Learn how energy companies operating in Turkey can manage sanctions risks. This 2026 guide covers UN, US, EU and UK sanctions, counterparty screening, beneficial ownership, energy trading, equipment imports, banking restrictions and contractual protection.

Energy companies operating in Turkey increasingly conduct transactions involving foreign investors, international banks, equipment manufacturers, commodity traders, shipping companies, insurers and cross-border payment systems. This international structure creates significant exposure to economic sanctions, export controls and restricted-party rules.

Sanctions risks may arise in projects involving solar and wind equipment, petroleum products, natural gas, battery systems, electricity trading, engineering services, project financing, maritime transportation and technology transfers. A company may comply with Turkish energy regulations while still encountering blocked payments, rejected insurance coverage or terminated supply contracts because of sanctions imposed by another jurisdiction.

Turkey implements binding United Nations Security Council sanctions through its domestic legal framework. Turkish companies may also be affected commercially or contractually by US, EU and UK measures when a transaction involves their currencies, banks, nationals, goods, technology or territorial jurisdiction. United Nations sanctions can include asset freezes, trade restrictions, arms embargoes and commodity-related measures.

This 2026 Updated Legal Guide explains the essential sanctions compliance measures energy companies and foreign investors should adopt before entering transactions connected with Turkey.

Why Sanctions Compliance Matters

A sanctions violation or high-risk transaction may lead to:

• Blocked or delayed payments.
• Bank account restrictions.
• Rejection of letters of credit.
• Termination of financing.
• Seizure or detention of equipment.
• Export-control investigations.
• Loss of insurance coverage.
• Contract termination.
• Exclusion from international markets.
• Civil or criminal proceedings in relevant jurisdictions.

The commercial impact may arise even where a foreign sanctions regime is not directly incorporated into Turkish domestic law. International banks, insurers, lenders and multinational counterparties frequently impose contractual compliance requirements extending beyond minimum local obligations.

Which Sanctions Regimes May Affect a Turkish Energy Company?

United Nations Sanctions

United Nations Security Council sanctions are especially important because member states implement binding Security Council measures through domestic procedures. They may target countries, individuals, companies, vessels, financial institutions or designated sectors.

Companies should screen counterparties against applicable UN designation lists and immediately investigate possible ownership or control by listed persons.

United States Sanctions

The US Office of Foreign Assets Control administers comprehensive and selective sanctions programs involving asset blocking and trade restrictions.

US sanctions may become relevant where a transaction involves:

• US dollars.
• US banks.
• US persons.
• US-origin goods or technology.
• Foreign subsidiaries of US groups.
• Persons designated on OFAC lists.
• Conduct exposed to secondary sanctions.

Energy-related restrictions are particularly significant in transactions connected with Russia, Iran and designated petroleum or shipping networks. OFAC maintains industry guidance addressing maritime oil trade, petroleum shipments and sanctions-evasion practices.

European Union Sanctions

EU sanctions may apply where a transaction involves EU companies, nationals, banks, territory, equipment or technology.

The EU continues to use restrictions affecting energy, finance, transport, trade and designated persons. Its Russia-related measures have repeatedly targeted energy revenues, petroleum services, vessels and sanctions-circumvention structures.

United Kingdom Sanctions

UK restrictions may become relevant through British investors, lenders, insurers, service providers, currencies or corporate groups. Turkish companies working with international financing institutions should therefore determine which sanctions regimes their counterparties contractually require them to follow.

1. Counterparty Screening

Every sanctions compliance program should begin with counterparty identification.

Companies should screen:

• Shareholders.
• Ultimate beneficial owners.
• Directors.
• Suppliers.
• Customers.
• Traders.
• Banks.
• Insurers.
• Shipping companies.
• Vessels.
• EPC and O&M contractors.
• Consultants and agents.

Screening only the contracting company’s name is insufficient. A company that is not individually listed may still be restricted because it is owned or controlled by designated persons.

