HOW DOES NATURAL GAS COME TO TURKEY?

Cahit SOYSAL
Board member

Fatih drilling ship, which carried out Turkey's first national deep-sea drilling in the Black Sea, discovered 320 billion cubic meters of natural gas reserves in the Sakarya Gas Field. This figure seems to be enough to meet Turkey's natural gas needs for at least 7 years. This discovery, made in Turkey's exclusive economic zone in the Black Sea, approximately 170 kilometers offshore, and which can meet a significant portion of the country's natural gas imports, has attracted attention to this region.

On the other hand, due to the decline in production in old oil fields such as the North Sea on Earth and the "easy oil" era approaching its end, hydrocarbon exploration and drilling companies began to focus on deeper waters and areas that had not received much attention in the past. As a result of this trend, the Eastern Mediterranean Basin has been at the center of energy-politics in recent years. The problems that neighboring countries have with each other and the disputes over the borders of the exclusive economic zone show that things will not be as easy for Turkey, which has started exploration activities in the Mediterranean, as in the Black Sea.

So, what will be the customs status of the natural gas extracted in the Black Sea and the natural gas or oil that may be discovered by Turkey in the Mediterranean? In this article, we will try to approach the issue from the perspective of customs legislation.

First of all, it is useful to touch upon the issue of transfer of natural gas in the Black Sea.

With the "Agreement on Continental Shelf Limitation in the Black Sea" signed between Turkey and the Union of Soviet Socialist Republics (USSR) on June 23, 1978, the two countries have determined their own continental shelves. Later, the 1982 United Nations Convention on the Law of the Sea regarding the delimitation of exclusive economic zones and continental shelf areas came into force. Following this Agreement, with the letters of Turkey dated 23.12.1986 and the USSR dated 06.02.1987, the parties agreed on the acceptance of the border regulated by the Agreement on Continental Shelf Delimitation between the parties for the exclusive economic zone. After the dissolution of the USSR in 1991, the Agreements in question continue to be valid for Russia and Ukraine with Türkiye. In other words, the natural gas Turkey finds in the Black Sea is entirely within its exclusive economic zone and there is no international dispute on this issue.

In the 1st paragraph of Article 18 of the Customs Law No. 4458, it is stated that "Goods obtained or produced entirely in a country are of origin in that country." In the 2nd paragraph, "Goods obtained or produced entirely in one country" is defined as; ….. h) Products extracted by that country from the bottom of the sea outside the territorial waters of that country or from under the soil at the seabed, with the exclusive right to operate it, …. It is stated that "it is understandable".

In this context, the natural gas to be extracted from under the sea through platforms to be established within Turkey's exclusive economic zone in the Black Sea will indisputably be of "Turkish Origin". After this determination is made, it is necessary to address the issue of how the natural gas in question will be brought to Turkey.

In the 1st paragraph of the 3rd article of the Customs Regulation, “… mentioned in this Regulation; …. o) Turkey Customs Territory or Customs Territory: It refers to the Customs Territory of the Republic of Turkey, which includes the territory, territorial waters, internal waters and airspace of the Republic of Turkey. Turkey's territorial waters are 12 nautical miles in the Black Sea and the Mediterranean Sea and 6 nautical miles in the Aegean Sea.

In this case, it is important how the natural gas in the exclusive economic zone in the Black Sea, 150 kilometers away from our territorial waters, will be transported to the Turkish Customs Zone. If natural gas is transferred from the platform where natural gas is extracted by laying an undersea pipe to the Turkish territory, the natural gas will be recorded in the domestic accounting system and subject to domestic trade with the e-invoice issued by a business established in Turkey in the form of domestic sale of a Turkish product. In this case, there will be no need to carry out any customs procedures.

