Oil & Gas Laws and Regulations in North Macedonia (2024)

1. Summary 

North Macedonia has regulated the oil & gas market, hence for performing activities in the field of natural gas and oil, an entity shall obtain an energy license issued by the Regulatory Commission of Energy. North Macedonian legislation is mostly harmonized with the EU regulations.  In June 2018, a new Law on Energy was adopted, thus harmonizing energy legislation with the Third Energy Package of the EU Energy Community was achieved. However, North Macedonia’s soil is not rich in mineral resources, neither oil nor gas, hence the supply of these mineral resources is done through foreign import. The energy sector in Macedonia is still in the process of development, which includes further construction of an internal gas distribution network.

North Macedonia is ranked first in the region in terms of progress in meeting the energy reforms, according to the Energy Community's Sustainable Development Report 2020, which is dedicated to Western Balkans countries. According to the report, North Macedonia has the highest scores in the areas of energy efficiency, renewable energy sources, environmental protection, transparency, and investment conditions in the area of energy.

Currently, the most important investment in the energy field is the construction of an interconnecting gas pipeline between North Macedonia and Greece, which will provide additional quantities of natural gas. This investment is estimated at EUR 50 million, of which EUR 10 million is a grant from the Investment Framework for the Western Balkans.

Additionally, a gas pipeline connection with Kosovo is in the planning phase, and with these two projects, North Macedonia will be a transit country with natural gas. Another important project is the construction of the secondary gas pipeline network, in 10 towns in North Macedonia, which will reach households.

2. Overview of The Country’s Oil & Gas Sector 

2.1. Legal Framework – A Brief Outline of Your Jurisdiction’s Oil & Gas Sector

The oil & gas market in the Republic of North Macedonia is regulated by the following laws: Mineral resources law, Law on concession and Private Public Partnership, Energy law, Petroleum reserves law, Mandatory oil reserve law, Trade law, Law on Protection of Competition, Customs Law, VAT Law, Law on excise duties, and Law on Market Inspection. In addition to these laws, the oil & gas market is also regulated by the Regulation on the Quality of Liquid Fuels, technical regulations (storage and transportation of oil derivatives, standards, etc.), as well as by ratified international agreements: the Stabilization and Association Agreement with EU, the Energy Charter Treaty and the Treaty on the Establishment of the Energy Community. Also, the relations in this market are affected by our country's accession to the World Trade Organization.

• Oil & Gas Exploration and Reserves 

The Mineral resources law recognizes the mineral resources as goods of general interest, which are property of the Republic of North Macedonia, regardless of the ownership of the land on which they are located.

According to the law, oil & gas are recognized as energy minerals, namely: all types of fossil coals, carbons in solid, liquid, and gaseous state, radioactive elements (uranium and thorium), all types of bituminous and oil shale, petrothermal energy and other gases found in the ground.

The law further prescribes the activities of public interest such as (i) performing detailed geological research and exploitation of energy raw materials and (ii) when the exploitation of the mineral raw material is of strategic importance and is necessary for the realization of projects of public interest determined by another law.

In order to achieve the goals and guidelines for the coordinated performance of geological research, the exploitation and sustainable use of mineral resources, the Government of the Republic of North Macedonia on the proposal of the Minister of Economy adopts a strategy for geological research, sustainable exploitation and exploitation of mineral resources (hereinafter: the strategy) for a period of 20 years. The strategy determines the scope and method of realization of geological research, the sustainable utilization, and the needs for the exploitation of mineral resources which are of essential importance for the development of the economy of the Republic of North Macedonia. According to the available data, a new strategy for the period 2025-2045 is in the process of enacting. 

The Mineral resources law recognizes the exploration of mineral resources as geological surveys which include prospecting geological surveys, scientific geological surveys, and detailed geological surveys. Prospecting and Detailed geological surveys are for commercial purposes, while scientific geological research can be done by legal entities from the field of geological sciences for the needs of implementation of scientific projects.

• Oil & Gas Production (Royalty/Production Sharing)

The Energy Law does not consider the production of oil and natural gas as an energy activity for which an energy license is required, however, the production of oil derivates represents an energy activity that requires a license issued by the Regulatory Commission for energy in North Macedonia. Hence, foreign entities can perform the production of oil derivates, by registering a branch office or subsidiary in North Macedonia and obtaining the license through the same.   

• Import and Export of oil & gas, Including LNG and Export facilities

Pursuant to the Energy law, the export and import of oil & gas are not recognized as energy activity, however, the oil trade, gas supply, and distribution of gas are prescribed as energy activities that require license. As mentioned before, the license is issued by the Regulatory Commission for energy in North Macedonia, upon request.

The oil & gas market regarding import in North Macedonia is fully liberalized, except for certain countries for which the government has adopted restrictive measures for banning the import of oil & gas. The prices for oil, oil derivates, and gas are determined by the Regulatory Commission of Energy in North Macedonia with the decision which enters into force within its publication in the Official Gazette of North Macedonia. Usually, the Regulatory Commission adopts these decisions every two weeks. Additionally, according to the Excise law, the importer of oil or natural gas shall pay excise to North Macedonia. Consequently, the price for oil and oil derivates is formed, so that, on the net price of oil or gas, the amount of customs duty, excise, and then the VAT is added. According to the Energy law’s bylaw, the price for oil derivates and certain fuels is determined according to an already prescribed mathematical formula.

