PETROLEUM MARKET LAW NO 5015

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PETROLEUM MARKET LAW NO 5015 OF TURKEY
Refik TIRYAKI, LLM Energy Expert Energy
Market Regulatory Aurthority Subcommittee N. 6
Transport, Environment, Energy and Trans-European
Networks Agenda, Brussels Centre Borschette Room
0C, 18-19 July 2005
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REASONS OF RESTRUCTURING

• For the purpose of
• Providing harmonization to general economic
  policies,
• Establishing stable and secure environment for
  investors and enterprises, as well as for
  consumers,
• Providing transparent and competitive
  environment,
• Meeting its international obligations,
• TURKEY has re-structured its petroleum market
  with the Law, numbered 5015, in December 2003.
• At first step Petroleum Market Law differentiated
  market activities (downstream activities) from
  petroleum operations (upstream activities).

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AIM SCOPE

• According to Petroleum Market Law,
• Legal separation of market activities are
  achieved,
• Market operations are bounded to license holding,
  
• Fuel supply chain, limitations on market shares
  and classification of users by volume limits are
  being realised,
• National petroleum stock system is established.
• On those grounds the objective of the Law shall
  be stated as
• to regulate guidance, surveillance and
  supervision of market activities,
• for reliable, cost-effective and competitive
  supply of petroleum from domestic or foreign
  sources to consumers,
• in a transparent, non-discriminatory and stable
  manner.

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LICENSES

• According to the law
• Refining,
• Fuel Distribution,
• Transmission,
• Processing,
• Storage,
• Transportation,
• Lube oil production,
• Eligible consumption,
• Bunkering activities and
• Vendor (retailing) activities,
• shall only be performed by license holders.

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LIQUID FUEL DISTRIBUTION-1

• Some of the parties taking place in the fuel
  supply chain as follows
• 1) Refineries those will be entitled
• to purchase and process crude oil or import
  finished products and deliver them to
• Its fuel distribution undertaking,
• eligible consumers,
• bunker delivery companies or to buyers abroad
• for transformation of crude oil delivered by
  third parties into a finished product.
• 2) Distribution undertakings are to be entitled
• to receive fuel from
• refineries,
• abroad,
• or another distribution undertakings (within
  framework of prior Board decision),
• for supplying
• to its vendors,
• to eligible consumers,
• to another distribution undertakings (within
  framework of prior Board decision),

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LIQUID FUEL DISTRIBUTION-2

• 4) Licensed storage undertakings are to be
  authorized
• to store petroleum under the ownership of third
  parties for
• Storage and
• operational requirements of those, performing
  market activities.
• 5) Transmission undertakings are authorized to
  transport petroleum products through pipelines,
• 6) Lube Oil Producers are to be entitled
• to produce lube oil from
• Natural or ,
• Artificial materials ,
• and import those classified as lube oil by the
  Board without any prior administrative procedure,

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CURRENT STATUS-1

• A. Regulations
• Petroleum Market Licensing Regulation, Published
  in June 2004,
• Petroleum Market Tariffs Regulation, Published in
  July 2004,
• Regulation Regarding The Technical Criterion
  Implemented in Petroleum Market, Published in
  September 2004,
• Regulation regarding implementation of national
  marker system, published in October 2004.
• Regulation Regarding Supervisions Carried out in
  Petroleum Market and the Procedures and
  Principles to be Followed in Preliminary
  Investigations and Investigations published in
  January 2005,
• Communique regarding import procedures of
  petroleum products other than liquid fuel,
  published in March 2005.

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CURRENT STATUS-2

• B. Application
• According to Licensing Regulation
• applications are being accepted first in June
  2004 and the process is still ongoing,
• The Law is ruled that 20th of December, 2004, is
  the deadline for persons acting in market to keep
  their legal rights bounded,
• Parties acting in the market widely followed
  their obligations to apply for licenses,
• Energy Market Regulatory Board is granted more
  than 12 000 persons to perform market activities
  with licenses. Those can be detailed as follows
• 4 Refinery,
• 36 Fuel Distribution,
• 6 Transmission undertakings,
• 57 Licensed storage,
• 24 Bunkering undertakings
• 756 Transportation,
• 48 Lube Oil Production,

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OTHER ISSUES-1

• Pricing
• The pricing for the purchase and sales of
  petroleum shall be constituted according to the
  free market conditions.
• Activities will be performed under the tariffs.
  These are
• Tariffs to be approved by the Authority for
  transmission and storage (natural monopoly),
• Tariffs to be submitted to the authority as
  ceiling prices,
• Tariffs to be declared (visible for consumers).

• National marker
• The Authority
• Shall determine conditions and quality of
  national marker,
• Set forth the procedures and principles for
  addition of national marker and submission of
  projections,
• Shall establish an audit system by national
  marker,
• Shall apply provisions of sanctions when marker
  is not sufficient.

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OTHER ISSUES-2

• The National Petroleum Stock Commission is
  established and chaired by the Undersecretary of
  the Ministry of Energy and Natural Resources.

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RESULTS and EXPECTATIONS

• For properly functioning petroleum market,
  required rules and regulations are prepared and
  put into force with enforcement of the Law,
• The rights and responsibilities of market
  participants clearly stated and protected by the
  decisions of Board,
• The guaranteed structure are being supported by
  the licenses, norm contracts and standards,
• State involvement and interventions to the market
  are being minimized. There will be confidence and
  stability for all the parties involved in
  petroleum activities. This will create a
  competitive environment, allowing free trade and
  movement of petroleum products from different
  sources,
• Harmonization with European Union targets,
  barriers to free movement of capital and goods
  are being eliminated,
• Greater private sector involvement is occurring
  progressively for the development of facilities
  needed in market.