Which are the types of business activity in the petroleum products market?
The main activity sectors in the petroleum products market include:
- Refining
- Imports and exports of crude oil or finished products to and from EU and non EU countries
- Storage and handling of petroleum products coming from refineries or imports
- Retail trade to final users
- LPG bottling and distribution to final users
- Marketing of biofuels
How prices are set in the petroleum products market?
The sector of petroleum products is especially sensitive since it concerns national security and defense policy, therefore, it is to a large extent under the supervision of the State. For the protection of competition, the refineries are required to notify the Regulatory Authority for Energy and the Minister of Economy and Development their method for setting ex factory prices of petroleum products, although, prices of these products in the domestic market are freely determined by those marketing these products.
By a joint decision of the Minister of Economy and Development and the Minister of Finance, based on the opinion of the Regulatory Authority for Energy, in cases of adverse impacts on the country’s economy due to high international prices of crude oil and petroleum products or due to the unjustified, according to the rules of healthy competition and the specific conditions of international and domestic petroleum market pricing of petroleum products, permission is granted to impose nationally or locally maximum selling prices to the consumer for all or some of the petroleum products. The validity of this decision may not exceed a period of two months (2) each time.
How a company may enter that market?
The carrying out of those activities in refining, biofuel marketing, marketing and distributing by an oil pipeline are allowed only after a license has been issued by the Ministry of Development. Respectively, to enter the market in LPGs retail trade and bottling a license is required issued by the Prefecture authorities.
These licenses are only granted to legal persons in the form of a Public Limited Company or Limited Liability Company or Private Limited Company, established in a EU Member State. An exceptional authorization for retail marketing may also be granted to natural persons.
Assuming that for each license the conditions imposed by law are separately met , more than one license can be granted to a person. If the same person holds more than one license, separate accounts are required for each activity for which a license has been granted.
How long the granted license is valid?
The validity period of the licenses may be renewed as follows:
- Refining License = 40 years
- Trade License = 5 years
- Heating Oil trading License = 4 years
- Bottled LPG trading License = 4 years
- Direct Supply of Petroleum Products from the Refineries License = 5 years
- Distribution by an Oil Pipeline License = 40 years
- LPG Bottling License = 8 years
- Trade of Biofuels License = 10 years
Are specific financial criteria for any type of license required?
Only the legal person which is going to be licensed for trading in one of the following cases must meet certain financial requirements. More specifically, for the following product categories a separate trading license is issued by category as follows:
A. Trading license for petroleum products and crude oil. This license does not include trading of marine and aviation fuel, LGP and asphalt.
B1. Trade license for tax free marine fuel
B2. Trade license for aviation fuel
C. Trade license for LGP
D. Trade license for asphalt
E. Trade license for petroleum products - excluding LGP, asphalt, and aviation fuel -sold in companies which have storage facilities in the Aegean islands excluding Crete, Rode and Saronic Islands.
Which are the financial requirements to be met for the granting of a trade license?
The legal person to be granted a trade license for one of the aforementioned cases must meet one of the following alternative requirements:
aa) Minimum share capital, as follows:
For license category Α :
| Sales volume (during previous calendar year in metric tons) | Minimum Share Capital |
|---|---|
| Up to 100.000 Μ.Τ. | € 200,000 |
| From 100.000 Μ.Τ. up to 300.000 Μ.Τ. | € 500,000 |
| From 300.000 Μ.Τ. up to 600.000 Μ.Τ. | € 1,000,000 |
| More than 600.000 Μ.Τ. | € 1,500,000 |
|
For license category Β1: |
€ 500,000 |
| For license category C: | € 500,000 |
| For license category E: | € 150,000 |
bb) A letter of guarantee, whereby the issuer guarantees payment to the Greek State, for any amount up to the amount which corresponds to the minimum share capital stated above, for repayment of claims in favor of the Greek State and at the expense of the applicant for the trade license. Especially for the license category D, a letter of guarantee amounting to five hundred thousand (500,000) Euro is required.
Are there any other technical requirements that must be met for the granting or renewal of a trade license?
For the granting or renewal of a trade license a minimum volume of storage availability is required, as follows:
For trade license Category Α, as follows:
| Sales volume (during previous calendar year n metric tons) | Minimum volume of storage availability (in m3) |
|---|---|
| Up to 100.000 Μ.Τ. | 1,500 m3 |
| From 100.000 Μ.Τ. up to 300.000 Μ.Τ. | 4,000 m3 |
| From 300.000 Μ.Τ. up to 600.000 Μ.Τ. | 7,000 m3 |
| More than 600.000 Μ.Τ. | 13,000 m3 |
|
A minimum volume of storage availability for the other categories of trade licenses is required as follows: |
|
| For license category Β1: | 5,000 m3 |
| For license category B2: | 5,000 m3 |
| For license category C: | 500 m3 |
| For license category E: | 1,000 m3 |
In any case, the minimum volume of storage availability should not fall short of what is necessary for maintaining the necessary commercial stock.