• Oil & Gas Pipeline Transportation and Distribution/Transmission Network

According to the Energy law, the transport of crude oil through an oil pipeline is recognized as an energy activity which requires a license.

• Oil & Gas Storage

According to the Energy law, the wholesale trader in fuels should own or have the right to use the storage premises for crude oil, oil derivatives, biofuels, bioliquids, and/or fuels for transport. The wholesale trader in fuels shall be obliged to hold operational reserves in oil derivatives and fuels for transport.

Pursuant to the bylaw Rulebook on the conditions for recording the quantities and the necessary capacity of crude oil, oil derivatives, biofuel or transportation facilities storage facilities, a storage facility for crude oil, oil derivatives, biofuels or fuels for transportation (storage) should have a tank with a minimum volume of:

• 100 cubic meters for biofuel,
• 100 cubic meters for fuels type 1 (GM-1) for jet engines,
• 200 cubic meters for liquid petroleum gas (LPG), and
• 500 cubic meters per derivative for other derivatives and fuels for transportation.

The warehouse shall be fenced and secured with an entrance and exit that is not connected to a gas station. In the case of the existence of several warehouses for storage in different locations of one merchant, at least one of the storage from these warehouses should satisfy the minimum volume referred to above.

Pursuant to the Petroleum reserves law, a "trading company – warehouse" is a trading company that owns at least one of the listed licenses for performing energy activities: (i) processing of crude oil and production of oil derivatives, (ii) production of fuels intended for transport with mixing of oil derivatives and biofuels and (iii)  wholesale trade in crude oil, oil derivatives, biofuels and fuels for transport, which at the same time holds an excise permit in accordance with the Law on Excises and with which the Agency for Mandatory Petroleum Reserves has concluded a contract in accordance with this law.

Regarding the storage of natural gas, North Macedonia has not regulated that matter yet.

2.2. Domestic Oil & Gas Production and Imports/Exports 

Relevant regulations for this matter are the Energy law and Mineral resources law and their bylaws. However, North Macedonia doesn’t produce domestic oil or gas, hence, the supply of oil & gas in our country depends on the import.

Regarding the import/export ratio of oil & gas, according to the available data from 2022 by the State Statistical Office’s News Release – Energy Balances 2022 – preliminary data No: 6.1.23.60 from October 20, 2023, the following data is available:

• Total Petroleum Products:
  • Imports: 1,349.051
  • Exports: 773
• LPG:
  • Imports: 67.689
  • Exports: 1.793
• Motor Spirits:
  • Imports: 103.116
  • Exports: 6.927
• Kerosene/Jet Fuel:
  • Imports: 51.423
  • Exports: 25.175
• Road Diesel:
  • Imports: 717.461
  • Exports: 71.435
• Heating and Other Gasoil:
  • Imports: 28.389
  • Exports: 0
• Residual Fuel Oil:
  • Imports: 210.57
  • Exports: 2.8
• Petroleum Coke:
  • Imports: 122.875
  • Exports: 17.149
• Other Petroleum Products:
  • Imports: 47.52
  • Exports: 8.493
• Natural Gas:
  • Imports: 287,792.404
  • Exports: 0

(all statistical data stated is represented in thousands of tonnes)

Regarding our jurisdiction’s energy requirements, our legal framework covers all the aspects related to oil & gas, however, in practice Macedonian infrastructure for oil & gas is not fully developed.

North Macedonia only imports oil which is done through OKTA AD Skopje as the only Macedonian refinery, which was set up in 1982 by the North Macedonian government. In July 1999, the state sold a majority stake in the company to EL.P.ET Balkaniki SA, a subsidiary of the Greece-based Hellenic Petroleum SA.

OKTA has a production capacity of 2.5 million tonnes per annum and a storage capacity of 330,000 cubic meters. The refinery supplies the local and Kosovo’s market, as well. For its purpose, OKTA is using crude oil through the Thessaloniki – Skopje pipeline, which was launched in July 2002. The plant produces gasoline, diesel fuel, oil, and LPG in smaller quantities. Apart from its primary activity, the company has developed its own retail chain, which consists of about 30 rebranded gas filling stations, nationwide.

In the context of gas, currently, North Macedonia is supplied with gas from Russia through the TurkStream gas being imported through the pipeline from Bulgaria. One of the most important projects involving gas in North Macedonia is the agreement with the Greek company – Gastrade SA, which will lead to the opening of a second route for LNG supplies to the country. The cross-border natural gas interconnector between North Macedonia and Grece is still in the phase of construction.

2.3. Foreign Investment and Participation 

North Macedonia does not impose restrictions on foreign companies in relation to performing energy activities in Macedonia, except for the obligation to establish a branch office or subsidiary in order to obtain the license.

