Turkey: New OtoCNG License And Amendments To Natural Gas Market License Regulation

Last Updated: 5 June 2017
Article by Faruk Aktay

Turkish Energy Market Regulation Authority ("EMRA") recently published amendments in relation to the Natural Gas Market License Regulation ("Regulation") in the Official Gazette dated 24 May 2017 numbered 30075. The amendments redefined the compressed natural gas ("CNG") activities and introduced a new license as OtoCNG license –different from the existing CNG license- that is required to be obtained by the companies interested in selling CNG for use as fuel in road vehicles and maritime vehicles within Turkish territorial waters.

New amendments also introduced additional obligations in relation to the corporate information systems and industrial control systems for the holders of natural gas transmission and distribution licenses.

The details of the amendments can be found in detail below:

Amendments to Compressed Natural Gas (CNG) License and Introduction of OtoCNG License:

Article 29 of the Regulation reads that companies to be operating in the CNG market are obliged to obtain a CNG license and the activities that will be carried out should be specified in detail in the CNG license. Accordingly, holders of CNG license may purchase natural gas from the gas extraction companies at the well, from national transmission network or city distribution system, suppliers and/or distribution companies and provided that it is noted in their licenses, they can also engage in the activities of:

  1. compression of natural gas, filling into pressure vessels and selling;
  2. transport of compressed natural gas filled within pressure vessels between cities by special vehicles, and selling of compressed natural gas -supplied from the CNG filling stations and/or purchased from whole sale companies producing compressed natural gas, compressed by the compression equipment installed on the transportation vehicles and filled into compressed and pressurized containers- by reducing its pressure at places where transmission networks cannot reach; and
  3. selling of OtoCNG for use as fuel in road vehicles.

With the amendment introduced, holders of CNG licenses are allowed to engage in the activity of selling compressed natural gas for use as fuel in domestic and foreign maritime vehicles within Turkish territorial waters.

Additionally, the new amendments requires that in the stations operating with OtoCNG license allowing solely for selling of compressed natural gas for use as fuel in road vehicles, activities of compression, filling into pressue vessels and transportation of CNG cannot be carried out. However, OtoCNG license holders may compress the natural gas for the supply to be made for road vehicles at its own station or to obtain the same from other CNG sales, CNG transmission and distribution licence holders.

New amendments also dictates without the Service Qualification Certificate (Hizmet Yeterlilik Belgesi) issued by the Turkish Standards Institute, CNG activities carried out with CNG Sales and/or OtoCNG licenses can not be continued. As per Provisional Article 7, as amended, holders of CNG Sales license are required to submit the original or a notarized copy of the Service Qualification Certificate issued by Turkish Standards Institute to the EMTA within one (1) year from the date of entry into force. License holders operating in this scope are obliged (i) to extend the validity of the Service Qualification Certificate issued for the stations so long as they carry out the CNG sales activities and (ii) to submit the renewed certificate to the EMRA. Additionally, with the amendment introduced to Schedule 3 of the Regulation, the Service Qualification Certificate is now included as a requirement for the application of the CNG Sales license.

Under the Provisional Article 10, holders of CNG Sales license issued before the date of entry into force of this Article are allowed to convert their license with OtoCNG license upon the payment of a license amendment fee but without being able to make any amendments on the license issue date and its validity period.

Application Documents Required for OtoCNG License: Amendments introduced to Schedule 3 of the Regulation provided a list of application documents that will be submitted to EMRA as part of the application for the issuance of OtoCNG License: The list of application documents are as follows:

  1. Full address of the station, including the plot, map and parcel details;
  2. Details about how the natural gas is procured;
  3. Supply capacity of the station (m3/h),
  4. Letter of undertaking which warrants that that facilities and equipment related to the OtoCNG activities are in compliance with the standards laid down in the Natural Gas Market Facilities Regulation,
  5. Original or notarized copy of the Workplace Opening and Operation Permit, in which the OtoCNG activity has been noted;
  6. Original or notarized copy of the Service Qualification Certificate obtained from the Turkish Standards Institute,
  7. In the event that the natural gas -purchased from the extraction company, national transmission network or city distribution system, suppliers and/or distribution companies- shall be compressed at the OtoCNG station, details about the inlet and compression pressure (bar) and design capacity (m3/h) of the station.

Amendments Concerning Natural Gas Transmission and Distribution License Holders: Pursuant to Article 21(7) and 28(18) of the Regulation, holders of transmission and distribution license are required to (i) run their corporate information systems and industrial control systems in accordance with TS ISO/IEC 27001 Information Security Management System standards and (ii) certify that their systems are in operation in accordance with TS ISO/IEC 27001 standards by proving its compliance to a certification body accredited by Turkish Accreditation Agency and ensure the validity of certification documents.

With the introduction of the new amendment, holders of transmission and distribution licenses are now required to take ISO/IEC TR 27019 Guidelines and TS ISO/IEC 27002 Implementation Guide as a reference while setting up their Information Security Management System in line with the standards of TS ISO/IEC 27001. Pursuant to Provisional Article 4, this amendment will be effective on 31 December 2017.

Amendments Concerning Natural Gas Wholesale License Holders: Pursuant to Article 25(5) and (6) of the Regulation, holders of wholesale license may carry out the sale of LNG to be used as fuel in road vehicles in the stations to be built up in certain places. The new amendment created a definition for LNG stations, which is "OtoLNG" however the provisions of the mentioned paragraph in relation to the rights and obligations of the wholesale license holders remained the same.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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