2. Beneficial Ownership Investigation

Energy transactions often involve holding companies, offshore entities, investment funds and complex corporate structures.

Due diligence should determine:

• Direct shareholders.
• Indirect shareholders.
• Ultimate beneficial owners.
• Persons exercising control.
• Nominee arrangements.
• Trust or foundation structures.
• Recent ownership transfers.

Unexplained or rapidly changing ownership structures may indicate an attempt to conceal a sanctioned person’s interest.

3. Energy Trading Risks

Sanctions exposure may arise in transactions involving:

• Crude oil.
• Petroleum products.
• Natural gas.
• LNG.
• Coal.
• Electricity.
• Petrochemicals.
• Storage services.
• Commodity financing.

The company should examine the product’s origin, seller, purchaser, route, financing bank, carrier, vessel and end user.

Documents should be reviewed for consistency. Differences between invoices, certificates of origin, bills of lading and payment instructions may indicate sanctions-evasion risk.

4. Equipment Imports and Technology Transfers

Renewable energy projects frequently import:

• Solar panels.
• Inverters.
• Wind turbines.
• Battery systems.
• Transformers.
• SCADA technology.
• Control software.
• High-voltage equipment.

Some items may be subject to export-control or dual-use restrictions imposed by the country of origin.

Before placing an order, the importer should verify:

• Export classification.
• Required licenses.
• Country restrictions.
• End-user conditions.
• Re-export restrictions.
• Software access limitations.
• Maintenance and technical-support restrictions.

An equipment purchase may become commercially useless if software updates, spare parts or technical services later become prohibited.

5. Banking and Payment Risks

Banks conduct their own sanctions screening and may reject a transaction even where the parties believe it is lawful.

High-risk payment features include:

• Unrelated third-party payers.
• Offshore intermediary accounts.
• Last-minute bank changes.
• Payments divided into unusual amounts.
• Different invoice and payment currencies.
• Requests to remove identifying information.
• Payments involving high-risk jurisdictions.

Contracts should not require payment through a bank that may be unable or unwilling to process the transaction.

Alternative payment arrangements must still comply with anti-money laundering, tax, foreign exchange and sanctions requirements.

6. Maritime and Shipping Risks

Energy commodities and large-scale equipment often move by sea.

Companies should examine:

• Vessel ownership.
• Vessel management.
• Flag history.
• Previous names.
• IMO number.
• Insurer and P&I Club.
• Ports of call.
• Ship-to-ship transfers.
• AIS interruptions.
• Cargo documents.

OFAC guidance identifies maritime practices relevant to sanctions evasion, including deceptive shipping and petroleum-trade structures.

Screening should continue until delivery because a vessel, owner or cargo party may become designated during the voyage.

7. Sanctions Clauses in Energy Contracts

EPC agreements, PPAs, supply contracts, financing agreements and joint venture documents should contain carefully drafted sanctions provisions.

Important clauses include:

• Definition of applicable sanctions.
• Continuing compliance warranties.
• Counterparty screening obligations.
• Ownership-change notifications.
• Information and document access.
• Suspension rights.
• Alternative payment arrangements.
• Termination rights.
• Indemnification.
• Audit rights.
• Cooperation with banks and authorities.

A clause requiring compliance with “all sanctions worldwide” may be too broad or legally uncertain. The contract should identify the regimes connected to the parties and transaction.

8. Sanctions and Force Majeure

Sanctions should not automatically be treated as force majeure.

The contract should separately determine:

• Whether performance has become legally prohibited.
• Whether payment remains possible.
• Whether an alternative bank may be used.
• Whether only part of the contract is affected.
• Whether suspension or termination applies.
• Which party bears additional costs.

A party should not be permitted to rely on sanctions caused by its own designation, ownership structure or compliance failure.

