reservoir Fluids (PVT) Analyses,- EOR Studies,

•Porosity and Permeability Measurements under Overburden Pressure,•Relative Permeability Test,•Capillary Pressure Test,•Oil, Condensate and Gas PVT Tests,•Phase Behaviour Test,•Hydrate Test,•CO Mobility Control in CO Injection by Foam, 2 2

•Polymer Gel Application for Improving Reservoir Conformance in CO Injection,2

•WOR Reduction by Crosslinked Polymer Gels.

RESERVOIR ENGINEERING LABORATORY SERVICES

- Petroleum and Petroleum Product Tests,- Water Analyses,- Gas Chromatografy Analyses, - Tracing and Controlling of Corrosion,- Well Stimulation Services,- Miscellaneous Analyses,

•Determination of Physical and Chemical Parameters of Petroleum and Petroleum Products,•Complete Analysis of Formation, Oil Field and Injection Waters,•Determination of Water Conformations to the Injection Operations,•Determination of the Composition of Hydrocarbon and Sulfur Compounds in Natural Gas and Gaseous Fuels (like LPG),•Monitoring Corrosion Coupons and Probes,•Performance Tests of Scale Inhibitors,•Determination and Evaluation of Additives Used in Well Stimulation,•Computer Simulation of Acidizing Operation by STIMCADE,•Determination of Appropriateness of Additives Used in Drilling and Well Completion Operations.

PRODUCTION TECHNOLOGY LABORATORY SERVICES

- Applied Well Control,

- Applied Drilling Fluids Technology,

- Matrix Acidizing,

- Core Analyses,

- PVT Analyses,

- Oilfield Water Treatment and Injection Quality Determination,

- Corrosion Control in Oil & Natural Gas Production,

- Sedimentology and Reservoir Geology of Carbonate and Clastic

Rocks,

- Basin Classification and Sedimentation -Tectonic Relationship,

- Petroleum and Gas Geochemistry,

- Applied Litostratigraphy and Sedimentology.

RESEARCH CENTER TRAINING ACTIVITIES

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The basic principle of our quality policy is to supply drilling services for TPAO’s and our customers’ exploration and production activities through meeting their increasing requirements and expectations with high quality and relevant cost. While conducting drilling activities with highly experienced staff, our target is to drill the wells in a safe, secure and high quality manner with low cost by applying the latest technology.

TPAO Drilling Department provides drilling, casing deployment, drilling for core plug, well control, air-foam-low pressure drilling services with the rigs having various drilling capacity.

Drilling Activities Up to Date;

Onshore Drillings

• Drilling Experience in 2.395 Wells• Deep Well Experience (6.100 m)• Deviated and Horizontal Wells• ERD (Extended Reach Drilling)• Multi Lateral Well Drillings- Batı Raman Field

Offshore Drillings

•Shallow Water Drilling (up to 80 meters water depth),•Deep Water Drilling (from 80 to 1.000 meters water depth) TPAO-TOREADOR-STRATIC Western Black Sea Joint Exploration Project,•Ultra Deep Water Drilling (Over 1000 meters water depth) TPAO-bp Eastern Black Sea Joint Exploration Project,

For providing mobilization, cost reduction, time saving and faster drilling, 800 HP MR-7000 mobile rig with the drilling capacity of 2.500 meters was delivered to TPAO in April 2007, 1.500 HP AC Drive electrical onshore rig with the drilling capacity of 5.000 meters will be delivered in 2007.

Besides, within the scope of F-320/3 Rig Upgrading Program ; main equipments of Mast, Substructures, Electrical Drawworks and Rotary Table were upgraded to 2000 HP AC Drive Electrical Rig with the drilling capacity of 6.500 meters was produced by National Oilwell Varco (USA) .

DRILLING SERVICES

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SoilMec MR 7000 Mobile Drilling Rig

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Drilling Activity

WELL COMPLETION SERVICES

Well Completion Services of TPAO provides various well

completion services in oil, natural gas and geothermal wells

drilled as exploration, appraisal and production wells in-house

and abroad and also, cementing, line testing, logging, well

stimulation and workover services requested by other oil

companies are supplied in line with TPAO’s vision with the

principle of reaching international standards.

Rig TypeCapacity

(Tons)

20

Specification

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

RODPULLER-4

RODPULLER-5

RODPULLER-6

RODPULLER-7

RODPULLER-8

RODPULLER-9

RODPULLER-10

20

20

25

25

25

25

RODPULLER RIGS

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Rig Type

IDECO-3

IDECO-5

IDECO-6

IDECO-7

IDECO-8

IDECO-9

IDECO-10

IDECO-11*

F.COOPER-1

F.COOPER-2

NAT-1

Capacity(2 7/8” Tubing) (Meter)

4.500

4.500

4.500

4.500

4.500

4.500

4.500

4.500

4.500

4.500

5.500

Specification

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

Mobile

* IDECO-11 Workover Rig operates in Kazakhstan.

WORKOVER RIGS

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WORKOVER OPERATIONS

Well completion, re-completion and production string repair

activities in-house and abroad are performed with 11 workover

rigs including new NAT-1, 7 rodpuller and their equipments.

NAT-1 Workover Rig

Rodpuller Rig

Rodpuller Rig

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LOGGING OPERATIONS

Open Hole, Cased Hole and perforating services are supplied with 5 digital, 2 analog logging trucks and 2 log skid units totaling 9 logging units. Logging operations are performed with new IQ and INSITE tools.

TECHNICAL OPERATIONS

Cementing, acidizing, and leak off operations are performed with 12 pumping units and their equipments (cement silos and batch mixers, etc.) and also, DST operations are performed with 11 DST equipments.

