Turkey: The New Petroleum Law

Last Updated: 14 June 2013
Article by Irmak Bademli

The new Petroleum Law has been adopted by the Turkish Parliament General Assembly on 30 May. The law brings new rules regarding the exploration and production of petroleum and natural gas in Turkey.

In the previous law, Turkey was divided into 18 "petroleum regions." In the new law, the Turkish territory is divided into two regions, onshore and offshore. The offshore regions are divided into territorial waters and non-territorial waters.

The new "search permit"

In the new law, a new "search permit" will be granted to companies to collect geological and geophysical data in licensed and un-licensed fields. The search company will be able to sell the data to interested parties for eight years, and after that the data will be accessible to all for a fee. More than one search permits as well as an exploration license may be granted to the same field.

Field data obtained during exploration will be open to public upon the expiration of the exploration license, whereas field data obtained during production will be open to public after five years.

New procedure for exploration license applications

License areas: The maximum exploration license area in onshore and territorial waters is 56 thousand hectares, whereas the maximum license area in non territorial waters is 1 million hectares. The fields, to which the exploration licenses are granted, have been harmonised with the international geographical grid system. Existing licenses will also have to be converted to the new system.

License period: The periods of exploration licenses have been increased from 4 years to 5 years for onshore licenses and from 6 years to 8 years for territorial waters. These periods may be extended by two years for onshore licenses and by three years for territorial waters, granted that the investor opens a new drilling well in this period and puts down 2% of the new investment into the well as collateral.

Application procedure: The fields, for which an exploration license application has been received, will be published, and other investors will be able to make applications for the same field for 90 days. These applications will be evaluated together based on the applicants' financial sufficiency and the applicant's work and investment plan. The evaluation principles in this context shall be laid out in a regulation. The law allows the General Directorate for Petroleum Works to exempt some fields from the application procedure and put them on tender.

Collateral requirement: Unlike the previous law, which had no collateral requirement for the exploration license, the new law contains a requirement for investors to put up a 2% collateral of their overall investments in onshore fields and 1% in offshore fields. Each year the share of this collateral corresponding to the works completed will be returned to the investor. In previously unexplored fields, fields with no/little sign of reserves or fields where untraditional exploration and production methods will be used, the cabinet will decide on whether collateral will be taken or how much this collateral will be (granted it is less than 2% of investment amount.)

Privatisation of TPAO? Significantly, the new law leaves out the provision, which gave the right to obtain exploration and operation licenses on behalf of the state to Turkish Petroleum Corporation (TPAO). The exclusion of this provision from the law supports Energy Minister Taner Yildiz's earlier comments that the TPAO may be privatised.

New rules for the calculation of state royalties

License period: If petroleum is discovered during exploration, an operation license is issued for the exploration, production and wholesale of petroleum. The operation license shall be granted for 20 years with the possibility to extend it twice for 10-year periods. According to the law, the production fields, the operation rights of which have expired, will be put on tender on the condition that TPAO does not wish to operate them.

State royalties: Under the previous law, the state royalty was calculated as 12.5% of the production based on pit top prices. Under the new law, state royalties will be calculated based on the market prices for crude oil and the wholesale prices for natural gas.

Gas storage: The new law also opens the way for using previous gas reservoirs for gas storage. The investor, which had been producing gas from the reservoir, will have priority for the operation of the field as a gas storage facility.

Noteworthy requirements and incentives

Taxes: 5% tax withholding shall be applied for independent professional service payments to limited taxpayers for petroleum exploration activities as per the provisions of Petroleum Law, pursuant to Article 30 of Corporate Tax Law. This rate had already been determined as 5% previously by a Cabinet decree. Now the withholding tax rate is being introduced into the new Petroleum Law.

In the case that petroleum right holders perform petroleum transactions defined in Petroleum Law and other activities based on general provisions, the accounting records are kept separately and the activities are taxed separately. In former Law, the petroleum right holders were also obliged to declare their activities related with petroleum transactions in separate tax returns.

Customs duty exemption and other incentives: The new law extends the customs duty exemption on imported equipment to locally-sourced equipment. The investor will be exempt from customs duty, levies and stamp tax for equipment imported and supplied locally. Expat employees will be exempt from the regulations under the Law No. 4817 for six months, reducing the bureaucratic burden. Foreign seismic, drilling and search ships and special equipment will be exempt from the restrictions of the Cabotage Law.

The law allows the Cabinet to determine the investment incentives applying to the holders of the petroleum rights.

Country needs: Holders of the petroleum rights are allowed to export 35% of the petroleum produced in onshore and 45% of the petroleum produced in offshore fields in fields discovered after 1 January 1980. The remaining amount in these fields as well as the petroleum produced in older fields have to be allocated to country needs. The law allows the Cabinet to re-determine the shares allocated to country needs.

Damage collateral: The amount of collateral against any damages to the environment or individuals have been determined based on the license levies set annually by the Finance Ministry. It corresponds to 0.05% of the levy for search permits, 0.1% of the levy for exploration licenses and 0.5% of the levy for operation licenses.

Penalties: Financial penalties will vary between TL 10 000 and TL 500 000, whereas the operations may be terminated temporarily (90 days-180 days) or the license may be annulled if the requirements are not met within the notice period.

Vested rights: Existing exploration and operation licenses will stay valid until the end of their license period. The operation licenses of TPAO will stay valid until production is finished in the field.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Erdem & Erdem Law
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Erdem & Erdem Law
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions