Turkey offers one of the most attractive oil & gas regimes in the world.
Essential articles of Turkish Petroleum Law 6491 and Petroleum Market Law 5015 as well as incentives are highlighted below.
TURKISH PETROLEUM LAW
Law No. 6491 Date of Approval: 30/5/2013
Objective, Scope, Definitions and Ownership
Objective and Scope
(2) This Law covers the terms and procedures regarding the regulation, management, provision of incentives for and auditing of petroleum exploration and production activities in Turkey, as well as the compilation, evaluation and provision of necessary information and data for exploration and production.
ARTICLE 8 -
(2) Applications for a production lease shall be made to the General Directorate in line with the provisions of the by-
(3) Production lease shall be granted for a period of twenty years as of its effective date, depending on the demand of the applicant, by taking into account the work and financial investment programs to be undertaken in accordance with the by-
(4) With the approval of the Minister, fields whose time of production right has expired may be? auctioned for a production lease to be granted. However, the Ministry shall firstly write a letter with a time limit to Turkish Petroleum Corporation asking whether it has a production lease request for this field. On the request of the Turkish Petroleum Corporation, the field shall not be auctioned. All or part of the production area of which the production lease was up for auction maybe pulled back from the auction with the approval of the Minister. Petroleum right holder or holders whose production leases were cancelled as a result of an administrative sanction shall not be re-
(5) No exploration license or production lease may be granted for a field that is subject to an auction unless the decision for auction is retracted. The fact that a field is auctioned does not require for it to be granted to the highest bidder or for any bid to be accepted. The terms and procedures of the auction shall be determined with a by-
(6)Upon request, the production lease holder may be granted with the permit to construct pipelines in order to transport the petroleum produced.
(7) Production lease holders whose production fields are partially or completely included in the same petroleum field may combine their petroleum operations.
Royalty, and Surface and Water Rights
ARTICLE 9 -
(2) No Royalty shall be collected from the petroleum used in petroleum operations in relation to exploration or production lease.
(3) The carbon dioxide gas produced in petroleum fields may be used in production increasing method.
(4) Petroleum reservoirs to be utilized as underground storage shall not be utilized unless factually or completely depleted and approved by the General Directorate. The operator has priority, if deemed suitable for underground storage area under the responsibility of an operator. No Royalty shall be collected from petroleum that is not producible in the field required for storage. This petroleum may be produced only if permission is taken from the General Directorate and Royalty is paid.
(5) Fields which allow for storage, other energy activities and petroleum production activities to be technically undertaken collectively may be the subject of both petroleum production activities and storage and other energy activities. If it is not possible to undertake the abovementioned activities collectively, the priority shall be determined by the Ministry taking into consideration the vested rights, if any.
(6) Royalty payable by a petroleum producer shall be calculated per barrel, for crude oil produced on a unit of petroleum, based on the market price for local crude oil provided in article 10 of Petroleum Market Law No. 5015 dated 4/12/2003, and for natural gas based on the sales price applied to distribution companies or consumers.
(7) The Royalty is accrued by declaration to the General Directorate until the end of the 20thday of the following month after the production has done and is paid until the end of the month to the tax office where the related party is affiliated in terms of income or corporate tax. If the declaration of Royalty is not made or is under declared, the Royalty is levied for the differences found on the basis of legal measures or concrete evidences. The levied Royalty is taken hundred percent more. If the under declared Royalty is declared per se within following 2 months of the actual time of the declarations by related party, the Royalty is levied fifty per cent more. The Royalty which is not declared in time or under declared and which is increased and levied on the detection of General Directorate or self-
(8) Operators, who combined their operations as per Article 8 paragraph 7 above, may pay single Royalty.
(9) Upon the demand of the Ministry, the Royalty may be paid in kind. Terms and procedures pertaining thereto shall be determined in the by-
Surface and water rights
ARTICLE 10 -
(2) A decision to expropriate for public interest shall be taken by the Ministry upon request. The process shall take place in accordance with the Expropriation Law No. 2942 dated 4/11/1983. Expedited expropriation in accordance with Article 27 of the same Law can be made. In case of an expropriation, the Treasury shall own the expropriated land and the utilization right shall belong to the petroleum right holder who has paid the expropriation fee. In this case, the Ministry of Finance shall grant usufruct right in favor of the petroleum right holder free of charge for the duration of the license or lease period. The utilization rights acquired within the framework of this Article shall continue for the license period as a part of the exploration license or production lease. Upon the cancellation of the exploration license or production lease, expropriation price shall not be returned.
