Documents considered by the Committee on 21 February 2018 Contents

1Emergency oil stocks

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

Commission Staff Working Document—mid-term evaluation of Council Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products

Legal base

Department

Business, Energy and Industrial Strategy

Document Number

(39302), 15130/17, SWD(17) 438

Summary and Committee’s conclusions

1.1In case of supply disruptions, EU Member States are obliged to maintain minimum stocks of crude oil and/or petroleum products, some of which may be held in other Member States. According to Eurostat, the UK currently holds around five million tonnes in other EU Member States (40% of its obligation) and holds around 500,000 tonnes belonging to other EU Member States. The overall cost of stockholding can be reduced if use is made of excess storage capacity abroad instead of building additional storage facilities domestically.

1.2The EU Directive exists in addition to similar obligations applied by the International Energy Agency (IEA), of which all but eight EU Member States are members. In 2009, the Directive was revised in order to ensure better alignment between the EU and IEA requirements and to add value.

1.3The Commission’s review of the Directive finds it to be effective and relevant. The revised Directive is considered to be much better aligned with the IEA rules, and it is considered to add value to those rules. This is because: not all Member States are IEA members; the EU system allows the EU to react to smaller, regional incidents rather than global supply crises that might be better managed by the IEA; the enforceability of the IEA system is lower than the EU system overseen by the Court of Justice; and the EU system requires one third of stockholding to be held in the form of finished products (such as petrol and kerosene).

1.4A number of suggestions are made for changes to the annexes so as to improve the Directive’s efficiency. These include possible harmonisation of the conditions for holding oil stocks in another Member State (“cross-border stocks”) as there can be discrepancies in reporting, leading to a lack of clarity as to the volume and quality of stocks.

1.5The Minister for Energy and Industry (Richard Harrington) says that none of the proposed changes is likely to be substantial. Of those, the suggestion regarding cross-border stocks is potentially the most significant. The details are not yet available, but the result might be a light touch register to improve the reporting of cross border stocks. He concludes that any changes are largely technical and will not fundamentally impact on the UK’s ability to meet its international oil stocking obligations in the future.

1.6We note that the Directive allows for some stocks to be held in other Member States and, as such, the UK both holds stocks for other Member States and has stocks elsewhere. Given this reciprocity, the UK’s exit from the EU is relevant to future oil stocking arrangements. We would welcome responses to the following queries:

1.7Pending a response to the above queries, the document remains under scrutiny. We draw this chapter to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents

Commission Staff Working Document—mid-term evaluation of Council Directive 2009/119/EC imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products: (39302), 15130/17, SWD(17) 438.

Background

1.8Council Directive 2009/119 imposes an obligation on Member States to maintain minimum emergency stocks of crude oil and/or petroleum products. The Commission’s document presents the findings of the mid-term evaluation to assess the actual effectiveness, efficiency, relevance, coherence and EU-added value of the Directive in the period 2009–16.

1.9The findings are as follows:

1.10Regarding the added value of the Directive above and beyond Member States’ individual measures and the IEA framework, the Directive is found to enhance the energy security of the eight Member States that are not member countries of IEA, and reinforces the legal certainty regarding the obligations and rights of those EU Member States that are IEA members.

1.11According to the study1 underpinning the evaluation, the Directive also adds value because:

1.12A number of proposals for changes are made:

These potential changes will be the subject of further assessment.

Explanatory Memorandum of 18 December 2017

1.13The Government indicates that the Department has inputted into the review throughout as an attendee at the Oil Coordination Group and also having responded to the consultation conducted during the review.

1.14The Minister notes that none of the changes is likely to be substantial. He describes the suggestions regarding cross-border stocks as potentially the most significant change. It is likely, he says, to result in a proposal for a “light touch register to improve reporting of such stocks”. The other three suggestions are technical in nature “with minimal impact on the UK and the operation of our domestic oil stocking system.”

1.15He concludes:

“These suggestions and the potential proposals and (if implemented) changes to the Directive are largely technical changes that will not fundamentally impact on the UK’s ability to meet its international oil stocking obligations in future.”

Previous Committee Reports

None.


1 Study in support of the mid-term evaluation of the functioning and the implementation of Council Directive 2009/119/EC on Oil Stocks.




23 February 2018