Petroleum is a very important energy input in today's economies. Today, it has a large area of use from electricity generation to transportation. Since petroleum formation takes many years, petroleum is among the nonrenewable (fossil) resources.
The rate of petroleum in energy consumption in our country is between 30-40%. For this reason, a regulation was made on the petroleum market and the Petroleum Market Law was published in the Official Gazette on 20/12/2003.
The objective of this Law is to regulate the guidance, surveillance and supervision activities in order to ensure the transparent, non-discriminatory and stable performance of market activities pertaining to the delivery of petroleum supplied from domestic and foreign resources to consumers, directly or after processing, in a reliable, cost-effective manner within a competitive environment.
License
Holding a license is obligatory for the following petroleum activities are performing refining, processing, lube petroleum production, storage, transmission, eligible consumer and bunker activities and to establish and/or operate facilities for the performance of aforesaid activities, and performing liquid fuel distribution, transportation and vendor activities. Requests regarding the license are concluded by EMRA within 60 days.
Persons who act contrary to the provisions regulated in the Anti-Smuggling Law are not licensed.
Private law legal persons that are capital companies as per the legislation of foreign countries, and performing market activities in Turkey shall be deemed settled in Turkey with regards to their activities in Turkey according to the legislation on the protection of value of Turkish Lira.
License Types
There are four types of licenses regulated in the Petroleum Market Law.
Refining undertaking: Refining undertaking is a capital company which has been granted the right to perform refining and petroleum trade activities due to its license. Crude oil and fuel can be obtained from abroad. Refining undertaking provided that it is registered in the license, processing and storage activities within the facility or in the vicinity, and transportation activities to other facilities in the vicinity via pipelines, and liquid fuel distribution activities via its distribution company.
Refining undertaking licensees shall be obliged to have the domestic and foreign sales tanks as well as crude oil, by-product, product-excluding liquid fuel- and liquid fuel tanks in their facilities registered in their licenses and shall be obliged to communicate to the EMRA the information about utilization of the tanks.
Transportation, processing, storage, transmission, lube oil production, eligible consumer, bunker delivery company and bunker vendor: Turkey's territorial waters and / or adjacent to the territorial sea vehicle called or airfields taxation of domestic and foreign aircraft or provided tax-free fuel and mineral oil bunkering. Bunker delivery company and vendor is a license holding capital companies and vendors which supply bunker obtained domestically or from abroad to air and sea vehicles.
In order to meet the stock and processing needs of those engaged in market activities, a storage license is issued to capital companies that store petroleum owned by someone else.
The meaning of eligible consumer is the licensed consumer whose annual petroleum consumption is more than the amount determined by the EMRA on product base, being no less than 5.000 tones in fuel-oil, heating fuel and diesel annually.
Capital companies engaged in oil trade, which are given the right to do refining, are called refiners.
A processing license is granted to those who carry out operations related to obtaining new products from petroleum and other chemicals except for the production of mineral petroleum and / or changing the quality or quantity of the products.
Distribution: Distributor license holders have the right to distribute products defined as fuel.
Distributor license holders may not distribute to other dealers other than the dealers they own or have contracted with.
Distribution undertakings shall be obligated to make annual marketing projections and submit them to the EMRA with details in February of each year. They shall also be obligated to evaluate the realization of their projections quarterly every year and submit such evaluation to the Authority in January, April, July and October and provide explanations for an increase or decrease of more than 10% in their projections.
Distributors create dealerships by contract. If the contract is not repeated for the continuation of the dealership three months before the end of the dealership period, the distributor will meet the petroleum need of the dealer until the end of the term.
The sale of distribution undertakings made through stations under their ownership shall not exceed 15% of the distributor’s total domestic market share. The domestic market share of the distribution undertaking shall not exceed 45% of the total domestic market. Distribution undertaking shall not grant subsidies to stations under their ownership or treat them differently from vendor stations.
Vendors: The arrangements (technical, safety, capacity, environment etc.) regarding vendor licenses shall be made by the EMRA.
Vendors shall have the following obligations during the license period:
-Not to take the delivery of liquid fuel from other distribution undertakings and their vendors other than the liquid fuel distribution undertaking whom they are the vendors of,
-Not to add products that could be added for adulteration and/or for fraud to liquid fuel and keep such material in their stations.
Price Formation in the Petroleum Market:
The pricing for the purchase and sales of petroleum shall be constituted according to the nearest accessible global free market conditions. For domestic crude oil, “market price” formed in the nearest delivery port or refinery shall be accepted as the price.
Monthly foreign exchange average selling rate announced by The Turkish Central Bank, barrel and metric ton as petroleum unit and US Dollar as foreign currency shall be used in the market price proposals.
Refining undertakings shall purchase the domestic crude oil from such minimum prices formed upon the proposal of the crude oil producers and shall give priority to domestic crude oil in crude oil supply. Refining undertakings shall give a written response within 15 days to crude oil producers’ proposals offering the crude oil with the minimum price referred to in this article or higher. Refining undertakings shall not make any monetary demand and offer concerning delivery point and conditions which may adversely affect producers. Disputes on prices shall be settled no later than 30 days by the arbitration of the EMRA, which award to be rendered in result of the arbitration, shall be binding on the parties.