Unit Type

BJ-1

BJ-2

BJ-3

BJ-4

BJ-5

BJ-6

BJ-7

T-10

HT-1

HT-2

OW-1

ACID TRUCK

Pump Type, Number

PACEMAKER,2

PACEMAKER,2

PACEMAKER,2

PACEMAKER,2

PACEMAKER,2

PACEMAKER,2

PACEMAKER,2

T-10,2

HT-400,1

HT-400,2

OIL WELL 2-48 PHD,2

PACEMAKER,1

Pump Power (HP)

900

900

500

1.300

1.300

1.300

900

520

340

680

680

450

Max Operating Pressure

(PSI)

8.000

10.000

10.000

10.000

10.000

10.000

10.000

8.000

8.000

8.000

8.000

10.000

PUMPING UNITS

System

LOG IQ SYSTEM

DDL-V / ANALOG

DIGITAL DDL 1

WARRIOR SYSTEM

DIGITAL EXCELL 2000 DBL DRUM

DIGITAL DDL V

ANALOG

DIGITAL EXCELL 2000 DBL DRUM

LOG UNITS

DIGITAL DDI-V

Model

INTER-COF-1991

INTER-TRANS.II-1979

SKID UNIT

SKID UNIT

INTER-COF-1986

INTER-COF-1986

FORD 3014-1988

INTER-COF-1986

INTER-COF-1982

Power (HP)

300

280

240

240

300

300

143

300

300

Log Unit

Log Tools

Pumping Unit

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TPAO District Managements have played an active role in the economic and social development of the region, while conducting their activities.

Building of Batman District Management Turkey's First Oil Production Well, Raman-8

At the Dodan Field, totally, 12 billion scf CO was produced and 2

refined. Then, CO was compressed and transported to the 2

B.Raman Field via pipeline and was injected to 80 CO injection 2

wells. Also, 4,8 billion scf of CO was re-injected into the reservoir 2

by re-cycle compressors.

With the aim of protecting the soil and preventing soil pollution during and after hydrocarbon exploration and production activities, Batman District Management concentrated on the implementation studies of bioremediation method used by the petroleum companies worldwide, in addition to the rehabilitation studies of contaminated soil through neutralization and stabilization methods. At the production fields, 150 new concrete mud-pits were built and brought into operation to prevent environment pollution and to control the flow of oil at well-head.

Batman District Management has also played an active role in the economic and social development of the region while conducting all these activities. Batman, before the oil discoveries, was a small village, namely Iluh. It has become an important province in South Eastern Anatolia with these discoveries. Batman has gained a great dynamism in the economical and social areas with the discovery of oil and establishment of the Refinery.

Today, Batman, as being located around TPAO complex and plant, has a great deal of contribution in national economy by increasing the employment volume in the region.

Batman District Management has been continuing its activities in the campus having a wide-range of social facilities. Moreover, the District Management contributes to education of the people in the region with the school situated in the complex.

It is envisaged that Batman District Management will boost its activities with great enthusiasm and endeavor in forthcoming years for achieving TPAO's vision of becoming a company meeting domestic oil and natural gas demand.

Exploration, drilling and production activities of crude oil and natural gas which are vital inputs of national economy have been carried out continuously since 1954. Batman District Management has an important and different position in oil sector as it is located in the region where the first oil discovery was realized and crude oil production commenced.

The first oil discovery in Turkiye was realized at the Raman Field in 1945 by MTA and the first production in economical means was realized in Raman-8 well in 1948. After foundation of TPAO in 1954, Batman District Management played a leading role in the exploration, drilling, production and refinery activities of the country.

In line with intensive exploration, drilling, production activities and oil field development studies in Batman District, drilling activities were continued in 2006. In this context, 46.075 m of drilling was realized in 33 wells with 4 active drilling crews and 5 drilling rigs.

New discoveries were realized at the G.Selmo and G.Kırtepe fields in 2006. From these fields, G.Kırtepe field was put into production, and new well drilling activities have been continued to develop the G.Selmo oil field reservoir.

In 2006, new appraisal and production wells were drilled in the fields near Syria border where high potential of oil production is estimated to exist. 9 wells were drilled and put into production at the B.Kozluca and Çamurlu fields. At the D.Sınırtepe field, which was discovered newly near the Syria border, one well was put into production and field development activities have been continued.

In order to enhance oil production at the B.Raman Field, a total of 7 wells were drilled and put into production. In Raman field 4 wells were drilled and brought on line. At the B.Raman and Raman fields, drilling activities with the aim of field development have been continued.

In 2006, the production activities in the Batman District were continued from 595 wells in 36 oil fields. As a result of these activities, 6,9 million barrels of crude oil and 54 thousand barrels oil equivalent of natural gas were produced in 2006. Furthermore, the abandoned wells at the Yolaçan, G.Hazro and İkiztepe Fields were brought on line.

BATMAN

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Thrace District Management has intensified its activities especially in natural gas exploration and production investment in recent years. TPAO has initiated its exploration and drilling activities in Thrace Basin with Uluman-1 well, in 1960. As a result of the studies performed in Thrace District, the first economical natural gas was discovered in 1970 at the Hamitabat and Kumrular Fields and the first oil discovery was realized in K.Osmancık and Deveçatak wells which were drilled in 1973-1974.

Due to substantial increases in TPAO's exploration and production activities in Thrace Region, TPAO Marmara District Management was founded in Tekirdağ. Furthermore, District Management's name was changed as Thrace District Management and moved to Lüleburgaz in 1984.

TPAO will increase its contributions to the national economy with its Natural Gas Storage Project and by discovering new fields as well as natural gas production in Thrace District. Our personnel having team spirit and total quality approach, have been carrying on their self-sacrifying studies at accelerated pace.

In 2006, 39.884 m of drilling activities were realized in 19 wells by Thrace District Management.

Natural gas discoveries in B.Sinekli-1, Karatepe-1, İncilibayır-1, Yeşilgöl-O1, Hamitabat-O1, D.Hamitabat-O1 exploration wells were realized. B.Sinekli-O1 appraisal well was completed as "gas well".

In addition, B.Velimeşe-1 and Reisdere-1 exploration wells drilled by TPAO - AMITY OIL joint venture in Thrace Region were resulted with natural gas discoveries. D.Adatepe-4 and Adatepe-6 appraisal wells opened jointly by AMITY OIL were completed as "gas wells".

Also, natural gas discoveries in Akkaya-1/A and Bayhanlı-1 wells drilled by TPAO - TOREADOR - STRATIC joint venture were realized. Akkaya-2,3, Ayazlı-3/A, D.Ayazlı-1,2, Akçakoca-3 wells were completed as "gas wells".

3In 2006, 399 million sm of natural gas and 140 thousand barrels of crude oil were produced in Thrace District. Crude oil and condensate produced from TPAO's fields have been transported to TÜPRAŞ by tankers.

