Introduction
The Decree on the Transportation of Crude Oil and Jet Fuel by Road and Rail (the "Transportation Decree") was amended by way of Presidential Decree numbered 715, effective as from its publication in the Official Gazette on 7 February 2019.
The amendments extend the scope of petroleum products that can be transported by way of road and rail.
Background
Although Turkey is not rich in oil and gas resources, it is an essential hub for their transit due to its geopolitical position.
The transportation of petroleum products into and through Turkey is regulated under two key pieces of legislation, namely the Law No. 4586 on the Transit Transport of Crude Oil through Pipelines and the Transportation Decree.
Since its initial publication on 11 November 2011, the Transportation Decree has been amended several times. Under the original version of the Transportation Decree:
- the import, transit transport and export of LPG, into Turkey by road and rail had been prohibited altogether; and
- the transit transport of crude oil and jet fuel through Turkey by road and rail was possible, subject to permit by the Ministry of Customs and Trade (the "Ministry")1 which were issued on the condition that there is express public benefit in carrying out the related transportation activities.
Subsequently, an amendment to the Transportation Decree introduced on 4 July 2014 expanded the scope of the transportation activities that the Ministry could permit to include the export of crude oil and jet fuel by way of road and rail.
The amendments
Following most recent amendments effected on 7 February 2019, the Transportation Decree now allows:
- the import, transit transport and export of LPG; and
- the transit transport and export of crude oil and other petroleum products,
by way of road and rail, subject to the approval of the Ministry.
One of the key changes introduced by the amendments is that it is now possible to import LPG into Turkey by way of road or rail. While it is still possible to transport crude oil and other petroleum products for export or on a transit basis by road and rail with the approval of the Ministry, their import remains prohibited.
Another key change is the replacement of the term "jet fuel" with "other petroleum products". According to Article 2 of the Petroleum Market Law, "other petroleum products" include all types of gasoline, naphtha (excluding raw material and solvent naphtha), jet fuel, all types of diesel, all types of fuel-oil and other products to be determined by the Energy Market Regulatory Authority. Therefore, the scope of petroleum products that can be transported for export and on a transit basis by road and rail will no longer be limited to jet fuel.
Conclusion
The amendments to the Transportation Decree expands the scope of transportation activities and the range of petroleum products that can be transported by way of road and rail.
Perhaps most importantly, it will now be possible to import LPG by way of road and rail. This can reasonably be tied to an intention to decrease Turkey's dependency on existing pipelines and sea lines for the supply of LPG. It is also noted by sources close to the subject that Turkey's growing demand and recent fluctuations in the Turkish currency have further amplified the need for Turkey to have access a larger universe of LPG suppliers, going forward.
Time will tell how much interest this is going to spark in the oil & gas space and whether and how quickly market players will fill this new degree of freedom by obtaining permits from the Ministry to engage in LPG import by road and rail. In any case, these regulatory changes can be expected to result in a marked increase in the amount of petroleum products traded with neighbouring countries in the near future.
Footnote
1. Readers to note that the Ministry of Customs and Trade has subsequently been reorganised and its duties have been assumed by the Ministry of Trade.
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