9. Red Flags Requiring Enhanced Due Diligence

Enhanced review is appropriate where:

• The counterparty refuses to identify beneficial owners.
• Payment comes from an unrelated entity.
• A recently incorporated company enters a high-value deal.
• The commercial route is unnecessarily complex.
• Documents contain inconsistent product origins.
• A vessel frequently changes names or flags.
• A customer refuses to disclose the end user.
• Equipment is routed through several intermediaries.
• A sanctioned-country connection is concealed.
• The price is commercially unusual.

A red flag does not automatically establish a violation, but it should not be ignored.

10. Internal Sanctions Compliance Program

An effective program should include:

1. A written sanctions policy.
2. Board and senior-management oversight.
3. Risk-based counterparty screening.
4. Beneficial ownership verification.
5. Transaction and payment monitoring.
6. Export-control review.
7. Vessel and cargo screening.
8. Contractual sanctions protections.
9. Employee training.
10. Escalation and investigation procedures.
11. Record retention.
12. Periodic independent audits.

The program should be tailored to the company’s actual activities. A solar developer, petroleum trader and charging network operator do not have identical sanctions risks.

What Should a Company Do After a Possible Match?

The company should not immediately accuse the counterparty or complete the transaction.

It should:

• Suspend the relevant approval process.
• Confirm whether the match is genuine.
• Review aliases and identification data.
• Examine ownership and control.
• Identify applicable jurisdictions.
• Preserve documents.
• Consult banks and specialist counsel.
• Assess reporting obligations.
• Record the final compliance decision.

Automated screening tools can produce false positives. Human legal review remains essential.

Common Mistakes Made by Energy Companies

Companies frequently:

• Screen only once at contract signing.
• Ignore indirect ownership.
• Rely solely on customer declarations.
• Fail to screen vessels and banks.
• Treat sanctions as only a banking issue.
• Ignore export controls.
• Accept vague sanctions clauses.
• Fail to train procurement personnel.
• Proceed despite unresolved red flags.
• Keep inadequate due diligence records.

Continuous monitoring is especially important because sanctions lists and ownership structures may change during a long-term project.

Frequently Asked Questions

1. Are US and EU sanctions automatically Turkish law?

Not necessarily. Their direct legal applicability depends on jurisdictional connections and the specific transaction. However, they may still affect Turkish businesses through banks, currencies, insurers, investors, technology suppliers and contractual obligations.

2. Must Turkish energy companies comply with UN sanctions?

Binding UN Security Council measures implemented through Turkey’s domestic legal framework must be observed.

3. Is checking the company name sufficient?

No. Shareholders, beneficial owners, controllers, directors, banks, vessels and other relevant transaction parties should also be reviewed.

4. Can a bank refuse an otherwise lawful payment?

Yes. Banks may apply internal risk policies that are stricter than the minimum legal position.

5. Are renewable energy projects exposed to sanctions?

Yes. Risks may arise through foreign investors, imported technology, software, financing, banks, equipment suppliers and end users.

6. Should sanctions screening continue after signing?

Yes. Long-term contracts require periodic and event-triggered rescreening.

7. Can a contract be terminated after a party is sanctioned?

Potentially. The result depends on the sanctions clause, applicable law, ownership, payment alternatives and whether performance has become prohibited.

8. Why should companies hire a Turkish energy lawyer?

A Turkish energy lawyer can assess applicable regimes, conduct enhanced due diligence, draft sanctions clauses, review financing and equipment contracts, investigate ownership structures and help manage blocked payments or suspected violations.

Legal Support – Contact Our Energy Compliance Lawyers

Sanctions compliance should begin before an energy transaction is approved, not after a payment is blocked. Effective screening, contractual protection and transaction monitoring help protect project financing, equipment supply and long-term investment value.

Fırat Fesih Kaya and our legal team advise foreign investors, renewable energy developers, commodity traders, EPC contractors, infrastructure funds, equipment suppliers, lenders and multinational energy companies on sanctions compliance, counterparty due diligence, energy contracts, international trade, project finance, customs matters and regulatory investigations.

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