The natural gas produced from the TPAO's fields is transported by TPAO pipelines 365 km in length and sold to 63 companies located in the region most of which are in textile, food and glass industries. Thus, TPAO contributes to the economy of the Thrace Region by providing low-cost input to the industrial plants that play significant roles in the national economy.

In the scope of the field development near Akçakoca in Western Black Sea, exploration and production activites were intensified. Natural gas production was initiated with the installation of tripod production platforms and completion of Çayağzı Natural Gas Process Facility in May 2007.

In line with requirement of storing natural gas of our country, K.Marmara and Değirmenköy Undergroung Natural Gas Storage Project was put into service in the beginning of 2007. Studies have been initiated for new possible natural gas storages having strategic importance.

THRACE

General View of Thrace District Management (Lüleburgaz)

The Edirne Bridge Over Meriç River

Silivri Natural Gas Storage Facilities


Building of Adıyaman District Management

ADIYAMAN

In Adıyaman, TPAO has accelerated its activities after the oil

discovery in Adıyaman Field that was put into production in 1971.

With the oil discoveries at the Çemberlitaş Field ın 1982, at the

Karakuş Field and its surroundings in 1988, Adıyaman has

become the most oil producing region of Turkiye. As a result of the

increase in activities, Adıyaman District Management was

established in 1992.

Depending upon the continuous activites in 2006, 16.875 m of

drilling in 9 wells was realized. D.Karakuş-1 was completed as

"oil well". After completing the workover operations, the well was

put into production. As of end of 2006, 14.815 barrels of oil

production from the well were realized. With the aim of

developing the field, drilling activities for 2 new wells were

initiated.

In 2006, 3,53 million barrels of oil production from 172 wells in 22

fields were realized. The cumulative oil production from the

region has reached to 171 million barrels by the end of 2006.

The breakdown losses in the wells were reduced substantially, 12

abandoned wells were re-completed and brought on line. Thus,

additional production of 76.424 barrels of oil was realized in 2006.

Furthermore, pumping and waste water systems were

rehabilitated in order to operate more productively through

reducing energy consumption and the whole equipments were

re-designed to get the maximum efficiency. Compared to 2000,

10.786.308 kWh/year energy saving was obtained.

Adıyaman District Management plays a significant role in

exploration activities performed in cooperations with domestic

and foreign firms. In this respect, the technical support and

equipments were supplied to the Western Black Sea project

performed jointly with TOREADOR-STRATIC and Zorlu Energy

(Adana), Georgia and Kazakhstan Projects performed by TPIC

(TPAO Subsidiary), within the context of geology, drilling and well

completion services.

Adıyaman District Management has realized remarkable

activities in the region and continued its aid activities for road,

school, police station and mosque constructions and thus, has

made a great deal of contribution to the development of social life

in the region.

Besides, as a sign of our environmental sensitivity, all

precautions have been taken. Various seminars on the subject of

health and safety were organized and every personnel were

acquainted with safety consciousness. Furthermore, on-the job

training programmes have been accelerated for the staff by

promoting their participation in various seminars, exhibitions and

fairs in order to acquaint them with global consciousness.

Karakuş Oil Production Tanks


Karakuş Tumulus

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TPAO, with its subsidiaries and associated company is carrying out its activities, both domestically and internationally to meet crude oil, natural gas and oil products demand of Turkiye most economically.

Strategic Alliance Agreement Between Petroecuador and TPIC

• TPIC, Domestic and International Petroleum Activities

• TPOC, International Petroleum Activities

• TPBTC, Participation in BTC Crude Oil Pipeline Project

• TPSCP, Participation in South Caucasus Pipeline Project

SUBSIDIARIES

• KazakhTurkMunai Ltd. Joint Company

Petroleum Activities and Trade in Kazakhstan

ASSOCIATED COMPANY

TURKISH PETROLEUM INTERNATIONAL COMPANY LTD. (TPIC)

TPIC was established in 1988 to operate in all branches of oil

industry comprising exploration, drilling, field development,

production, transportation, refining, crude oil and oil products

trading and marketing.

TPIC aims to expand its activities in countries in target countries

such as Iraq, Syria, Libya, Azerbaijan, Turkmenistan, Uzbekistan,

Kazakhstan and Ecuador.

TPIC focused on making agreements to transport Iraqi oil to

Mediterranean ports and has taken significant steps for

constructing pipelines and storage facilities. TPIC will accelerate

additional investments such as new pipelines, refinery and

storage facilities.

SUBSIDIARIES

KAZAKHSTAN ACTIVITIES

TPIC Aktobe Branch Office was founded in 1999 and continues its

oil field services in Kazakhstan. TPIC rendered her first

international drilling service within the scope of TEPCO Project in

1999.

Between 2000 and 2002, TPIC carried out workover, logging and

perforating services for KazakhTurkMunai Ltd. with one rig. In

2004, well completion operations of two wells were carried out

for Caspineft TME Company and TPIC provided materials and

equipment hiring services for this company. According to the

contract signed in June 2003 with KazakOilAktobe Workover

Company, well completion operations were carried out for 92

wells of which 23 wells were completed in 2006 and well

completion studies have been continued in 2007. In addition, well

completion services are carried out for KTM in 9 wells and for

Aral Company in 1 well.

GEORGIA ACTIVITIES

Within the framework of the drilling contract signed on August

30, 2005 with Frontera Eastern Georgia Ltd. Company, 3 wells

were drilled and the project was completed on August 16, 2006.

Besides, through the goal of managing the operations and

following up new opportunities in Georgia, a branch office in

Tbilisi was opened on November 28, 2005.

IRAQ ACTIVITIES

Between 2001 and 2002, TPIC drilled 20 wells with 3 drilling rigs in

Khurmala field for North Oil Company (NOC) and signed a service

contract covering drilling, logging and cementing services for 10

wells in the same field on April 14, 2005. A Memorandum of

Understanding regarding the cooperation was signed with Iraq's

Oil Ministry in Ankara in May 2006.

