Client Alert:

The New Petroleum Law

The Turkish Petroleum Law numbered 6491 (“Law”) has entered into force as of June 11, 2013. The Law has repealed the old Petroleum Law numbered 6326 (“Repealed Law”) which was in effect for almost sixty years.

The Law has changed the duration of the exploration licenses which shall be obtained from the General Directorate of Petroleum Affairs (“General Directorate”). Previously, the duration for the exploration licenses was 4 years and could only be extended up to 8 years. However, the Law provides that the exploration licenses are granted for a period of 5 years for explorations on land and 8 years for explorations at sea. The exploration licenses can be extended up to 9 years on land and up to 14 years at sea respectively.

The number or petroleum regions has also changed. Pursuant to the Repealed Law, there were eighteen petroleum regions. This number has been reduced to two regions namely land and sea.

The Law also abolished the “state fee”, a fee payable to the state. However, the provision requiring 1/8th of the petroleum to be paid to the state as the state’s share has been preserved. Calculations of the state share will be based on the market price of crude oil.

One of the most important changes brought by the Law is to remove the monopoly of Türkiye Petrolleri Anonim Ortaklığı (“TPAO”) over the petroleum market under the Law. The market is now open to all public and private entities.

The Law requires operation licenses to be obtained for exploration, production and sale of petroleum. The operation licenses will be granted by the General Directorate for a period of twenty years.

The Law also provides certain exemptions (i.e tax and investment exemptions) to the public and private entities who wish to engage in the petroleum market. In this respect, import of the necessary equipment listed under Article 13 of the Law will be exempt from customs tax, fees and stamp tax.

Finally, no new applications for exploration license shall be accepted by the General Directorate within the first year commencing on the date the Law came into force. In other words, new exploration license applications will need to be filed starting from June 11, 2014.

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