Especially for a LPG trade license: The licensee who sells and distributes bottled LPG, shall be the exclusive owner of at least 30,000 suitable refillable gas bottles marked indelibly not allowing any intervention to the name and brand. Especially in the case of the first issuance of a trade license in Category C and up to the time of its renewal, the above minimum number of bottles is reduced to 20,000.
Is there any special levy for the petroleum products market operators?
By a decision of the Minister of Economy and Development , the country is divided into geographical regions depending on the needs of a smooth supply of petroleum products . A special account has been opened with the Bank of Greece under the name of “Corporate Finance Account for Petroleum Products Trading Companies for Transporting Fuels in the Country’s Distressed Areas.”
The special levy has been set at a rate of one point two percent (1.2%) over the pre-tax value of petroleum products which are handled by: a) the Trade License holders, b)The Retail Trading License holders for certain categories, c) the Purchasing Cooperatives and d) Major final consumers, for direct purchases made from Refining License holders in the country or direct imports, excluding the armed forces fuel supplies, aviation fuel, and marine fuels for coastal and international shipping.
This special levy is estimated and levied during the procedure of customs clearance of petroleum products and constitute a resource of a Special Account, which is allocated for the payment of subsidies to the Trade License Holders who undertake to cover the need for petroleum products in the Country’s Distressed Areas, for charitable purposes, and funding of the study and research in the energy field.
Which is the prescribed licensing procedure?
The licensing procedure is quite swift and flexible:
I. The file of the operator or company concerned is submitted to the Licensing Authority including a series of documents, such as:
- Documents relating to the organizational and administrative structure of the applicant
- Extracts of criminal records for the members of the Board of Directors
- Certificates for tax and social security clearance
- A feasibility study and a business plan for the project’s economic viability
- Receipt of a special fee payment to the Tax Office (this fee is variable and can reach up to € 6,000)
II. The Authority shall act within 60 days. The decision may be appealed within 30 days of its issue.
III. In the case of permit approval, the applicant enters a special register and it is required: (a) to keep a Petroleum Transactions Book where all commercial transactions are recorded in detail, (b) to maintain operating stocks in Security Stock Warehouses, (c) to comply in audits of its accounts and books by the Ministry of Economy and Development and the Energy Regulator.
What is the Petroleum Transactions Book?
The licensee shall keep in a “Petroleum Transactions Book” separately for every license and product detailed accounts of the volume of each product commercial transactions.
Entities, companies, individuals, or everyone else involved in the energy sector in any way, are required to submit data and information to the relevant competent services of the Ministry of Environment, Energy and Climate Change, including in particular data on supplies, imports, exports, production, handling, operation, management, storage, pricing, trading energy products, as well as, statistical information on economic terms.
Such information is confidential, and it is used exclusively for preparing statistical summaries for the energy sector and the overall planning of the Ministry of Environment, Energy and Climate Change or provided for in the relevant European Union and the International Energy Agency provisions.
Which are the provisions for stock security obligations?
The total level of petroleum reserves, which is maintained for the benefit of the country within the territory of the European Union and on a permanent basis in order to meet the needs of the internal market in periods of serious supply disruptions, within and EU or international obligations of the country, corresponds to at least 90 days of average daily net imports. The average daily net imports to be taken into account are calculated on the basis of their crude oil equivalent of imports during the previous calendar year.
Obligation to keep emergency stocks is independent from the type of license held and exclusively within its provisions:
- Those who import crude or semi-processed or petroleum products referred to in paragraph 1 for consumption in the domestic market.
- Large final consumers which import and store those products exclusively for own consumption.
The level of the emergency stock maintained by the licensee amounts at least to the 90/365 of net imports made domestically during the preceding calendar year. This level can be adjusted by a decision of the Minister of Environment, Energy and Climate Change, taking
into account the EU and international commitments of the country.
Which sanctions are established for legislation infringements concerning the market of petroleum products?
The sanctions established are of two kinds, criminal and administrative.
-
Criminal: Anyone without a legal permit or in breach of the conditions laid down by the legislation refines, stores, trades, distributes, delivers, supply, provides, bottles or sell crude oil or petroleum products or other energy products, is punishable by imprisonment of at least three (3) years and a fine of ten thousand (10,000) up to fifty thousand (50,000) Euros.
If the perpetrator commits repeatedly the act referred to in the preceding paragraph and the cumulative value of these transactions exceeds the sum of seventy three thousand (73,000), is punishable with imprisonment of up to ten (10) years and a fine of fifty thousand (50,000) up to three hundred thousand (300,000) Euros. - Administrative: For each breach of the provisions referring to petroleum products, a fine of five thousand (5,000) to one million five hundred thousand (1.5 million) Euros is imposed. For estimating the amount of the fine imposed the criteria taken into consideration include, in particular, the gravity of the infringement, the consequences arising from this, the degree of fault and the recurrence of the infringement.