(3) Subject to its compliance with the provisions of other relevant laws and its acquisition of utilization rights, an explorer or an operator shall have the right to search for water in the land included in its exploration license or production lease or in its vicinity, by various methods including drilling and to use the water found and to use other existing water, to the extent needed in its operations, without violating the others' rights to that water.
(4) Operator, during the petroleum exploration and production activities, shall be liable to conduct and exercise every survey, investigation and research projects in order to ensure the protection of surface, ground, coastline and sea waters in terms of quality and quantity.
(5) Petroleum exploration and operation activities may be carried out in areas deemed forests under the Forestry Law No. 6831 dated 31/8/1956 and which are subject to permit and license, provided that the permissions are obtained in accordance with the relevant legislation and the costs are paid.
(6) If the exploration license or production lease, petroleum right of which is held by an explorer or an operator, is in a neighboring position with another exploration license or production lease, the terms and procedures concerning the distance to the border of neighboring field up to which petroleum operations can be conducted shall be determined in a by-
Taxation, Import, Export and Transfers
ARTICLE 12 -
(2) The withholding tax to be applied to the limited liable tax payer institutions on payments made from their self-
(3) For petroleum right holders performing petroleum operations defined under this Law as well as other activities based on general provisions, their petroleum operations shall be monitored on accounting records and taxed separately from their other activities. Two or more petroleum right holders whose principal business activity is the conduct of petroleum operations under this Law shall be subject to taxation separately even if a partnership is established among them.
(4) Article 3, paragraph 3, sub-
(5) Except for Royalty, a petroleum right holder's revenues generated from production in return for the capital that corresponds to its investment in the petroleum operations shall be deemed amortized pursuant to the provisions of Law No. 213 until the recovery of the capital calculated on the current exchange rate for foreign companies which are limited liable tax payers and until the investment amount is turned into an expense through amortization for national companies with full obligations. This rule shall also apply to the amounts remaining from capital that a petroleum right holder has imported in foreign currency in the past years pursuant to Petroleum Law No. 6326 dated 7/3/1954 repealed with this Law, but has not yet been remitted.
(6) Capitalization shall be voluntary for exploration expenses, incidental drilling costs and expenses for the relinquishment and drilling of wells not productive in economical quantities, which were approved by the Ministry. Except for exploration expenses, incidental drilling costs and expenses for the drilling of wells not productive in economical quantities which the petroleum right holder made, expenses of the economic values and expenses for attainment of such economic value and the installments thereon shall be reimbursed by amortization according to the preference of the petroleum right holder either by being recorded as expense or by capitalization. The amortization ratios to be applied on these expenses capitalized by being included in capital account, shall be determined separately for each petroleum field in comparison with Article 316 of the Law No. 213, but jointly by the Ministry and the Ministry of Finance by also taking into account the reserve conditions. However, the cost or the value of a part of the petroleum field assigned to a purpose other than petroleum production and the residual value that the petroleum right holder is entitled to at the end of the petroleum operation, shall be deducted from the amortization ratio.
Import and Export
ARTICLE 13 -
(2) A conformity assessment of Turkish Standards Institute marking shall not be sought for materials a petroleum right holder has imported to use in petroleum operations that were approved by the General Directorate.
(3) The exemption provided in the foregoing paragraphs shall continue in case of transfer of such materials with the permission of the General Directorate from a petroleum right holder to another petroleum right holder to be used in its petroleum operations. If the related materials are transferred for an activity not considered petroleum operation for use or sale within Turkey, then they shall be subject to all taxes and dues applicable during the importation or internal usage, which are effective on the transfer date. Except for materials having a physical life of less than one year, the transfer of other materials shall be made using values determined by value assessment at the time of transfer or exportation.
(4) If ten years has passed as of the date of entry into Turkey of materials imported exempt from customs and other import tax and duties, the petroleum right holder that has imported or transferred these materials shall have all possessory rights over them.
(5) Materials imported for petroleum operations may be exported with the permission of the General Directorate.
ARTICLE 14 -
(2) To be set off against its capital, a petroleum right holder may at all times apply for a transfer. Upon having completed the transfer of its capital, it may transfer other transferable net properties quarterly within the current year. For set off operations, a transfer declaration shall be given following the submission of the corporate tax declaration.