2.4. Protection Of Investment 

Besides the local legal framework, the main international agreements which Macedonia has ratified are:

a) The Stabilization and Association Agreement with the EU (SAA), which the Republic of North Macedonia ratified on April 13, 2001, and which entered into force on April 1, 2004. Although SAA entered into force in 2004, the parts regulating trade and trade issues entered into force on June 1, 2001, by a special Interim Agreement on Trade and Trade-related Issues between the Republic of Macedonia and the European Community. 

b) The Energy Charter Treaty, which was ratified in North Macedonia on April 2, 1998;

c) The Energy Community Treaty, which was ratified in North Macedonia on May 12, 2006;

d) Convention on Climate Change 2015 (Paris Agreement);

Also, the relations in the oil & gas market are affected by our country's accession to the World Trade Organization.

Additionally, the relevant domicile laws regulating oil & gas are aligned with most of the EU directives, as follows:

The Energy law, which was adopted in 2018, and amended in 2019, and 2022, is in accordance with the Decision of the Ministerial Council of the Energy Community No. O/2011/02/MS-EnC and the following directives are transposed:

• Directive 2009/72/EC concerning common rules for the internal market in electricity;
• Regulation 714/2009 on conditions for access to the network for cross-border exchanges in electricity;
• Directive 2009/73/EC concerning common rules for the internal market in natural gas;
• Regulation 715/2009 on conditions for access to the natural gas transmission networks;
• Directive 2005/89/EC concerning measures to safeguard the security of electricity supply and infrastructure investment;
• Directive 2004/67/EC concerning measures to safeguard the security of natural gas supply;
• Directive 2009/28/EC on the promotion of the use of energy from renewable sources; and
• Regulation 543/2013 on submission and publication of data in electricity markets.

The Mandatory oil reserve law which was amended in 2021 with the amendment that complies with the Commission's Implementing Directive (EU) 2018/1581 of October 19, 2018, amending Council Directive 2009/119/EC on the methods for calculating reserve obligations.

Additionally, the Mineral resources law adopted in 2012, with the amendment in 2022 complies with Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market, CELEX number 32006L0123.

North Macedonia has mostly harmonized its legislation with the EU, considering that North Macedonia was granted candidate status for EU membership in December 2005, and in 2020, the European Council endorsed the decision to open accession negotiations with North Macedonia. After the Council approved the Negotiating Framework, in accordance with the revised enlargement methodology, on 19 July 2022 the EU started the opening phase of the accession negotiations with North Macedonia. In December 2023, the country completed the screening process. 

3. Exploration of Oil & Gas 

3.1. Granting of Oil & Gas Exploration Rights 

As mentioned above there are three types of exploration according to the Law on mineral resources. Prospective geological surveys are carried out to determine potential spaces for performing detailed geological surveys. Prospective geological surveys can be carried out on the whole territory of the Republic of North Macedonia, except for areas for which the procedure for awarding concessions for detailed geological surveys is being conducted, for already allocated areas under concessions for carrying out detailed geological surveys, explored areas and concessions for the exploitation of mineral resources.

The right to perform prospecting geological research is acquired by obtaining a prospecting geological concession research, which is awarded by the government of North Macedonia based on a public call with an electronic auction.

Concession for prospecting geological research can receive any legal entity, including foreign legal entities with a subsidiary registered in North Macedonia. The concession can be granted for 2 years, without the possibility of an extension of validity.

After issuing the decision granting a concession for prospecting geological research, the concessioner and the grantor shall conclude an agreement.

Detailed geological surveys are carried out in the area where are established the existence of one or more mineral resources for the purpose of obtaining data on the position, shape, origin, quality of the deposit, reserves, conditions, and opportunities for their usage, the space on which will be built facilities for the purpose of determining the geotechnical, hydrogeological and other properties of the soil, for the recategorization of reserves, expansion of concessions for carrying out detailed geological research and exploitation of mineral resources, as well as for the purpose re-injection of water into the underground. 

Detailed geological surveys of mineral resources shall not be carried out in areas located in populated areas, public roads, water facilities, riverbeds and banks of surface water bodies (rivers, lakes, and reservoirs), military objects, monuments of culture and protected areas of nature, as well as in other spaces where objects of public interest are located, without prior consent of the bodies of the state administration competent for the affairs of the respective area. 

Similar to the prospecting geological research, for performing detailed surveys, the entity should be granted with concession by the Government of North Macedonia. The foreign entity that has established a branch office or subsidiary in North Macedonia has the right to be granted the concession same as the other local entities. For energy mineral resources the concession shall be granted for 6 years.

Based on the decision to grant the concession for detailed geological surveys of mineral resources, the grantor and the concessionaire conclude a concession agreement for detailed geological research.

The concession for the exploitation of mineral resources is assigned based on public call (for private entities) and based on request (for public entities) under conditions determined by the Law on mineral resources and the Law on concessions and public-private partnership.

The deadline for submitting bids shall be at least 30 days from the date of publishing of the public call for awarding a concession of goods of general interest in the Official Gazette of the Republic of North Macedonia.