Niko-1 Well, Georgia

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SYRIA ACTIVITIES

A drilling and mud service contract was signed on July 11, 2006 with Dove Energy Ltd. for 1 well and the operations were completed. A drilling contract for 1 well was signed on November 9, 2006 with IPR MEL Company and the operations have been continued. Moreover, through the goal of managing TPIC operations in Syria, a branch office was opened in Damascus in 2006.

TURKIYE ACTIVITIES

Within the scope of the contract signed on March 3, 2006 with Zorlu Petrogas, Oil, Gas and Petrochemical Products Construction Inc., the project was completed after drilling of 1 well in May 2006. Drilling activities were realized in the Batman and Thrace regions with TPIC’s drilling rigs.

In addition, under joint partnership of N.V.Turkse Perenco and TPAO, a drilling contract for 1 well in Silopi was signed on November 13, 2006 and the operations are continued. Within the scope of the drilling contract for 2+3 wells singed on June 16, 2006 with Hema Endüstri A.Ş. Energy Group, the first well operation is being continued in Bartın. Furthermore, a drilling contract was signed on October 13, 2006 with Gürmat Energy Investments Trading Co. for 5 firm and 4 optional wells to be drilled at the Aydın-Germencik geothermal field. The operations are planned to be initiated in March 2007.

OIL PRODUCTS TRADE

Within the scope of Oil Products Trade with SOMO (State Oil Marketing Organization) commenced in 2003, TPIC has delivered 96.500 tons of oil products to Iraq in 2006. TPIC has delivered 1,4 million tons of oil products from the end of 2003 up to end of 2006.

BUNKER ACTIVITY

TPIC is on the way of being an integrated company, with bunker project, directly serving to its strategic aim defined as “becoming one of the majors in international oil and oil products trade”.

In order to relize this project, TPIC has obtained “Bunker License” from Energy Market Regulatory Authority (EMRA) on May 26, 2006 in accordance with Petroleum Market Law No 5015. For implementation of the project, Ceyhan and Marmara regions have been determined as the primary targeted markets.

STORAGE FACILITIES

In order to strengthen its position in the Mediterranean oil market, TPIC realized an investment by constructing new storage

3tanks with 86 thousand m capacity at BOTAŞ / Dörtyol facilities. 3Consequently total capacity has reached to 100 thousand m in the

region. TPIC realized an investment at BOTAŞ / Dörtyol facilities covering loading/discharging facility to enable about 400 thousand tons of white products to be handled per month. The facility has the highest tanker loading capacity in the region.

With this investment, it was targeted to meet TPIC's needs in domestic and international markets and also needs of oil distribution and marketing companies.

Bunker Activity

TP PETROLEUM DISTRIBUTION COMPANY

In order to realize the activities such as storing, bunkering, importing and marketing of oil products to both domestic and eligible consumers, within the context of new Petroleum Market Law, TP Petroleum Distribution Company was established on February 16, 2006 and the company has obtained Distribution License on October 19, 2006 from EMRA for a period of 15 years.

HABUR – GASOIL TRADE

Through the Habur Facilities at Iraq border, TPIC has sold totally 3,7 million liters of gasoil to both international market and to domestic fuel distribution companies in 2006.

BUSINESS DEVELOPMENT

Business development studies were focused on acquiring licenses in exploration, development and production fields by following business opportunities in Azerbaijan, Iraq, Georgia, Kazakhstan and Ecuador.

Oil Distribution Activity

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TURKISH PETROLEUM BTC LTD. (TPBTC LTD.)thTPBTC Ltd. was incorporated in Cayman Islands on 20 February

2002 in order to participate in Baku–Tbilisi–Ceyhan Main Export

Crude Oil Pipeline (BTC) Project, which has a primary objective of

carrying the ACG oil to international markets, and the Project

Companies (BTC Co., BTC Int. Investment Co. and BTC Finance

B.V.) on behalf of TPAO.

TPBTC Ltd. currently has a 6,53 % share in the BTC project.

TURKISH PETROLEUM SCP LTD. (TPSCP LTD.)

TPSCP Ltd. was incorporated in Cayman Islands on May 2002

in order to participate in South Caucasus Pipeline (SCP) Project,

which has been established to carry Shah Deniz natural gas, and

the other project companies in accordance with the project

agreements on behalf of TPAO.

TPSCP Ltd. has been a party to SCP project agreements which

have been signed on February 27, 2003 under the guaranty of

TPAO. TPSCP Ltd. currently has a 9% share in the SCP project.

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TURKISH PETROLEUM OVERSEAS COMPANY LTD. (TPOC)

TPOC Ltd. was established in Jersey, Channel Islands in 1996 as

an affiliate of TPAO to carry out all activities related with technical

and commercial oil and gas trade.

TPOC Ltd. currently participates in Shah Deniz, 9%, Kurdashi 5%,

and Alov 10%, Projects in Azerbaijan sector of the Caspian Sea.

TPOC is working as an operator of Libyan exploration projects,

with 51% share in NC-Block-188 (Ghademes Basin) and NC-

Block-189 (Sirte Basin) and with 100% share in NC-Block-147/3-4

(Murzuq Basin). In addition, TPOC Ltd. holds 13,5% share in IIA, IIB

and III Blocks in Georgian region of Black Sea.

BTC Crude Oil, SCP Natural Gas Pipelines

ASSOCIATED COMPANY

KAZAKTURKMUNAI (KTM) LTD. JOINT COMPANY

KazakhTurkMunai (KTM) Ltd. Joint Company was established by the foundation agreement signed between TPAO and the Kazzarubejgeologia State Enterprise (KZBG) of the Kazakhstan's Ministry of Geology and Earth Preservation on the 9th of January 1993. By this Agreement, setting the shares as KZBG 51% and TPAO 49%, KTM Ltd. has acquired hydrocarbon exploration and exploitation rights in 7 blocks in 4 different regions of Western Kazakhstan.

KTM Ltd. signed, with Kazakhstan Government, the “Petroleum Exploration, Development, Production and Marketing Contract” which governs the activities within these blocks, on May 31, 1994. The contract has set out the participation interests as 49% TPAO, 26% KZBG and 25% Munaigaz, and established an 11 (4+4+3) years of exploration period starting from February 4, 1993 and a 25 years of production period for each field starting from the date of economic discovery.

