The Natural Gas Market Licensing Regime In Türkiye Within The Framework Of The Natural Gas Market Licensing Regulation

The Turkish natural gas market is regulated within the framework of the Natural Gas Market Law No. 4646 (the "Law") and the secondary legislation enacted pursuant thereto, and operates under a licensing-based market structure subject to the close supervision of public authority. The Natural Gas Market Licensing Regulation (the "Regulation"), enacted by the Energy Market Regulatory Authority ("EMRA"), constitutes one of the principal regulatory instruments determining under which conditions and by which market participants market activities may be carried out. The Regulation comprehensively governs the conditions for entry into and exit from the market, the types of licenses, the rights and obligations of license holders, as well as the procedures and principles regarding the amendment, transfer, and termination of licenses.

The primary legal basis of the Regulation is the Law No. 4646, which grants EMRA the authority to regulate and supervise the market, issue licenses, determine license conditions, and impose sanctions where necessary. In this respect, the Regulation constitutes a piece of secondary legislation that concretizes the general principles set forth under the Law and provides guidance for their practical implementation.

The principal objective of the licensing system introduced by the Regulation is to ensure that market participants operating in the natural gas market possess adequate financial, technical, and organizational capacity, to secure the safe and sustainable functioning of the market, and to guarantee that market activities are carried out in accordance with the principles of transparency and competition.

In this context, the fundamental principles emphasized under the Regulation may be summarized as follows:

• Principle of security of supply: The primary objective is to ensure that natural gas is supplied to consumers in an uninterrupted, high-quality, and safe manner.

• Protection of competition: The prevention of monopolization in the market, the establishment of equal competitive conditions, and the avoidance of discriminatory practices are aimed.

• Transparency and auditability: The effective monitoring and supervision of the activities of license holders by EMRA constitute an essential principle.

• Public interest and consumer protection: The protection of final consumers in terms of price, quality, and continuity of service represents one of the main pillars of the Regulation.

The Regulation classifies the activities that may be carried out in the natural gas market according to license types. In this respect, the principal license types include import licenses, export licenses, wholesale licenses, transmission licenses, distribution licenses, storage licenses, LNG licenses, and CNG licenses.

Each license type contains specific conditions appropriate to the nature of the relevant activity and imposes distinct obligations on license holders. For instance:

• An import license covers activities related to the procurement of natural gas from abroad and its importation into Türkiye; long-term supply contracts, security of supply obligations, and storage requirements are of particular importance for this license type.
• A distribution license relates to the delivery of natural gas to final consumers within a designated geographical area; investment obligations, service quality, and the fulfillment of connection requests come to the forefront in this context.
• Storage and LNG licenses are of a strategic nature in terms of ensuring system flexibility and security of supply and are therefore subject to stringent technical and financial qualification criteria.

While granting license holders the right to conduct market activities, the Regulation balances this right with strict obligations. The principal obligations of license holders include, inter alia:

• refraining from engaging in activities outside the scope of the license;
• complying with applicable legislation, EMRA decisions, and market regulations;
• maintaining financial adequacy and required guarantees;
• complying with the obligation to submit information and documents; and
• avoiding discriminatory practices against third parties and consumers.

In the event of a breach of these obligations, EMRA is vested with sanctioning powers, including the imposition of administrative fines, suspension of the license, or revocation of the license.

The Regulation also sets out in detail the financial, technical, and organizational qualification criteria required during the license application process and throughout the continuation of the license. Accordingly, legal entities applying for a license are required to satisfy minimum capital requirements, demonstrate that they possess technical infrastructure and human resources appropriate to the scope of their activities, and fulfill the guarantee obligations prescribed by EMRA. The guarantee mechanism functions as a safeguard that encourages license holders to conduct market activities in compliance with the legislation and protects the public interest against potential breaches of obligations. In this respect, a license does not merely constitute an authorization to operate, but rather represents a dynamic legal status requiring the continuous maintenance of financial and institutional adequacy.

Furthermore, the Regulation explicitly stipulates that the ultimate responsibility remains with the license holder even where market activities are carried out through contractual relationships with third parties. In models involving the use of subcontractors, transfer of operations, or procurement of services, the license holder remains the addressee before EMRA in all cases with respect to compliance with legislation and the fulfillment of market obligations. This provision is of particular importance in preventing indirect avoidance of liability in the market and in clearly identifying the counterparty of the regulatory authority.

The Regulation prescribes strict rules regarding the transfer and amendment of licenses. The direct or indirect transfer of licenses, mergers and demergers, and changes of control through share transfers are subject to EMRA's approval. The main purpose of these rules is to prevent the circumvention of qualification requirements sought at the stage of market entry through indirect means and to avoid sudden and uncontrolled changes in the market structure. The termination of licenses may arise due to expiry of the license term, upon the request of the license holder, revocation due to non-compliance with legislation, or bankruptcy. In the event of termination, measures such as the transfer of facilities or the temporary operation of the business by another license holder may be adopted where required by the public interest.

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.