The government is acting to curb the spread of fraud in the liquid hydrocarbon sector and protect fair competition. In recent weeks, concerns about pirate practices in fuel sales have emerged, affecting lawful businesses and the prices paid by consumers. A royal decree has been issued to introduce targeted reforms to the Hydrocarbons Law, with the aim of stopping unregulated activities that have become more common as new business models appear.
The decree states that fraudulent practices in the liquid hydrocarbon market have grown due to gaps in sectoral obligations. Many companies evade VAT and customs duties and miss mandatory contributions to key energy programs. These gaps undermine the Petroleum Products Strategic Reserves Authority and the Biofuel Certification Information System and the National Energy Efficiency Fund, creating an uneven playing field for compliant operators.
Officials from the Ministry of Ecological Transition emphasize that rapid changes in sector law in recent years require an urgent review of the liquid hydrocarbon market. The draft reform acknowledges that current legislation does not fully regulate emerging business models, prompting a comprehensive update to close loopholes and ensure consistent enforcement.
The government warns that lax enforcement has enabled some firms to gain an unfair advantage while pushing costs onto ordinary consumers. Strengthening sanctions is a clear priority, including the potential withdrawal of official operating permits or the imposition of urgent interim measures to stop noncompliant activities while the dossier is processed.
Focus on retail
New rules are being considered to regulate retail distributors of petroleum products, the area where irregularities are easiest to spot. Retail distributors would no longer be allowed to supply other distributors in a de facto wholesale role. The Hydrocarbons Act, in its current form, permitted this kind of cross-supply, and the reform aims to close that loophole.
When the measure was first introduced in 2015, the expectation was that opening the market would boost competition and help stabilize prices for consumers. In practice, the opposite outcome has been observed, according to government statements.
In addition, amendments clarify that both wholesale operators and retail distributors must use and comply with pipeline networks and storage facilities, rather than allowing uneven access. The idea is to ensure that all players meet the same obligations, including blending biofuels and contributing to the national energy efficiency fund.
Since the late 1990s, wholesale operators have relied on logistics and tax warehouses to supply the market. The current law is being challenged by some firms that attempt to bypass sector obligations, including those that do not have retail distribution networks but still act as wholesale operators. Regulators intend to curb these practices and maintain transparent, accountable supply chains.
There has been a noticeable rise in the number of wholesale operators, which supports reliable supply and competitive pricing for downstream retailers. The sector now includes about ten registered wholesale operators, marking a notable shift from 2015 when the landscape was far more concentrated.
Complaints from oil companies
Big oil players report that pirate operators are committing fraud on a large scale in fuel sales. Industry leaders gathering through the AOP employers’ association, including Repsol, Cepsa, BP, Galp, Saras, and others in the sector, have intensified their complaints in recent months. Independent groups within the UPI association have echoed these concerns.
Beyond law enforcement actions targeting VAT fraud in the hydrocarbon sector, regulators recognize that noncompliance with biofuel obligations has driven additional compensatory payments. Records show substantial annual contributions amounting to tens of millions of euros in recent years, underscoring the financial impact on the market and the need for robust compliance.
Catalyzing reform is framed not just as punishment but as a pathway to a healthier, more transparent market for consumers in North America and beyond. By strengthening oversight and clarifying operator responsibilities, the government seeks to restore confidence in fuel supply chains and ensure fair prices for households and businesses alike, with ongoing attribution to official reforms and regulatory guidance.
These developments reflect a broader commitment to aligning sector practices with audited standards and keeping pace with evolving business models while protecting public interests and market integrity. Observers note that the regulatory approach aims to balance effective enforcement with clear, predictable rules that businesses can reasonably follow in the years ahead.