I. INTRODUCTION

For the effective management of policies concerning energy and natural resources, it is fundamental that the rules shaping the industry be evaluated and updated in line with the given country’s economic development, social welfare, as well as principles of “competitive governance”. Relevance and actuality of these rules are key to a country’s energy supply security, resource utilization efficiency, financial stability and sustainability. On the other hand, the increasingly palpable geopolitical risks of the last few years have significantly accelerated the transformation in policies pertaining to energy and natural resources. By the same token, the Omnibus Bill numbered 7501 (the “Law”) published in the Official Gazette dated 11/05/2024 and numbered 32543 should be viewed through these lenses.

This article aims to provide a detailed analysis of the legislative acts intended to reshape energy and natural resources industries and sheds light on stakeholders’ strategic decision-making processes. The market will be shaped by adaptation and innovative reaction of existing and potential actors to the changes so envisaged; effectively reformulating mining practices, floating solar and offshore wind energy plants, liquefaction and export of natural gas, utilization of Renewable Energy Resource Areas (the “RERA”), opportunities for unlicensed facilities to obtain licenses, project support for energy efficiency, additional capacity allocation, and regulations related to the nuclear liability regime.

II. FUNDAMENTAL PRINCIPLES

1. Regulations Regarding Mining Practices

The Law strikes out the reference to “five years in other group mining operation license areas” from Article 24 of the Mining Law No. 3213 (the “Mining Law”), effective as of 28/02/2024, thereby intending for (i) the obligation of reporting according to the National Mineral Resources and Reserve Reporting Code (the “NMRRR Code”) and (ii) the negligence penalty defined as the reduction of license areas as stipulated by the Mining Law to continue only for group IV minerals and adopts the concept of voluntariness for group I, group II, group III and group V mines (the “Other Group Mines”).

The mines classified under group IV are those located relatively farther from the surface compared to the Other Group Mines. Therefore, the rationale of the article reads that preparing reports according to the NMRRR Code is not technically necessary for the Other Group Mines and high reporting costs have a negative impact on the ability of the Other Group Mines to obtain or expand their operating permits.

Another change related to mining practices pertains to the exploration rights of the General Directorate of Mineral Research and Exploration (the “MRE”). To acquire such exploration rights, one must provide reporting in accordance with the NMRRR Code while the resource is deemed to have met the conditions of economic reasonable expectation of extraction in accordance with NMRRR standards.

The Law regulates that reports prepared by the MRE without reference to the NMRRR Code will suffice for the MRE’s acquisition of exploration rights. Consequently, resources identified throughout the MRE’s exploration activities will be utilized per reports to be drawn by the MRE, relieving economic and operational pressure presumably caused by compliance with the NMRRR standards, thus helping meet the ever-increasing demand for raw materials.

2. Construction of Floating Solar Power Plants and Offshore Wind Power Plants

The scope of Article 6 of the Coastal Law No. 3621 concerning structures to be built in the sea, has been expanded to include all water areas through this Law. Moreover, although as a general rule construction of renewable energy generation plants requires prior zoning plan approval; the Law provides an exception in the sense that renewable energy generation plants can be established without a zoning plan in the respective areas of seas, dam reservoirs, artificial lakes and natural lakes declared as a RERA by the Republic of Türkiye Ministry of Energy and Natural Resources (the “Ministry”), except for:

• reservoirs and wetlands supplying drinking and utility water; and
• coastal areas and shoreline strips falling within the scope of the Coastal Law.

On the other hand, the Law also facilitates installation of unlicensed electricity generation facilities on designated water basins to meet electricity needs of agricultural irrigation facilities owned by the General Directorate of State Hydraulic Works or irrigation unions. Furthermore, so long as the aforementioned areas fall within the municipal boundaries, municipalities and their affiliated institutions will be able to establish unlicensed electricity generation facilities based on renewable energy sources having been granted permission from the General Directorate of State Hydraulic Works.

We expect that implementation of these changes will create an ample opportunity for commissioning of floating solar power plants in the unlicensed and hybrid domains, as well as offshore wind energy power plant construction and operation through prospective RERA schemes.

3. Liquefaction and Export of Natural Gas

Activities related to liquefaction of natural gas had been historically regarded as part of storage operations per the Natural Gas Market Law No. 4646 (the “Natural Gas Law”), whereas the Law finally grants an independent status as a standalone market activity to such works. In this regard, liquefaction of natural gas covers “liquefaction of domestically produced and/or imported natural gas for exportation abroad or domestic resale”. Through this regulation, in line with its goal of becoming a natural gas trading hub, Türkiye aims to increase its competitiveness in liquefied natural gas (“LNG”) exports drawing upon both domestic natural gas reserves and imports thus cement its place as a strategic global actor.

Furthermore, to encourage construction and commissioning of floating LNG terminals, the Law grants an exceptional regulatory authority to the Energy Market Regulatory Authority of the Republic of Türkiye (the “EMRA”) for operation and relocation of these facilities, signifying a distinction from rules governing storage facilities.