The South Karatobe Field in Aktobe Region was also added to the assets of KTM Ltd. by the “Contract on the Completion of Exploration and Production of Hydrocarbons for the South Karatobe Oil Field” signed, on May 18, 1999, between KTM Ltd. and the Agency of the Republic of Kazakhstan on Investments.

According to the results of intensive exploration operations, KTM Ltd. has relinquished 5 blocks completely and 2 blocks partially which were granted by the Contract dated May 31, 1994. KTM Ltd. still owns Block IV in Aktau Region and Block IIa in Aktobe Region under this Contract and South Karatobe license under the Contract dated May 18, 1999.

In Block IV at Aktau Region; the West Yelemes oil field was declared as commercial discovery on March 20, 1996 and the Northeast Saztobe and the Southeast Saztobe oil fields on May 13, 1999. These fields have been on stream since May 1999. The East Saztobe and Tasım-Bekbolat oil fields within the same Block, are subject to test production. The total average daily oil production of the fields within this block is 2.270 barrels.

The Laktibay oil field within the Block IIa at Aktobe Region, was declared as commercial discovery on April 24, 2003. The field has been on stream since November 1999 and its average daily production is 1.550 bpd. The other oil field at Aktobe Region, the South Karatobe, was declared as commercial discovery on February 23, 2003. It has been on stream since May 2003 and its average daily production is 2.780 bpd. KTM Ltd. produced a total of 2.4 million barrels of oil in the year 2006. As of end of 2006, its cumulative production is 18,2 million barrels of oil.

Process Pumping Station, West Yelemes


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In 2006, 27 % of the total domestic investment expenditures was for exploration, 27 % for production and 46 % for both drilling and the others.

Domestic Oil & Natural Gas Exploration and Development Investment Expenditures (Thousand USD)

2004 2005 2006

52.651

86.641

40.346

30.177

209.815

42.950

68.751

93.982

76.929

282.612

112.128

110.407

151.260

39.696

413.491

2004 2005 2006

Exploration

Production

Drilling

Others

TOTAL

36.819

60.588

28.214

21.103

146.724

31.815

50.927

69.616

56.984

209.342

78.083

76.885

105.334

27.644

287.946

1$=1,43 YTL 1$=1,35 YTL 1$=1,436 YTL

Domestic Oil & Natural Gas Exploration and Development Investment Expenditures (Thousand YTL)

Exploration

Production

Drilling

Others

TOTAL

INVESTMENTS

In 2006, TPAO's domestic investment expenditures were 288 million USD, while it was projected 368 million USD in 2007.


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By the end of 2006, approximately 88 % of the total cash call

investments are realized in Azerbaijan projects. The projects in

Azerbaijan constitute great importance for both TPAO and the

country.

Countries Investments in 2006 Cumulative Investments

AZERBAIJAN 412.588.115 2.507.436.207

ACG Project 248.714.684 1.690.714.560

Shah Deniz Project 80.640.000 336.710.878

SCP Project 27.450.000 107.478.000

Alov Project 3.160.005 26.101.507

Kurdashi Project - 17.302.390

BTC Project 51.841.426 324.152.023

Baku Offices 782.000 4.976.849

KAZAKHSTAN - 287.673.038

TURKMENISTAN 97.321 4.514.472

LIBYA 24.814.7822.789.000

Libya Block 147/3-4 2.605.000 9.867.000

Libya Block NC/188-NC/189 184.000 14.947.782

GEORGIA 458.747 565.668

ALGERIA 25.548.592-

TOTAL 2.850.552.759415.933.183

USD

Exploration and Development Invesments Abroad

Besides, its domestic oil and gas exploration and production,

TPAO started its international activities in 1993, which grew

continuously over the years.


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BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The consolidated financial statements of Türkiye Petrolleri A.O have been prepared in accordance with International Financial Reporting Standards (IFRS). The company, which is incorporated in Turkiye, maintains its books of accounts and prepares its statutory financial statements in accordance with the Turkish Commercial Code and Tax Legislation and the Uniform Chart of Accounts issued by the Ministry of Finance. The foreign subsidiaries and associates maintain their books of accounts in their local currency in accordance with the related local laws and regulations in force in the respective countries where they are registered and operate. The financial statements have been prepared from statutory financial statements of the Company and its subsidiaries and associated with adjustments and reclassifications for the purpose of fair presentation in accordance with IFRS.

Currency Measuring Unit, Reporting Unit and Methodolgy of Foreign Currency Conversion Inflation adjustments have been made to the financial statements of TPAO by using wholesale price index (wpi) to disclose the effect of changes in the general purchasing power of the Turkish Lira, as of December 31, 2006 and and December 31, 2005, in accordance with IAS 29.

IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of the measuring unit at the time of the balance sheet and the the balance of previous periods to be restated at the same terms by using general price index. One of the characteristics that necessitates the application of IAS 29 is a cumulative three-year inflation rate approaching or exceeding 100%. Such cumulative rate in Turkiye is 32,79% for the three years ended December 31, 2006 (December 31, 2005 - 35,61%) based upon the wholesale price index announced by the Turkish Statistical Institute (“TURKSTAT”).

Although the three year cumulative inflation rate was below the rate indicated in the preceding paragraph, since the majority of the people keep their savings in foreign currencies, the prices of goods and services are set in terms of foreign currencies, interest rates, prices and wages are expressed in terms of the general price indexes, and the market prices are determined by taking into account the interest cost to offset the losses of purchasing power including the short-term transactions, and such examples show the characteristics of a hyperinflationary environment and therefore the accompanying consolidated financial statements are adjusted according to inflation arrangements described as in IAS 29.

The relevant years' indexes and conversion coefficients are as follows:

Date Index Conversion Coefficient

31 December 2003 7.382,1 1.327931 December 2004 8.403,8 1.166531 December 2005 8.785,7 1.115831 December 2006 9.802,7 1.0000


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The main principles for the above-mentioned restatements are as

follows:

- The financial statements which are stated in terms in terms of

the previous year's price levels are restated in terms of the

current Turkish Lira at 31 December 2006.

- Monetary assets and liabilities reported in the balance sheet a 31

December 2006 are not restated because they are already

expressed in terms of the monetary unit current at that balance

sheet date.