The provisions of Articles 33 and 34 of the Customs Law will be taken into consideration in the domestic transfer of natural gas to be loaded onto ships as "liquefied petroleum gas" from the platform in the Black Sea. Article 33 of the Law states that "Entry and exit to the Turkish Customs Territory is made through customs gates"; Article 34 includes the provision "Vehicles entering or leaving the Turkish Customs Territory are subject to customs supervision." In this case, even though the ship is carrying "liquefied petroleum gas of Turkish origin", the ship approaching the Turkish port will be subject to customs enforcement control and the "Question Paper" signed by the ship captain will be delivered to the customs enforcement officers. However, since the "liquefied petroleum gas" brought has the status of goods in free circulation, permission will not be obtained from any customs authority to load the gas onto other land vehicles or land-based pipelines without submitting a customs declaration. That is, the evacuation of the ship will be carried out completely in accordance with the procedures for discharging cabotage cargo. Undoubtedly, for this "natural gas", the product will be recorded in the domestic accounting system with the e-invoice issued by a business established in Turkey.

Whether the same procedure can be applied for future Mediterranean natural gas or oil will depend on future developments.

If an agreement is reached between Turkey and the countries bordering the Eastern Mediterranean on the "exclusive economic zone", as in the Black Sea, and this issue is concluded in an agreement, gas or oil traffic will take place as mentioned above. Likewise, if Turkey uses the natural gas or oil extracted from the Mediterranean entirely for its own needs, the product transfer will take place as mentioned above.

However, when Turkey wants to sell the natural gas or oil it extracts from a region in the Mediterranean, which is considered a "disputed area" in the international literature, to third countries, it seems likely that there will be technical problems regarding the "origin of the goods". Transferring Mediterranean natural gas or oil to Turkey via pipeline or ship will not change the outcome; Goods coming from abroad will be evaluated as "goods not in free circulation" and will be subject to customs procedures. In other words, the ship operator will submit a "Summary Declaration" to the customs administration before its ships arrive at a Turkish port; When the ship arrives at the port, it will be checked by customs enforcement officers and a "Question Paper" will be issued; The tanks where the cargo will be pumped will be places that have acquired the status of "temporary storage place" or "customs warehouse". Then, the product owner business will issue an invoice limited to its batch sales abroad and transfer the product abroad by ships, TIR trucks or pipelines, accompanied by a "Transit Declaration" to which this invoice is attached. However, when the buyer company requests that the certificate of origin of the goods be sent, there will be difficulties in issuing a "certificate of origin" approved by the chambers of commerce in Turkey. Even if these chambers issue a certificate of origin stating that the product is of "Turkish origin", the state in which the buyer company is established is aware of the existing dispute. and if there is concern that this may affect commercial and political relations with other countries, the customs authority of the said state will not respect this certificate of origin.

However, with a legal regulation, the "crude oil" extracted from the Mediterranean can be brought to Turkey and exempted from import taxes with a declaration of entry into free circulation; If they are processed in refineries in Turkey and converted into products such as "gasoline", "diesel oil" or "gas oil", a "certificate of origin" can easily be issued for these products and "final product gasoline” will be deemed to be of “Turkish Origin” without being a matter of international dispute. The same situation will be valid if the "liquefied petroleum gas" carried by ships is converted into "natural gas" under low pressure and given to pipelines and exported abroad in this way, and due to this conversion process, the "natural gas" will be deemed to be of "Turkish Origin". certificate can be issued.

Another option would arise in the export of Mediterranean natural gas and oil to European Union (EU) member countries. Due to the "Customs Union" existing between Turkey and the EU, before the export of the said products to EU member countries accompanied by the A.TR Movement Document, a "Compensatory Tax" will be collected on these products at the rate of customs duty in the Common Customs Tariff between Turkey and the EU, and It will be ensured that it obtains “Free Movement Status”.

To put it briefly, although there are no legal obstacles for the transfer of Black Sea natural gas, which has created great excitement in Turkey, to Turkey, it seems inevitable to make legal regulations and general regulatory administrative procedures for the transfer of possible natural gas or oil in the Mediterranean to Turkey.