The fact that floating LNG facilities already perform storage activities and entail a mobile nature lies behind the conscious choice to bestow upon the EMRA such an exceptional power. As a matter of fact, storage facilities must operate continuously in a fixed position by their nature to provide uninterrupted service.

On the other hand, to promote financing of new storage investments and ensure supply security, existing system users are granted exemptions from access provisions to enable more effective and efficient utilization of capacities in cases where their demands cannot be met.

Finally, as regards natural gas applications, the requirement for legal entities to obtain separate export licenses for each country to which exports are made has been abolished. In line with the increasing export demands from the European Union countries, a transition has been made to the practice of issuing a “single export license” for multiple countries to streamline export procedures and facilitate market entry.

4. Implementation of the RERA Projects

The Law aims to counterbalance adverse effects caused by adoption of the instant underbidding method in previous RERA schemes for electricity generation through competitive auctions which led to unrealistic and infeasible price formation in the sense that (i) the competition rules and principles will be determined by the Ministry in the competition specifications, and (ii) the price and/or the fee resulting from the competition will be evaluated within the scope of the Renewable Energy Resources Support Mechanism (the “RERSM”).

This provides flexibility to the Ministry regarding the method to be chosen as well as other elements of competition, aiming to eliminate the risk of idle capacity resulting from the RERA bids falling below market averages.

5. Conditions Pertaining to License Applications by Existing Unlicensed Facilities

Article 8 of the Law, envisages changes in the regime to be applied for facilities conducting unlicensed electricity generation activities, starting from the expiration of the ten-year tenure of the RERSM. Accordingly, the amount that these facilities will pay as a contribution fee to the RERSM after obtaining their licenses has been changed, whereas previous proposals towards generation of additional revenue for the state budget through accrual of a one-time license fee has finally found a legal basis.

Accordingly, any facility owner seeking to acquire a license will

• apply to the EMRA for obtaining the license,
• pay the license fee, and
• pay the price difference, throughout the license period and as a contribution fee to the RERSM; if the hourly market clearance price in the electricity market exceeds the current RERSM price applied for the respective type of facility.

In terms of opportunities available to license holders and methods to dispose upon the electricity so generated: this regulation, in practice, nullifies the following option “b)” due to practical elimination of arbitrage opportunities stemming from the margin between a) the RERSM price and b) the prices that may be formed in the day-ahead/intraday markets. Therefore, investor preference is expected to predominantly manifest in the RERSM or bilateral agreement platforms.

6. Support for Energy Efficiency Projects

The definition of “Applicant” in the Energy Efficiency Law No. 5627 (the “Energy Efficiency Law”) has been amended, and the terms “Specific Energy Consumption” and “Carbon Intensity” have been added to the given article by operation of the Law.

The implementation of this article aims to (i) promote efficient use of energy, prevent waste, reduce the economic burden of energy costs, and increase efficiency in the use of energy resources and energy for the protection of the environment. This includes incentivizing individuals and entities operating in industries, buildings, agriculture, and service sectors, as well as other sectors, to play a role in enhancing energy efficiency, (ii) increase energy efficiency and utilization of renewable energy sources by providing support payments to applicants who reduce energy and/or carbon intensity or specific energy consumption and (iii) promote investments contributing to digitalization by encompassing process-based and facility- based projects instead of equipment-based projects.

7. Revocation of Licenses for Projects That Cannot Be Implemented and Additional Capacity Allocation

The temporary Article 32 (the “Temporary Article”) added to the Electricity Market Law No. 6446 aims to release idle connection capacity previously granted to facilities that cannot be brought into life. In this context, the Law confers upon competent public authorities the power to terminate licenses, pre-licenses, and license applications, or to cancel contracts signed as a result of the RERA competitions.

• Legal entities wishing to terminate generation licenses, pre-licenses, or license applications, or to amend them by reducing installed capacity, must apply to the EMRA within 2 (two) months following the effective date of the Temporary Article. In this case, the guarantees previously submitted to the EMRA will be partially or fully refunded.
• Legal entities wishing to cancel contracts signed as a result of the RERA competitions must apply to the Ministry within 2 (two) months following the effective date of the Temporary Article. In this case, the guarantees previously submitted to the Ministry and the EMRA will be refunded.

8. Regulations Regarding Nuclear Materials

The amendment to the Nuclear Regulation Law No. 7381 stipulates that the obligation of the operator to take out insurance and provide collateral can be transferred to the carrier which will equal its responsibilities to that of the operator, provided that (i) the person transporting nuclear material files a request, (ii) the nuclear facility operator gives his consent and (iii) the Nuclear Regulatory Authority approves such demand.

Therefore, in parallel with many other countries establishing a nuclear liability regime, relevant provisions of the Convention on Civil Liability for Nuclear Damage dated 29/07/1960, and the concept of the carrier’s liability have finally found a legal basis.

III. CONCLUSION

Effective and purposeful implementation of the novelties brought about by the Law concerning the energy and natural resources industry can pave the way for establishing a competitive, efficient, and sustainable investment environment on a global scale, despite geopolitical risks. For all stakeholders, it is of critical importance to internalize the aforementioned regulations and to identify and evaluate emerging investment currents.

The full text of the Law can be accessed here.