- The inflation adjusted capital was derived by indexing cash

contributions, dividends reinvested, legally accumulated profits,

affiliates' and tangible fixed assets' profits added to the capital are

transferred to capital from the date they were contributed.

- Non-monetary assets and liabilities which are not carried at

amounts current at the balance sheet date and equity capital

(except the revaluation fund which is eliminated in the inflation

accounting practice) are restated by applying the relevant

conversion factors.

- The gain or loss on the net monetary position as the result of the

effect of the general inflation differs accordingly as a result of the

restatement of non-monetary assets, shareholders' equity and

income statement items. The gain or loss on the net monetary

position has been derived as a difference resulting from the

restatement of non-monetary assets, owners' equity and income

statement items.

- All items in the income statement are restated by taking into

account the changes occurred between index at the transaction

date and the index at the balance sheet date, with the exception of

depreciation, amortization, gain or loss on disposal of non-

monetary assets (which have been calculated based on the

restated gross book values and (- ) accumulated

depreciation/amortization).

Currency Measuring Unit, Reporting Unit and Methodolgy of

Foreign Currency Conversion of Subsidiaries and Affiliates:

Financial statements of the foreign subsidiaries, prepared in US

Dollars and consolidated accordingly, are converted into New

Turkish Lira at the closing-rate of foreign currency at the balance

sheet date before inclusion into the consolidated statements.

Measurement Currency

KTM

TPOC

TPBTC

TPSCP

TPIC

TPPD

USD

USD

USD

USD

USD

USD

Associated Company and Subsidiaries


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Conversion of Financial Statements to Foreign Exchange As a Matter of Convenience

For the convenience of the reader, the accompanying financial statements have been converted from New Turkish Lira to USD with the Central Bank buying exchange rate at period-end of 31 December 2006 (USD = YTL 1,4056). This transaction is not intended to comply with the provisions of IFRS 21 "The Effects of Changes in Foreign Exchange Rates" or Financial Accounting Standards Board No.52 "Foreign Currency Conversion" for the exchange of financial statements in a highly inflationary economy. The Turkish Lira amounts, underlying the conversion, have been re-measured in compliance with International Accounting Standard 29, "Financial Reporting in Hyperinflationary Economies" as explained above.

Principles of Consolidation

The Consolidated financial statements comprise the financial statements of TPAO ("the Parent Company", "the Company") and its subsidiaries, which it controls, drawn up to 31 December 2006. Subsidiaries are defined as the companies which the Parent Company directly or indirectly owns 50% of the share, voting rights or majority of the management; or which the Parent Company controls. Controlling power refers to the power to have an active role and govern financial and operating policies of the subsidiary so as to obtain benefits from its activities. Companies where the power to govern does not exist but the parent has an interest of 20% to 50% in the share capital are defined as affiliated companies.

The subsidiaries and the affiliates' titles and their shareholding percentages at 31 December 2006 are as follows:

KTM

TPOC

TPBTC

TPSCP

TPIC

TPPD

Associated Company and Subsidiaries

Effective Rate of Ownership (%)31 December 2006

49

100

100

100

100

100

The subsidiaries and the affiliates' titles and their shareholding percentages as of 31 December 2006

The Company's participating interest in KTM is reflected to the financial statements by using equity method. The equity method is a method of accounting whereby an equity investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net profit or loss of the associate (investee). In the equity method, the profit and losses of the subsidiaries, up to the amount of the Parent Company's share of interest, are reflected to the income statement. Net assets of the subsidiaries, also up to the amount of the Parent Company's share of interest, are disclosed in the balance sheet. In the case of a long term value sag determination, provisions are allocated by the Parent Company. The book value of the investment in the capital of subsidiaries held by the parent company has been offset against the equity of the invested companies and all inter-company purchase and sales and all accounts receivable and payable balances have been clarified.

GoodwillGoodwill arising on consolidation represents the excess of the cost of acquisition over TPAO's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is recognized as an asset and is subject to impairment review. Goodwill arising on the acquisition of an associate is included within the carrying amount of the associate. Goodwill arising on the acquisition of subsidiaries and jointly controlled entities is presented separately in the balance sheet.

On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of unamortized goodwill is included in the determination of the profit or loss on disposal. Negative goodwill represents the excess of TPAO's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition over the cost of acquisition. Negative goodwill is released to income based on an analysis of the circumstances from which the balance resulted. Negative goodwill arising on the acquisition of an associate is deducted from the carrying value of that associate. Negative goodwill arising on the acquisition of subsidiaries or jointly controlled entities is presented separately in the balance sheet as a deduction from assets. No significant goodwill arose in the acquisition of subsidiaries or associates by TPAO.

Accounting ForecastsThe preparation of consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results might differ from these estimates. These estimates are reviewed periodically and, as adjustments become necessary they are reported in the income statement in the periods in which they become known.

Related PartiesFor the purpose of these consolidated financial statements, subsidiaries and affiliates and the Treasury (the Company's sole shareholder) are referred to as related parties.

Allowance of Doubtful ReceivablesDebtors are stated in the balance sheet at estimated net realizable values. Net realizable value is the invoiced amount less reserves for doubtful debts. Allowances are recognized against doubtful debts, which are under legal proceedings. Allowance for other receivables is provided based on an amount that management believes is adequate to absorb future losses on existing receivables based on an analysis of balances by age, previous loss experience and general economic conditions (based on the best adequate estimate of management).

Revenue RecognitionGroup's revenues are comprised of all the services and sales income (except the net income within the Group). Revenues are recorded as the net invoice value at the time when the services are provided. Revenue is shown net of value added and sales taxes, discounts and returns, all restated in equivalent purchasing power at 31 December 2006. Sales of oil and other products are recorded when title passes to the customer. Revenue from the production of oil and natural gas in which the Group has an interest with other parties to the project are recognized on the basis of the Group's working interest in the project.

InventoriesInventories are stated at the lower of cost, which restated at the equivalent purchasing power at 31 December 2006, and net realizable value. In accordance with that principle, necessary provision is set for the diminution of value of inventories and accounted in previous year's expense account. Costs comprise direct materials and, where applicable, direct labor costs and those overheads that have been incurred in bringing the inventories to their present location and condition but excludes borrowing cost. Cost is calculated by using the weighted average method.