The deadline for deciding on the most favorable bid starts with the day of expiry of the deadline for submission of the bid. If not otherwise specified in the tender documentation, the deadline to reach a decision on the selection of the most favorable bid shall be 30 days. After the decision on the selection of the most favorable bid becomes lawful, the contract for the concession of goods of general interest can be signed.

The concession for the exploitation of mineral resources is granted for a period of up to 30 years, depending on the determined reserves of mineral resources given in the report from the performed geological surveys, with the possibility of extension for a period of 30 years.

Additionally, for the exploitation of the mineral resources besides the concession, the concessionaire should also possess a permit for the exploitation of mineral resources. The exploitation permits are issued by the Ministry of Economy, with a validity period that cannot be longer than the validity period of the exploitation concession. An exploitation permit is issued for the same type of mineral resources for which the exploitation concession was granted.

The concessioner is obliged to submit a request for issuing a permit for the exploitation of mineral resources within four years of obtaining the concession for energy minerals which includes oil & gas. Along with the request, the concessioner should submit the following documents:

• proof of resolved property relations in the part of the land on which the exploitation of mineral resources will be carried out, except in the case of underground exploitation in conditions where the exploitation has no influence on the surface;
• geodetic report for special purposes with cadastral indications made by sole traders - authorized surveyors and trade companies for geodetic works that meet the requirements of the Law on Real Estate Cadastre;
• the main mining project for the exploitation of the mineral resources that are subject to the concession together with an audit (expert) assessment of the same;
• a decision to approve the environmental impact assessment study or a decision to approve the environmental impact assessment report;
• waste management plan;
• confirmation of a financial guarantee to cover the costs of eliminating harmful effects on the environment, in accordance with the law;
• traffic consent for connection to a public road;
• water use permit and/or water discharge permit issued by the competent body of the state administration responsible for water management, if the issuance of such a permit is required, which is determined by the competent body of the state administration responsible for water management; and
• proof of measurement of the exploited and sold quantity of mineral raw materials.

The Ministry of Economy is obliged to issue the exploitation permit within 30 days, counted from the day of receipt of the request for the issuance of the exploitation permit.

The permit for the exploitation of mineral resources ceases to be valid with:

• termination of the validity of the exploitation concession;
• cessation of the functionality of the operating facilities for which it was issued;
• expiration of the validity period of the exploitation permit. 

After issuance of the permit, the concessionaire is obligated to begin the exploitation of the mineral resources within 3 years.

The only current initiative in gas and oil development is the interconnecting pipeline for natural gas between North Macedonia and Greece, which is under construction.

3.2. Foreign Exploration

The foreign entity can be granted the same rights as the domestic entities i.e., concession, and license for exploration, but only through a branch office or subsidiary established in North Macedonia. Consequently, the branch office can obtain licenses, concessions, service contracts, and contractual rights under PSA.

For the disposal of the oil or gas exploration rights the holder of the concession for detailed exploration, can transfer the ownership of the results of the performed detailed geological surveys to another person for which they conclude an agreement that must be certified by a notary. The entity which has done the transfer shall notify the Ministry of Economy.

Additionally, the transfer of shares to the entity that performed the detailed geological surveys and submitted a request for granting a concession for exploitation, as well as for the concessionaire who has been granted a concession for the exploitation of mineral resources that individually or in total would lead to a change of the management package in the company, as well as the transfer of shares or shares which individually or collectively would lead to a change in the management package of the trading company that is the founder of the concessionaire, but also of the natural person who is the owner and owns a corresponding share in the company, who directly or indirectly appears as the founder or owner of the concessionaire shall be done after written consent of the grantor (the government) is given.

Please also see Section 3.1.

3.3. Stages of the Exploration Process 

Please see Section 3.1.

3.4. Obligatory State Participation 

The state can benefit from the fees that the concessionaire who performs mineral exploitation of raw materials is obliged to pay.

According to the Law on concession and PPP, the concessionaire has the obligation to pay a concession fee to the grantor or the public partner, the minimum amount of the fee is determined in the contract award announcement, and based on the feasibility study for the justification of the award of the concession of goods of general interest or the contract for the establishment of a public-private partnership.

Also, in the tender documentation, the grantor could decide to determine that the concessionaire should pay a certain percentage of the realized profit to the grantor.

Specifically, according to the Mineral resources law, the concessionaire for the exploitation of mineral resources is obligated to pay the following fees:

• An annual fee for using the space allocated by the concession for exploitation, and depending on the type of mineral raw material that is the subject of the concession for exploitation; and
• compensation for the exploited amount of mineral raw material, subject to the concession.

The concession fee for the granted concession for the exploitation of mineral resources, the concessionaire is obliged to pay for each year separately, no later than December 31 of the current year. The amount is pre-determined by the tariff adopted by the government.

Regarding the data during the exploitation process: (i) a geodetic survey and (ii) a geodetic report with a calculation of the unearthed quantities of mineral resources shall be submitted to the Ministry of Economy and the State Inspectorate for Technical Inspection. 

