NEW DEVELOPMENTS IN MINING LAW AND NATURAL GAS MARKET

Amendments to the Mining Law and Natural Gas Market Law are underway.

Currently, for an exploration license to be transformed into an operation license, Article 24 of the Turkish Mining Law No:3213 requires a report to be prepared in accordance with the National Minerals Resource and Reserve Planning Code (UMREK) for all groups of mines (within 10 years after the exploration license date for Group IV minerals; i.e. metallic minerals such as iron, copper, gold or zinc; and within 5 years for the remaining mines). The UMREK Code is based on international standards and the failure to attain such standards leads to reduction in the reserve areas granted to a right holder. However, the minerals other than Group IV minerals are typically found close to the surface where such detailed exploration reporting is not only necessary but also cost prohibitive. Given that such international exploration standards for reserve areas are seldom mandatory in most countries in the world, the Industry, Commerce, Energy, Natural Resources, Information and Technology Commission of the Turkish Parliament submitted a proposal to remove this rigorous requirement and; therefore, to facilitate the granting of operation licenses for minerals other than Group IV minerals. The proposed amendment will also allow the Turkish Mineral Research and Exploration General Directorate to acquire finder’s rights without going through this lengthy and costly process, which is intended to accelerate the commercialization of such rights and collection of revenues from license holders.

The proposed legislation also intends to support the further development of the LNG market in Turkey and the national aim of becoming a commercial center in natural gas, by classifying the activity of liquefying natural gas as a new market activity, separate from the activity of storing LNG. A new license is being introduced, which is separate than the storage license, for the exportation of the natural gas, extracted or imported in Turkey, after it is liquefied, without being subject to the storage license requirements. A similar improvement is also proposed for the floating natural gas terminals (FSRUs), so that exceptions and exemptions can be granted by the Turkish Energy Market Regulatory Authority to such terminals, which are currently operated under storage license.