Successful Effort MethodThe Company enters the petroleum research and development costs in its accounts in accordance with successful effort method. Accordingly, all the costs incurred in petroleum research activities are capitalized in case of a proved reserve. If not all these costs are transferred to the expense accounts. But pre-drilling exploration costs are directly transferred to the expense accounts in the income statement regardless of whether or not proved reserves are found. However, development expenses are incurred in order to improve the production of crude oil or natural gas, consequently they are capitalized even though they don't reach to their intended targets.

A proved reserve is depleted using a rate derived after dividing actual production by forecasted total estimated reserve amount.


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ASSETS

CASH

BANKS

MARKETABLE SECURITIES

ACCOUNT RECEIVABLES-NET

NOTES RECEIVABLES-NET

DUE FROM PARTICIPATIONS

DUE FROM RELATED PARTIES


DUE FROM SHAREHOLDERS

OTHER RECEIVABLES

INVENTORIES

PREPAID EXPENSES AND INCOME ACCRUALS

OTHER CURRENT ASSETS

CURRENT ASSETS

DEPOSITS & GUARANTEES GIVEN


INVESTMENTS

TRADE RECEIVABLES

PARTICIPATIONS

TANGIBLE FIXED ASSETS ( NET)

INTANGIBLE FIXED ASSETS (NET)

WELLS IN PROGRESS

WELLS IN PRODUCTION

ADVANCES GIVEN


DEFERRED TAX ASSETS

LONG-TERM ASSETS

TOTAL ASSETS

29 51

240.506 547.322

242.162 296.115

6

1.044 1.887

199.624 191.734

72.759 6.840

4.242 3.347

760.369 1.047.302

5.011 65

524.565 210.306

911.493 1.091.263

9.573 20.014

38.093 32.645

651.500 589.846

18.307 14.429

132.342 96.420

30.618

241 9.625

1.065 486

35.591 39.915

2.358.398 2.105.014

3.118.767 3.152.316

2006 2005

TURKISH PETROLEUM CORPORATIONCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006 AND DECEMBER 31, 2005 (THOUSAND YTL)


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LIABILITIES

41.881

10.904

156.360 169.752

147

38.705 15.116

4.694 109.585

54.716 55.629

17.388 572

69.945 56.551

341.809 460.139

426.435

77

16

84.205 83.880

176.401 32.776

15

260.624 543.184

3.297.594 3.219.778

3.227.844 3.055.925

(4.407.815) (4.297.150)

398.712 170.440

2.516.334 2.148.993

3.118.767 3.152.316

2006 2005

TURKISH PETROLEUM CORPORATIONCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006 AND DECEMBER 31, 2005 (THOUSAND YTL)

SHORT TERM BANK LOANS

CURRENT PORTION & INTEREST OF LONG TERM BANK LOANS

TRADE PAYABLES

NOTES PAYABLES

DUE TO SHAREHOLDERS

DUE TO RELATED PARTIES

OTHER PAYABLES

TAX LIABILITY

PROVISIONS FOR LIABILITIES AND EXPENSES

INCOME FOR FUTURE PERIODS & EXPENSE ACCRUALS

DEFERRED TAX LIABILITY

SHORT TERM LIABILITIES

BANK LOANS

DUE TO SHAREHOLDERS

OTHER PAYABLES

PROVISION FOR RETIREMENT PAY LIABILITIES

PROVISION FOR OTHER DEBT

INCOME FOR FUTURE PERIODS AND EXPENSE ACCRUALS


LONG TERM LIABILITIES

CAPITAL

RESERVES

RETAINED EARNINGS

NET PROFIT / (LOSS) FOR THE PERIOD

TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


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ASSETS

CASH

BANKS

MARKETABLE SECURITIES

ACCOUNT RECEIVABLES-NET

NOTES RECEIVABLES-NET

DUE FROM PARTICIPATIONS



DUE FROM SHAREHOLDERS

OTHER RECEIVABLES

INVENTORIES


OTHER CURRENT ASSETS

CURRENT ASSETS

DEPOSITS & GUARANTEES GIVEN


INVESTMENTS

TRADE RECEIVABLES

PARTICIPATIONS

TANGIBLE FIXED ASSETS (NET)

INTANGIBLE FIXED ASSETS (NET)

WELLS IN PROGRESS

WELLS IN PRODUCTION

ADVANCES GIVEN


DEFERRED TAX ASSETS

LONG-TERM ASSETS

TOTAL ASSETS

21 36

171.106 389.387

172.284 210.668

4

743 1.342

142.020 136.407

51.764 4.866

3.018 2.381

540.955 745.092

3.565 46

373.196 149.620

648.473 776.368

6.811 14.239

27.101 23.225

463.503 419.640

13.024 10.265

94.153 68.597

21.783

171 6.848

758 346

25.321 28.397

1.677.859 1.497.591

2.218.814 2.242.684

2006 2005

TURKISH PETROLEUM CORPORATIONCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006 AND DECEMBER 31, 2005 (THOUSAND USD)


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LIABILITIES

29.796

7.758

111.241 120.769

105

27.536 10.754

3.339 77.963

38.927 39.577

12.371 407

49.762 40.233

243.176 327.361

303.384

55

11

59.907 59.676

125.499 23.318

11

185.417 386.443

2.346.040 2.290.679

2.296.417 2.174.108

(3.135.896) (3.057.164)

283.660 121.258

1.790.221 1.528.880

2.218.814 2.242.684

2006 2005

TURKISH PETROLEUM CORPORATIONCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006 AND DECEMBER 31, 2005 (THOUSAND USD)

SHORT TERM BANK LOANS

CURRENT PORTION & INTEREST OF LONG TERM BANK LOANS

TRADE PAYABLES

NOTES PAYABLES

DUE TO SHAREHOLDERS

DUE TO RELATED PARTIES

OTHER PAYABLES

TAX LIABILITY

PROVISIONS FOR LIABILITIES AND EXPENSES

INCOME FOR FUTURE PERIODS & EXPENSE ACCRUALS


SHORT TERM LIABILITIES

BANK LOANS

DUE TO SHAREHOLDERS

OTHER PAYABLES

PROVISION FOR RETIREMENT PAY LIABILITIES

PROVISION FOR OTHER DEBT

INCOME FOR FUTURE PERIODS AND EXPENSE ACCRUALS


LONG TERM LIABILITIES

CAPITAL

RESERVES

RETAINED EARNINGS

NET PROFIT / (LOSS) FOR THE PERIOD

TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

*The financial statements have been audited and prepared in the currency of New Turkish Lira. The financial statements have been translated from YTL to USD with The Central Bank Buying Exchange Rate at period-end. The Central Bank Buying Exchange Rate for the end of 2005 and 2006 is 1,4056 YTL.