The concessionaire who exploits the mineral resources is obliged once a year in the period from September 15 to December 15 of the current year to carry out a geodetic survey and prepare a geodetic report with a calculation of the unearthed quantities of mineral resources, which will precisely define the quantities of the unearthed amount of mineral resources and the period in which it was carried out, and by January 31 of the current year to submit the geodetic report for the previous year to the Ministry of Economy and the State Inspectorate for Technical Inspection, as well as for the mines that carry out underground exploitation.

Due to the correct performance of detailed geological surveys with mining works and exploitation of mineral resources, depending on the type of mineral resources, that are the subject of exploitation, the concessionaire is obliged to perform mining measurements and prepare mining plans.

Additionally, the concessioner is obligated to report the obligations for exploited quantities of mineral resources once a year in the period from January 1 to 31 in the current year for the previous year to the Ministry of Economy, for the works in the field of mineral resources to submit data and calculation about the exploited quantities of mineral resources in the current year.

3.5. Risks To Be Considered

In North Macedonia, no oil or gas has been found yet, so there is a risk that the exploration/exploitation of these resources will not give the desired result to the exploratory.

4. Production of Oil & Gas 

4.1. Granting Of Oil & Gas Production Rights 

As mentioned before, the Energy law does not consider the production of oil and natural as an energy activity for which an energy license is required, but only the production of oil derivates requires a license. The conditions for obtaining the license are prescribed in the bylaw – Rulebook for licenses.

For obtaining the license, the request should be submitted to the Regulatory Commission of Energy, along with proper documentation. If the request and the documentation are sufficient, the Commission within 30 days of the day of the submission of the request, schedules a session during which the filled documentation is being reviewed. Within 10 days after the session, the Commission is obligated to adopt a decision. The license can be issued from three to 25 years, depending on the decision of the Commission.

4.2. Foreign Production 

Please see Sections 4.1, 3.2, and 3.1.

4.3. Stages of the Production Process 

As mentioned above, the Energy law and Law on mineral resources regulate the exploration, exploitation, and granting rights for performing these activities, however, the production of oil & gas is not regulated, probably due to the fact that these mineral resources in North Macedonia are not yet founded. Hence, North Macedonia only imports oil & gas.

For the concession for exploration and exploitation please see Sections 3.1 and 3.2.

4.4. Obligatory State Participation 

Please see Section 3.4.

4.5. Risks To Be Considered

Please see Section 3.5.

5. Termination of Production of Oil & Gas 

5.1. Abandonment and Decommissioning 

The Mineral resources law regulates the abandonment and decommissions of the area used for detailed geological research or exploitation, as well as processing of mineral raw materials, detailed geological research, exploitation and/or processing of mineral raw materials, performing mining operations and processing operations on mineral raw materials. Pursuant to the law, during the activities and after their completion the commissionaire must carry out rehabilitation and recultivation of the area, in accordance with the project for carrying out detailed geological research, the rehabilitation project, which is an integral part of the main or additional mining project, as well as in accordance with the waste management plan.

5.2. Environmental and HSE Consideration 

The relevant law – Mineral resources law – regulates only the obligations of the concessionaire for health and safety during the performance of the activities of exploration and exploitation of the mineral resources. Hence, the concessionaire who carries out detailed geological research or exploitation, as well as the processing of mineral raw materials, during the performance of these activities is obliged to comply with the provisions of this law and the Law on the Environment and other regulations in the area of ​​the environment and must implement environmental protection measures from potential danger and harmful influences.

The concessionaire shall implement measures for the ban on leaving, dumping, or uncontrolled storage of waste from mineral raw materials, and a waste management plan. Pursuant to the law, concessionaires are responsible for the waste they create during the exploitation and processing of mineral raw materials to dispose of them in waste installations.

Also, for granting the permit for the exploitation of the raw materials, a confirmation for a financial guarantee is required, which would be sufficient to cover the costs of eliminating the harmful effects on the environment from the permitted activity.

6. Safety of Oil & Gas Exploration and Production 

6.1. International Treaties to Which the Jurisdiction Is a Party 

Below is a list of the main international treaties in the field of safe exploration and production of oil & gas to which North Macedonia is a party:

• Energy Charter Treaty;
• Treaty Establishing the Energy Community;
• Convention on Climate Change 2015 (Paris Agreement);

Please also see Section 2.4.

6.2. Offshore Safety Directive 

North Macedonia has not implemented the Offshore Safety Directive or any similar act.

7. Import, Export, and Sales of Oil & Gas 

7.1. Import and Export of Oil & Gas

Please see Sections 2.1 and 2.2.

7.2. Transportation 

Pursuant to the Energy law, the operator of the activity transporting crude oil through an oil pipeline shall be obliged, upon prior approval by the Ministry for Economy, to adopt the operating rules of the pipeline and publish them on its website. These rules shall govern in particular:

• technical conditions for the transport of crude oil;
• the technical conditions for the maintenance and safe operation of the oil pipeline;
• manner of determining the types of instruments for securing payment for crude oil transmission services;
• the manner of harmonization with the users of the pipeline in cases of planned interruptions,
• the content of the plans for the development and maintenance of the pipeline, as well as the manner and procedure according to which the users of the pipeline submit the necessary data for the preparation of those plans;
• the measures and procedures to be implemented in cases of major accident;
• the manner, conditions, and procedure for the agreed access of a third party to the crude oil transport system;
• the functional requirements and the accuracy class of the metering devices, as well as the manner of metering the transported quantities of crude oil and
• any other terms and conditions required for safe and reliable transport.