(3) A petroleum right holder can keep abroad the foreign currency generated from the export of the petroleum. This amount shall be offset against the remittance of the capital imported to Turkey and the transfer of net values exceeding this.
(4) Terms and procedures concerning the inclusion of revenues generated by the petroleum right holder through activities other than petroleum operations into its capital, demands for transfer and allocation of foreign currency to be taken abroad under the scope of this article shall be determined in a by-
Employment of Foreign Personnel, Force Majeure and Permissions to Be Taken from Other Institutions Employment of Foreign Personnel
Taken from Other Institutions
ARTICLE 17 -
Prohibitions and Special Provisions, Administrative Fines, and Administrative Measures
Prohibitions and special provisions
ARTICLE 22 -
(2) Any rights obtained according to any other Law cannot authorize the holder thereof to conduct any petroleum operations.
(3) The petroleum right holder who has concluded petroleum operations shall be liable to return the land to its former condition. Terms and procedures concerning this liability shall be determined by a by-
(4) The petroleum right holder shall be liable to compensate all the damages incurred to the owner and the possessor of the land, to the land itself, and to the facilities there, and any loss of product or the operational profits that the mentioned person is deprived of.
(5) Investigation permits, exploration licenses and production leases may be granted to capital companies or legal entities established as capital companies in accordance with a foreign state's legislation provided that they are in compliance with the principles of this Law.
(6) Rights provided by this Law shall not entitle its holder to enter in or be at any place where the entrance or presence is prohibited under any other law.
(7) Petroleum right holder shall not commit or permit another to commit a dangerous act directly or indirectly during his petroleum operation. Petroleum right holder may install the required facilities and equipment for the petroleum operation under the license provided that it does not disrupt the lives of local people, harm the environment or the nature or endanger them.
(8) Presentation of bonds to meet any loss and damages that may arise during operations, prior to obtaining the petroleum right is mandatory. Bonds per hectare shall be five ten thousandth of the investigation permit duty for investigation permits, one thousandth of the exploration license duty for exploration licenses and five thousandth of the production lease duty for the production lease. Council of Ministers shall have the authority to increase or decrease this rate by 50 per cent. The petroleum right holder shall match the re-
(9) If a condition arises that threatens a petroleum operation, the petroleum right holder shall notify the General Directorate and other petroleum right holders whose operations may be adversely affected, providing information about the nature of the threat and the measures taken to overcome it. In the event the General Directorate considers the measures that have been taken or that are to be to be taken to be insufficient, it may request the petroleum right holder to take additional measures.
(11) Matter of in which distance the petroleum operation to be made at borders, military forbidden zones, historical sites and residential areas shall be prescribed with a by-
(12) Petroleum right holders shall be entitled to export 35% for the onshore and 45% for the offshore of the total of the crude oil or natural gas produced in the fields discovered after 1 January 1980 as crude oil or petroleum products; the remaining per cent and the total of the crude oil and natural gas produced in the fields discovered before 1 January 1980 as well as the petroleum products shall be reserved for the country. The Council of Ministers shall have the authority to regulate the procedures and principles on the redetermination and implementation of these ratios.
Temporary and Final Provisions
ARTICLE 28 -
ARTICLE 29 -
TURKISH PETROLEUM LAW APPLICATION REGULATION
Official Gazette Date: 22.01.2014 Official Journal Number: 28890
Oil discovery and exploration
ARTICLE 17 -
(2) By examining the information and documents to be submitted with the General Directorate, the discovery notification; monitoring the production after the discovery notice, long-
(3) With the registration of exploration, the explorer is obliged to continue the production, to develop the oil field and to sell the oil it produces in order to be the basis of the production license. Within this scope, the explorer must submit a detailed program of the determination activities to be carried out in the petroleum field to the General Directorate within six months from the date of the discovery registration.
(4) At the request of the petroleum right holder, if the maximum period of the exploration license registered in the Law does not suffice to carry out the procedures specified in the third paragraph above, the extension of the additional period specified in the sixth paragraph of Article 6 can be given.
