5.000
%
Positive
41
mm boe
94
%
While the country remains relatively volatile politically, the operating and taxation regime remains stable and well managed. Despite the issues elsewhere, these have not translated in to headwinds for oilfield operation. Consequently, we have upgraded out outlook to Positive.
April 23, 2024
Middle East
mm bbl
bcf
Located in south eastern Europe and Southwestern Asia. Turkey borders Bulgaria and Georgia, Greece and Syria.
Concession
Simple Concession fiscal regime, with only royalty and corporate income tax payable. Royalty rates vary with location (onshore and offshore) and production rates. Successively increasing discounts to the royalty rates apply to fields in increasing water depths, as incentives for deep-water exploration. Discounts to the royalty rates also apply for heavy oil fields, and for fields employing enhanced recovery methods.
Turkey experienced strong economic growth between 2002 and 2007, and it weathered the global economic crisis of 2008-2009 better than most countries, establishing itself as a relatively stable emerging market with a promising trajectory of reforms and a strong banking system. However, over the last several years, economic and democratic reforms have stalled and, by some measures, regressed. In 2021, Turkey’s GDP grew 11% year-over-year (YOY), the highest growth rate in ten years, but the Turkish lira also shed 44% of its value against the dollar and has lost over 80% of its value against the dollar in the last five years. In 2022, GDP grew by 5.6%, exceeding expectations, while inflation averaged 64.3%. In 2023, growth is expected to be around three%, with significant downside risks. Continued unorthodox monetary policy, currency depreciation, inflation, high current account deficits, and over $100bn in damage from the February 2023 earthquakes have left Turkey vulnerable to external economic shocks. Turkey’s foreign direct investment (FDI) regime treats foreign investors identically to domestic investors and places few restrictions on acquisitions by foreign firms. However, opaque rulemaking and legislative processes added risks for all investors in 2022. Turkey’s FDI equity capital inflows amounted to $6.48bn 2022, compared to $7.1bn in 2021. Turkey’s investment incentives promote green and renewable investments and the development of strategic industries and developing regions of Turkey. Geopolitical shocks, including Russia’s full-scale invasion of Ukraine, have spurred inflation primarily through increased energy prices in Turkey but have not meaningfully degraded the country’s investment climate. Export controls and sanctions compliance risks related to assets with business interests in Iran, Belarus, and Russia continue to be a concern for investors. Turkey’s investment climate is positively influenced by its large domestic market, favourable demographics, skilled workforce, and strategic location.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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