Administrative Sanctions
Administrative sanctions; measures consist of license cancellations and administrative fines. The institution responsible for imposing administrative sanctions is EMRA.
Administrative Fines
Administrative fines are imposed in the event of refinery, distributor, transportation, bunker, processing, storage, transmission, mineral oil production and activities within the scope of free user license without obtaining a license.
Administrative fines are imposed on persons who possess fixed or mobile tanks, apparatus or equipment contrary to those specified in the documents that constitute the basis of the license in order to obtain or sell illegal fuel or counterfeit national markers or to subject them to any market activity.
Administrative fines are imposed on those who add the products that can be added to the fuel for adulteration and / or fraudulent purposes and keep them at their stations.
Administrative fines are imposed on license holders who do not comply with restrictions on market activity.
Administrative fines are imposed on license holders who do not comply with the license obligations.
An administrative fine is imposed in case of direct or indirect prevention of price formation or attempting to prevent it.
Administrative fines are imposed on license holders who take any action that will result in malicious or dangerous action.
Administrative fines are imposed on those who operate outside of the rights granted by the owned license.
Administrative fines are imposed on licensees who directly or indirectly block access to transmission and storage facilities.
In case of dealership activities without obtaining a license, an administrative fine is imposed.
An administrative fine is imposed in case the dealers do not comply with their dealership obligations.
License holders, who are obliged to keep national petroleum stock, are fined two hundred and fifty Turkish Liras for each ton of product missing at the date of detection.
Administrative fines are imposed on those who do not comply with the obligations imposed by the law, secondary legislation or license provisions, and EMRA decisions.
License Cancellation
In case of violation of the legislation and EMRA decisions about the license holders, it is warned that the violation will be eliminated within thirty days, otherwise a temporary suspension will be made. At the end of the warning period, the activities of those who continue to be against the legislation are temporarily suspended for sixty days. In case the act, which has the possibility of correction due to its nature, is repeated within two years from the date of detection, the relevant market activity is suspended for a period of sixty days without any warning. If the detected violations are not eliminated at the end of the temporary suspension period, the license is canceled.
An administrative investigation is initiated and necessary sanctions are imposed on the license holders for the acts of fuel smuggling specified in the Anti-Smuggling Law. During the investigation process, the license is temporarily suspended.
Except for the refinery where the acts of smuggling specified in the Anti-Smuggling Law are determined, all activities subject to license are suspended temporarily by EMRA and the license of the license holders is canceled according to the decision.
In the case of a request or transaction made pursuant to this Law, if it is determined that there has been fraudulent or false declaration against the law, the license shall be revoked.
Licenses of those who install illegal products are canceled.
Judicial Remedy Against EMRA Decisions
It is necessary to first file to EMRA against the Board decisions made by EMRA. A lawsuit is filed against EMRA Board decisions within 60 days from the notification of the decision. This 60-day period is suspended in case of an file to EMRA. If the party applying to EMRA does not receive an answer within 60 days or receives a negative answer, this period continues.
A lawsuit is filed in Ankara Administrative Courts against the decisions of EMRA Board.
Appeals can be filed against the decisions of the court of first instance.
Related Council of State Decisions
“The application of the temporary sealing procedure at the plaintiff's fuel station in accordance with Article 20 of Law No. 5015 stems from the fact that the fuel of unknown origin is considered as smuggled fuel in accordance with paragraph 11 of Article 3 of Law No. 5607. However, with the amendment in paragraph 11 of Article 3 of Law No. 5607, the scope of the smuggling offense was limited to fuel that contains or does not contain national markers below the level determined by the Energy Market Regulatory Authority. It is understood that the possession of fuel of unknown origin cannot be considered within the scope of smuggling by itself.
In this case, considering that the reason for the sealing process applied pursuant to paragraph 8 of Article 20 of Law No. 5015 has disappeared, the compliance with the law in the action subject to the action is correct in the Court's decision on the cancellation of the action in question.” (Council of State 13th Department, Case No:2015/5051, Decision No: 2020/2910)
“While defining a license in Law No. 5015, it is stated that the license shall refer to the document showing that real and legal persons are given permission by the Board to operate in the aforementioned markets. In the same law, there is a regulation that the license applications regarding the petroleum market will be made to the Energy Market Regulatory Authority and the procedures regarding the granting or cancellation of the licenses will be made by the Authority. It is the duty of the Board to implement the provisions of Law No. 5015 and cancel the license in cases listed in the Law, in accordance with Article 5/B of Law No. 4628.
In this respect, if it is determined that the dealership license of the plaintiff should be terminated as a result of the examination, the file should be submitted to the Board and the plaintiff company's license should be evaluated by the Board. For this reason, in the transaction regarding the termination of the dealership license by the Department, there is no legal action in the decision of the Administrative Court, which is the subject of the appeal in terms of compliance with the law and the rejection of the case.” (Council of State 13th Department, Case No: 2014/3471, Decision No:2020/91)