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1.278.081 1.629.520

(93.639) (71.656)

(604.546) (1.009.747)

579.896 548.117

(181.098) (55.738)

(30.264) (21.105)

(193.403) (168.010)

175.132 303.264

787.316 122.030

(352.673) (64.451)

(4.863) (652)

(163.889) (63.789)

441.023 296.402

(23.048) (69.550)

(19.263) (56.413)

398.712 170.440

SALES

SALES DISCOUNT

COST OF GOODS SOLD

GROSS PROFIT OR (LOSS)

RESEARCH AND DEVELOPMENT EXPENSES

MARKETING, SELLING AND DISTRUBITION EXPENSES

GENERAL ADMINISTRATION EXPENSES

OPERATION INCOME / (LOSS)

INCOME AND PROFIT FROM OTHER OPERATIONS

EXPENSES AND LOSSES FROM OTHER OPERATIONS

FINANCIAL EXPENSE

MONETARY GAIN / (LOSS)

PROFIT OR (LOSS) FOR THE PERIOD

PROVISIONS FOR TAXES PAYABLE

DEFERRED TAXATION

NET PROFIT OR (LOSS) FOR THE PERIOD

TURKISH PETROLEUM CORPORATIONCONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 , 2006 AND DECEMBER 31 , 2005 (THOUSAND YTL)

2006 2005


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909.278 1.159.306

(66.619) (50.979)

(430.098) (718.374)

412.561 389.952

(128.840) (39.654)

(21.531) (15.015)

(137.595) (119.529)

124.595 215.754

560.128 86.817

(250.906) (45.853)

(3.460) (464)

(116.597) (45.382)

313.761 210.872

(16.397) (49.481)

(13.704) (40.134)

283.659 121.257

SALES

SALES DISCOUNT

COST OF GOODS SOLD

GROSS PROFIT OR (LOSS)

RESEARCH AND DEVELOPMENT EXPENSES

MARKETING, SELLING AND DISTRUBITION EXPENSES

GENERAL ADMINISTRATION EXPENSES

OPERATION INCOME / (LOSS)

INCOME AND PROFIT FROM OTHER OPERATIONS

EXPENSES AND LOSSES FROM OTHER OPERATIONS

FINANCIAL EXPENSE

MONETARY GAIN / (LOSS)

PROFIT OR (LOSS) FOR THE PERIOD

PROVISIONS FOR TAXES PAYABLE

DEFERRED TAXATION

NET PROFIT OR (LOSS) FOR THE PERIOD

TURKISH PETROLEUM CORPORATIONCONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31 , 2006 AND DECEMBER 31 , 2005 (THOUSAND USD)

2006 2005

*The financial statements have been audited and prepared in the currency of new Turkish Lira. The financial statements have been translated from YTL to USD with The Central Bank Buying Exchange Rate at period-end. The Central Bank Buying Exchange Rate for the end of 2005 and 2006 is 1,4056 YTL.


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CURRENT RATIO = 2.22

ACID TEST RATIO = 1.64

LIQUIDITY RATIO = 0.70

FINANCIAL LEVERAGE = 0.19

THE RATIO OF EQUITY TO TOTAL ASSETS = 0.81

THE RATIO OF EQUITY CAPITAL TO LIABILITIES = 4.18

GROSS SALES REVENUE / NET SALES REVENUE = 0.49

NET PROFIT / TOTAL ASSETS RATIO = 0.13

FINANCIAL RATIOS DERIVED FROM CONSOLIDATED FINANCIAL STATEMENTS OF TPAO FOR 2006


HEADQUARTERS

Turkish Petroleum CorporationSöğütözü Mahallesi 2.Cadde No:86 06100 Çankaya - Ankara / TURKIYEPhone: +90 (312) 207 20 00 Telefax: +90 (312) 286 90 00 - 286 90 01E-mail: [email protected]: www.tpao.gov.tr

TPAO SUBSIDIARIES AND ASSOCIATED COMPANY

TPIC,Turkish Petroleum International Company td.Söğütözü Caddesi No:27 Söğütözü - Ankara / TURKIYEPhone: +90 (312) 285 44 55Telex: 44063 TPIC TRTelefax: 0(312) 484 57 31E-mail: [email protected]: www.tpic.com.tr

KazakTurkMunai Ltd. Joint CompanyBusiness Center "Okan Inter-Continental" 144,Abay Ave, Astana, 473000 REPUBLIC OF KAZAKHSTANPhone: 00 7 (3172) 39 10 25Telefax: 00 7 (3172) 39 10 29 - 39 10 26E-mail: [email protected]

TPAO INTERNATIONAL OFFICES

Azerbaijan TPAO / TPOC / TPBTC Officeth340 Nizami Street, 370000 ISR Plaza, 4 Floor Baku - AZERBAIJAN

Phone :(00 99 412) 498 95 26 - 493 14 98Telefax:(00 99 412) 498 14 35

TPOC,Tripoli - Libya OfficethAl Fatah Tower 1, 9 Floor, No:91 Tripoli -LIBYA

Phone: (00 218 21) 335 14 94 - 335 14 96Telefax: (00 218 21) 335 14 95E-mail: [email protected]

Turkmenistan Branch OfficeGöroğlu Cad. No:41A - 321 T.C. Kültür Merkezi Aşkabat - TURKMENISTANPhone: (00 99 312) 27 35 36 - 27 35 38Telefax: (00 99 312) 27 35 39E-mail: [email protected]

TPIC Tbilisi Branch OfficeChavchavadze Avenue Abuladze Street No:7 - TBILISI - GEORGIAPhone: 00 995 32 912 942Telefax: 00 995 77 52 11 08E-mail: [email protected]

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www.tpao.gov.tr

TURKISH PETROLEUM CORPORATION

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