The rules shall be submitted to the ministry for approval.

The performers of the energy activities transport of crude oil through the pipeline, i.e., transport of oil derivatives through product pipeline shall be obliged to provide in a non-discriminatory and transparent manner agreed access to the users of the oil pipeline, i.e., the pipeline for transport of crude oil. 

The performer of the energy activity and the user requesting access to the oil pipeline, i.e., the product pipeline shall conclude an access agreement which in accordance with the Law shall regulate in particular:

• data on the point of receipt and the point of delivery;
• the dynamics of the transport, the quality of the crude oil, i.e., the oil derivative;
• the fee for the performed transport, as well as the types of instruments for securing the payments;
• manner of resolving disputes; and
• contractual penalties for illegal deviations in relation to the agreed quantity and prescribed quality of the transported crude oil, i.e., oil derivative.

The performer of the energy activity may reject the request with a decision, for access due to:

• lack of capacity;
• operating disturbances or overload of the oil pipeline, i.e., the pipeline;
• endangering the safety or functioning of the oil pipeline, i.e., the product pipeline;
• inadequate quality of crude oil, i.e., oil derivative, and in accordance with the decree on quality of liquid fuels; 

Ministry of the Economy as a competent authority adopts a methodology for declaring the fee for transport of the oil through the pipeline.

Regarding the natural gas transmission system in the Republic of North Macedonia, the operator of the natural gas transmission activity must be certified as a natural gas transmission system operator. The procedure for certification of the transmission system operator of natural gas is carried out:

• by the request of the natural gas transmission system operator who has been issued a license for the activity of natural gas transmission; or
• ex officio by the Regulatory Commission for Energy in case of (i) the operator of the natural gas transmission system does not submit a request for certification, (ii) when a violation of the provisions has occurred or may occur ownership separation prescribed by this law, or (iii) upon a submitted reasoned request from the Secretariat of the energy community (for the foreign entity).

The procedure for certification of persons from third countries begins upon request from the operator or owner of the transmission system of natural gas, the Energy Regulatory Commission implements the procedure for certification of the operator of the transmission system of natural gas that is under the control of a person or a group of persons from a third-party country or third countries.

The Regulatory Commission upon request should notify immediately The Ministry of the Economy in North Macedonia and the Secretariat of the Energy Community.

The Ministry, within two months from the receipt of the notification prepares an opinion in which it contains an assessment of whether the issuance of the certificate can threaten the security of supply in the Republic of Macedonia and/or the security of supply to a contracting party or member state of the energy community.

The Regulatory Commission, within four months from the date of receipt of the request prepares a proposal-decision for certification, i.e., rejection of the request for certification, which should consider the opinion of the Ministry of Economy.

The operator of the natural gas transmission system is obliged to annually prepare a plan for the development of the natural gas transmission system for a period of the next ten years. The plan should be submitted for approval to the Energy Regulatory Commission no later than October 31 of the calendar year and after the plan is approved the same is published on the Energy Regulatory Commission website. The operator of the natural gas transmission system prepares and submits to the Ministry of Economy and the Energy Regulatory Commission one-year, five-year, and ten-year forecasts for the demand for natural gas in the Republic of Macedonia by October 31 of each calendar year at the latest.

The operator of the natural gas transmission system is obliged to:

• provide services for permanent or interruptible access to a third party and ensure that the price for the capacity subject to interruptions reflects the probability of interruptions and
• to offer system users long-term and short-term services.

The operator of the natural gas transmission system is obliged to offer natural gas transmission services to the users of the system by applying equal contractual conditions, previously approved by the Energy Regulatory Commission and published on its website.

7.3. Land Rights 

Pursuant to the Energy law, construction of new natural gas distribution systems in a certain area of ​​the territory of the Republic of Macedonia is carried out by legal entities based on:

• a contract for the establishment of a public-private partnership awarded by the government, and
• public service concession agreement granted by the government, with which the concessionaire undertakes to build use, and manage a new natural gas distribution system.

The government, at the proposal of the Minister for Economy or the local self-government unit, makes a decision to start the procedure for awarding a contract for the construction of a new natural gas distribution system.

Additionally, the law states that this procedure will not be carried out if there is a natural gas distribution system in that area that is not sufficiently used or if a procedure for awarding a contract has been started.

7.4. Access and Integration 

The natural gas transmission system is regulated by the operator of the system which maintains, upgrades, and expands the natural gas transmission network, manages the natural gas transmission system, and connections to other systems and natural gas transmission systems of other countries.

Please also see Section 7.2.

