Regulation For The Authorization Of Hydrocarbon-Derived Liquid Fuel Marketing Activities

Reglamento Para Autorización De Actividades De Comercialización De Combustibles Líquidos Derivados De Los Hidrocarburos (en Español)

Legal Report No.13, 2001

(Supplement to Official Gazette 445 of November 1, 2001)

Presidential Decree No. 2024 rules the marketing activities of liquid fuels derived from hydrocarbons in Ecuador. These activities include the importation, exportation, storage, transportation, distribution and sale performed by local or foreign, natural or juridical persons on a national level.

Based on the requirements established in the Regulation, the Ministry of Energy and Mines approves, through a ministerial decree, applications to engage in marketing activities of hydrocarbon-derived liquid fuels. Applications must be filed with the Ministry of Energy and Mines along with the required documents in authenticated form.

Authorization will be given for the term stated in the application, without any exclusivity, and can be renewed upon an express request. The term of the authorization will be subject to the results of the monitoring the National Hydrocarbons Office conducts each year.

In case the authorization given to a marketing company has expired, the distributors belonging to the network distribution thereof will have fifteen days to become part of another marketing company in existence. The annual control certificate issued by the National Hydrocarbons Office to the new marketing company must be in effect at the time of expiration of the authorization of the former marketing company. Also, the new company must have a distribution network.

Marketing companies authorized to engage in marketing activities for hydrocarbon-derived liquid fuels are required to fulfill the following requirements:

Have a supply of hydrocarbon-derived liquid fuels from PETROCOMERCIAL, under a contract. In addition to the clauses agreed by the parties, the contract must stipulate the suspension of supply or contract termination at the request of the National Hydrocarbons Office.

Register with the National Hydrocarbons Office the composition of their distribution networks, including the location and name of owner and/or party responsible for management;

Maintain the distribution network described in the authorization request

Solely supply their own distribution network and/or contractually related networks and their own customers, only end consumers, with hydrocarbon-derived liquid fuels;

Maintain in force an insurance policy with the coverage the regulation requires. The placement of insurance will not release the marketing company from its liability with respect to the compensation it must pay for any accident caused in the performance of its activities; and,

Provide basic marketing information and fulfill the responsibilities and obligations of providers referred to in the Consumer Defense Law.

At their expense, authorized marketing companies are required to oversee that the quality and quantity of the hydrocarbon-derived liquid fuel they supply through their distribution networks comply with the regulations in effect and that the services given to end consumers are adequate, efficient and timely.

In order to verify compliance of this provision, each month marketing companies shall submit a report on their activities to the National Hydrocarbons Office.

When a determined geographical area does not have a supply of hydrocarbon-derived liquid fuels or its supply is deficient, marketing companies will be required to satisfy the needs of that market.

Marketing companies cannot suspend hydrocarbon-derived liquid fuel marketing activities because they are a public service, except in the event of force majeure duly justified before the National Hydrocarbons Office.

Importation or exportation: Authorized marketing companies are required to:

Request from the Minister of Energy and Mines authorization to import or export fuel; and,

Have their own infrastructure or use the infrastructure of third parties, registered with the National Hydrocarbons Office, to store hydrocarbon-derived liquid fuels.

The National Hydrocarbons Office shall determine the volumes of hydrocarbon-derived liquid fuels authorized marketing companies can import or export. The volume will be determined based on investment and share in the domestic market.

In a resolution, the Minister of Energy...