As is known, the petroleum explorations have come to the fore in
Turkey within the discovery of new oil wells. Even if its oil
production does not meet the oil demand, Turkey has been working
also on reforms in oil market like in other energy sub-sectors.
The downstream and midstream market activities such as refining,
distribution, transport, export and import activities are regulated
by the EMRA under the condition of a convenient license obtaining.
The relevant authority for oil exploration licenses is the General
Directorate for Oil Affairs ("GDOA"). Together with the
energy market liberalizations in other sub-sectors, oil market has
also been opened to competition within the new legislation. The
Petroleum Market Law and License Regulation include rules which
opens the market activities to private sector companies.
New Petroleum Law
The recent Petroleum Law with Law No. 6491, which has been in
force since 11.06.2013, provides several amendments and incentives
regarding oil exploration and operation in order to support and
increase of the oil exploration and manufacturing activities in
Turkey. This law includes advantageous principles that will attract
the interest of investors and increase the oil manufacturing
activities in Turkey.
Simplified licensing procedures
Licensing bureaucracy for oil exploration and operation has been
minimized and license procedures have been accelerated. According
to this Law, license applications are completed within 60 days.
Moreover, the license terms have been extended depending on the
related exploration area and license extension criteria have been
amended. Due to these amendments, the oil exploration activities
have been supported and the increase of the number of oil
exploration activities has been provided.
New Petroleum Areas
Petroleum areas have been divided into sea and land, which had
been regulated as 18 petroleum areas. Different criteria and
conditions have been set forth for each petroleum area and the
license terms are longer for the seas. Application of the same
license terms for all petroleum areas according to the repealed law
influenced the investments negatively regarding their terms.
New Criteria for Calculation of State's Share
State's share on the manufactured petroleum is based on the
market price whereas this amount was calculated depending on the
wellhead price. Moreover, state share payment exceptions have been
regulated to support the oil manufacturing under certain
Market Opened to Competition
License applications for the same petroleum area which are made
within 90 days have been accepted. Applications for the same
petroleum area were not accepted after 4 working days according to
the repealed law. The extension of evaluation term leads to
establishment of a more competitive oil market. Moreover, the
market control of TPAO (Turkish Petroleum Corporate) has been
decreased, even if it's control has not been abolished
completely. According to the repealed law, the oil exploration and
operation license obtaining right belonged solely to the TPAO,
whereas the New Petroleum Law opens the market to private sector
companies while the TPAO has a privilege in extension of expired
licenses under certain conditions.
The New Petroleum Law provides several customs and stamp tax
reductions or exepmtions for import and transfer of certain
equipments used in petroleum activities under certain conditions.
Moreover, the external transfer of financial assets, current fonds
has also been exempted from income and corporate tax under the
conditions stated in the Law.
In addition tax incentives, the petroleum exploration or
operation license owners may benefit from the other general
investment incentives with the Council of Ministers'
resolution. Structure and contidions of these investments have been
regulated by the related laws and resolutions and it may depend on
the location, type and amount of the investment.
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.
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