ARTICLE 20 -
a) Periodic notices
5) Declaration of State shares: A copy of the sales invoices for natural gas with the original declaration of the explorers and operators, annex-
Procedures and Principles of the Government Share Procedures and Principles
ARTICLE 29 -
(7) (Amendment: RG-
(10) In the case of the request of the Ministry, the share of the State may be paid in kind. Crude oil from the producer's tanks to the State account will be stored in petroleum right holders tanks for a period of sixty days without any charge. In this case, the transportation costs of the produced oil from the wellhead to the storage location belongs to the petroleum right holder. For the oil which has been kept longer than this period, the producer saves himself / herself by paying the market price. The sixty day free storage period begins on the date when the petroleum right holder states the availability of oil.
PETROLEUM MARKET LAW
Law No. 5015 Enforcement Date: 4.12.2003
Objective, Scope, Definitions and Abbreviations
Objective and Scope
Article 1. The objective of this Law is to regulate the guidance, observance and audit activities in order to carry out transparent, non-
This Law covers the regulation, guidance, observance and audit procedures to ensure and improve a sound and regular operation of the markets related to petroleum.
The activities of the Turkish Armed Forces within the scope of this Law and carried out directly through the equipment and facilities under its ownership and the activities carried out through the equipment and facilities under the ownership of the Ministry of National Defense Fuel Supply and NATO POL Facilities Operating Agency within the scope of Law No. 4636 of 5 April 2001 on the establishment and duties of the Agency, shall not be subject to the provisions of this Law. (Supplementary sentence: 22/1/2015 – 6586/91 article) However, the procedures, principles and exemptions for obtaining a license shall be determined by the Authority where the activities of the Agency within Law No. 4636 are associated with storage and transmission activities.
(Supplementary paragraph: 28/3/2013-
Restrictions of Activities
Article 9. Those supplying crude oil and liquid fuel from foreign countries shall be obliged to hold a refinery, distribution or bunker fuel delivery license. Producers of crude oil in Turkey are entitled to import crude oil at an amount to blend with the low gravity domestic crude oil. The import of crude oil and liquid fuel shall be carried out at the authorized customs administrations having the necessary equipment to perform certain technical and quantity measurements. The import to be carried out by the distributors shall be limited with the liquid fuels registered in the sub-
Crude oil trade in the country can be performed only by the producers and refinery undertakings and among each other.
Distributors are obliged to submit white product (petroleum, diesel oil) distribution projection at an amount of minimum 60,000 tons/year and dealership information to the Authority in their license applications and are not entitled to deliver liquid fuel, not referred in their licenses, to the users except for the activities to be performed in the capacity of a dealer
Article10. The pricing in petroleum purchase and sale shall be established according to the closest accessible global free market conditions. For domestic crude oil, “market price” formed in the closest delivery port or refinery shall be regarded as the price.
Refinery undertakings shall purchase domestic crude oil at this minimum price established upon the proposal of the crude oil producers and shall give priority to the domestic crude oil in crude oil supply. Refinery undertakings shall give a written response within 15 days to the proposals of crude oil producers for the said minimum price or higher one.
HE MINING LAW IN SOME OF THE LAW AND THE LAW
LAW ON CHANGES TO THE DECISION
Law No. 7164 Acceptance Date: 14/2/2019
OIL MARKET LICENSE REGULATION
Purpose, Scope, Legal Basis, Definitions
Obligations of Refinery Licensee Owners
a) Operation of refinery facilities under license,
b) Production and delivery of products in accordance with technical regulations,
c) In the supply of crude oil, priority should be given to domestic crude oil producers and not to make any material request and offer in the place and conditions of delivery that will be against the production companies,
d) Receiving domestic crude oil at the minimum prices formed in the offer of the crude oil producers or respond in writing to the bids on the minimum price within fifteen days,
e) Keeping an integral part of the national petroleum stock,
f) Prioritizing the production and delivery of fuel and other products necessary for national security,
g) Preparing the prices related to the purchase of oil as ceiling prices considering the most accessible world free market formation,
h) Providing and maintaining the production capability of the tactical fuels used by the Turkish Armed Forces in case of product demand,
i) In the scope of the national petroleum stock, keeping a minimum of 20 times the amount of daily average product replenished in their own warehouses or in licensed storage facilities;
j) Entitling the same conditions as the own distribution company, to the other distribution companies demanding fuel,
k) Adding the national markers specified by the institution to the fuel to be distributed in the country either during the distribution from the refinery or at the entrance of the customs,
) (Annex: RG-
m) (Annex: RG-
n) (Annex: RG-
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