7.5. Gas Transmission and Distribution 

In North Macedonia, GA-MA AD Skopje performs energy activity, transmission, and management of the natural gas transmission system and is obliged to ensure the reliable and safe operation of the natural gas transmission system, which is ensured by planning, construction, and maintenance of the gas pipeline, on measuring and regulating stations and other equipment, as well as with careful management and supervision of the transmission network and control of all activities in the protective belt of the gas pipeline.

There are currently three smaller systems for the distribution of natural gas, namely the Directorate for TIRZ, JP Kumanovo Gas, and JP Strumica Gas. These companies are holders of licenses for performing energy activities, distribution of natural gas, and supply of natural gas to consumers connected to the natural gas distribution system and are obliged to ensure the development, maintenance, as well as reliable, and safe operation of the distribution system of natural gas for reliable, high-quality and safe delivery of natural gas to users.

Starting from January 1, 2015, the natural gas market in the Republic of Macedonia has been completely liberalized and all consumers can choose from which trader or supplier they will purchase natural gas. The Energy Regulatory Commission has issued 15 licenses for natural gas trade, two licenses for natural gas supply, as well as one license for natural gas supply as a last resort.

Please see Section 7.2 and 7.3.

8. Trading 

8.1. Trading License 

Regarding natural gas, the following activities are considered energy activities: (i) transmission of natural gas, (ii) organization and management of the natural gas market, (iii) distribution of natural gas, (iv) supply of natural gas, and (v) natural gas trade.

A license is not required for (i) transmission and distribution of electricity or natural gas through direct lines, (ii) natural gas trade in cases where natural gas is not transported through the natural gas transmission or distribution system, (iii) traders and suppliers from contracting states or participants in the Energy Community Agreement for transactions they perform on the organized electricity and natural gas market.

A subsidiary of a foreign person organized in the Republic of Macedonia, whose founder has been issued a license or other appropriate document for trading or supplying electricity or natural gas in a country that is a contracting party or participant in the Energy Community Agreement may, by applying the principle of reciprocity, to carry out these activities in the Republic of Macedonia after a decision has been issued for registration in the register of foreign traders and suppliers of electricity and natural gas who can carry out energy activities in the Republic of Macedonia. The register is established and managed by the Energy Regulatory Commission.

Pursuant to the Energy law, the wholesale natural gas market includes:

• market with bilateral contracts,
• organized market and that market day in advance;
• balance the energy market.

The Ministry of Economy is the owner of the company that is the operator of the natural gas transmission system.

According to the Energy law, the natural gas trader buys natural gas on the natural gas market in the Republic of Macedonia or abroad for the purpose of selling to other traders, suppliers, and consumers who meet the conditions for independent participation in the market, the operator of the natural gas transmission system and the operator of the natural gas distribution system, as well as for sales abroad.

The natural gas trader is obliged to the operator of the natural gas transmission system and the operator of the natural gas market in a timely manner to deliver the information on the quantities of natural gas and the corresponding time schedule specified in all contracts for the purchase and sale of natural gas, as well as from contracts for cross-border transactions through the natural gas transmission system, in accordance with the rules for the natural gas market and the rules for the allocation of cross-border transmission capacities.

The natural gas trader, in cases where he performs cross-border transactions of natural gas, is obliged to provide sufficient transmission capacity, including cross-border and/or distribution capacity and system services, in accordance with the Energy law and the regulations and rules adopted on the basis of this law.

Pursuant to the Energy law, the natural gas trader is obliged to perform his duty in particular to:

• fulfilled the requirements for financial guarantees established by the operator of the natural gas transmission system and for the obligations for balancing the planned and realized transactions with natural gas,
• at the request of the Energy Regulatory Commission, timely submit information and reports on natural gas transactions and business activities in the Republic of Macedonia,
• invoices its consumers for the delivered natural gas, as well as for the transmission capacity and/or the distribution capacity, if it is authorized by the consumer for their provision,
• ensure the confidentiality of data and quantities of natural gas delivered to consumers.

The trader is obligated to allow the (i) Regulatory Commission for Energy, (ii) the Commission for the Protection of Competition, and (iii) the Secretariat of the Energy Community access to data relating to all their transactions for the purchase and sale of natural gas with consumers who meet the conditions for independent participation in the natural gas market, as well as with the operator of the natural gas transmission system, the operator of the natural gas distribution system or the operator of the natural gas market for at least a period of the last five years.

The Energy law prescribes the separation of activities, according to which the company that holds a license for carrying out the activity of natural gas transmission cannot have licenses and cannot be involved in carrying out the activities of production, organization, and management of the natural gas market, distribution, trade in natural gas or supply of natural gas.

8.2. Products

N/A

9. Competition

9.1. Authorities

The Energy Regulatory Commission and the Commission for the Protection of Competition are the government authorities, which are responsible for the regulation of competition aspects as well as the anti-competitive practices in the oil & gas sector.

As mentioned above the natural gas trader is obligated to allow the commission to have access to the data related to the natural gas trade for at least a period of five years.

9.2. Anti-Competitive Actions 

The Energy Regulatory Commission monitors and supervises the functioning of the energy markets in order to:

• strengthen the efficiency, competitiveness, integrity, and transparency of energy markets,
• discover irregularities, distortion of competition, and forms of unfair competition on the market, as well as other activities on the energy markets contrary to the laws, other regulations, and the obligations established in the licenses for performing energy activities.

If, during the monitoring of the conditions and functioning of the energy markets the Regulatory Commission for Energy determines an irregularity, it shall adopt a decision ordering the taking of appropriate mandatory measures, including the prohibition of the specific behavior of the perpetrator of energy activity, in order to ensure security of supply, efficient, competitive and non-discriminatory functioning of energy markets, as well as the protection of the rights of consumers and users of energy systems. The decision states the measures that should be taken by the person performing the energy activity, as well as the deadlines by which these measures should be taken and the obligation to submit reports on the measures taken.

The Regulatory Commission for Energy cooperates with other competent state bodies and institutions, as well as with the Regulatory Board of the Energy Community, the energy regulatory bodies of the contracting parties, and participants in the Energy Community and with the Secretariat of the Energy Community.

If the license holders do not act on the decision adopted by the Energy Regulatory Commission, the Commission proceeds with the following:

• submits a request for initiation of misdemeanor proceedings or other proceedings before a competent state authority, and
• may start a procedure for suspending or revoking the energy license.

Additionally, if during the monitoring of the functioning of the electricity, natural gas, and thermal energy markets, the Regulatory Commission for Energy assesses that there is no effective competition, it may, in cooperation with the Commission for the Protection of Competition and the Secretariat of the Energy Community, carry out additional research and to take necessary and appropriate measures that ensure the promotion of competition and efficient functioning of the energy markets.

Pursuant to the Competition law, if there are circumstances that indicate the possibility of competition being disturbed, the Commission for the Protection of Competition can conduct an investigation in a certain sector of the economy or for a certain type of contract in different sectors of the economy.

In the course of the investigation, the Commission for the Protection of Competition may with a conclusion request the enterprises to submit data regarding their economic and financial situation, their business relations and connections, data on their statutes and decisions, the number and identity of the persons affected by such decisions, as well as other data of importance for the research.

If there are circumstances that indicate the possibility of competition being disturbed, the Commission for the Protection of Competition can conduct an investigation in a certain sector of the economy or for a certain type of contract in different sectors of the economy.

In the course of the investigation, the Commission for the Protection of Competition may with a conclusion request the enterprises to submit data regarding their economic and financial situation, their business relations and connections, data on their statutes and decisions, the number and identity of the persons affected by such decisions, as well as other data of importance for the research.

In emergency cases, when there is a risk of serious and irreparable damage to competition, the Commission for the Protection of Competition, ex officio with a decision, and based on its initial knowledge of the existence of a violation, determines temporary measures for the company that its behavior can cause serious and irreparable damage to competition. With the decision the Commission will order the cessation of certain actions, the fulfillment of certain conditions or other measures necessary to prevent distortion of competition, and will determine the duration of the measures which should be proportionate and appropriate to the goal to be achieved by the determined temporary measures. If it is necessary and appropriate for the prevention of distortion of competition, the Commission for the Protection of Competition may by decision change the already determined measures and/or modify their duration.

10. Stability Clause and Dispute Resolution 

10.1. Stability Clause 

Macedonian legislation does not recognize a stability clause regarding oil & gas companies.

This clause can be foreseen in the agreement between the investor and the government, upon the government’s disposition. In practice, this kind of clause, in the agreement is usually a provision that foresees that the investor is protected from political influence or amendment of the laws that regulate the matter of the agreement, in a way that, if this kind of change occurs, the investor shall be compensated.

10.2. Compulsory Dispute Resolution Procedure

Pursuant to the Energy law, the supplier of natural gas shall introduce a single contact center that is staffed and technically equipped, through which it provides its consumers in a timely manner, in a transparent and non-discriminatory manner, without payment of compensation, all the necessary information regarding their rights and obligations, the application of the applicable regulations and the methods of dealing with objections and resolving disputes.

The performer of the transportation of crude oil through an oil pipeline, that is, transportation of petroleum products through a product pipeline, and the user of the oil pipeline, i.e., the product pipeline, upon a request submitted by the user, enter into an access agreement which besides other elements, should contain a provision which regulates the way for resolving the dispute.

10.3. International Treaty Protection 

North Macedonia has ratified the New York Convention, (Official Gazette 11/1981 from February 27, 1981), and the ICSID was ratiffied by the Socialist Federal Republic of Yugoslavia (Official Gazette of the SFRY, Supplement, International Treaties, no. 7/1967), accepted by North Macedonia on October 27, 1998.

The litigation shall proceed according to the bilateral or multilateral agreement concluded between North Macedonia and the country to which the foreign entity (investor) belongs.

In general, there should be no special difficulty in litigating or seeking to enforce judgments or awards, against government authorities or state organs. However, there is no case law in the oil & gas sector when foreign corporations have successfully obtained judgments or awards against government authorities or state organs pursuant to litigation before domestic courts.