EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 13.11.2008 
SEC(2008) 2859 
  
COMMISSION STAFF WORKING DOCUMENT  
Accompanying document to the 
Proposal for a 
DIRECTIVE OF THE COUNCIL 
imposing an obligation on Member States to  maintain minimum stocks of crude oil 
and/or petroleum products  
 
SUMMARY OF THE IMPACT ASSESSMENT  
{COM(2008) 775} 
{SEC(2008) 2858} 
EN 2   EN The Impact Assessment for which this Summar y is presented relates to item 2008/TREN/001 
of the Commission Work Programme. It was prepar ed in the context of the preparation of a 
legislative proposal on the revision of th e EU emergency oil stock legislation. 
The Impact Assessment builds on analysis unde rtaken within the Commission, supported by 
several structured (Oil Supply Group, Berlin Foss il Fuels Forum) and informal consultations 
with stakeholders and a formal public consultation. 
Background  
The March 2007 European Council underlined the need to enhan ce the security of supply for 
the EU as a whole and for each Member State, inter alia by developing more effective crisis 
response mechanisms. It highlighted in this context the need to review EU oil stocks 
mechanisms, with special reference to the availability of oil in the event of a crisis, stressing 
complementarity with the crisis mechanism of the International Energy Agency (IEA). 
Problem analysis  
The legal framework for establishing and using emergency oil stocks in the EU is based on 
rules established in the late 1960s and early 1 970s. In recent years the risk of oil supply 
disruptions has grown for a number of reason s, including the increasing global demand 
coupled with limited spare production capacity, th e concentration of su pply in a handful of 
(often politically unstable) c ountries, the proliferation of geopolitical conflicts and the 
growing number of natural disasters. Current global trends, coupled with the EU's internal 
development (such as successive enlargements, completion of the internal market, decreasing 
indigenous production) are all factors calling for reviewing of the existing EU stock 
legislation. 
In addition, analysis of the current system re veals weaknesses which might prevent it from 
functioning suitably in case of  an actual supply disruption. 
At present Member States are free to choos e their stockholding arrangements. This has 
resulted in a diversity of systems and pract ices across the EU. Ther e are doubts whether all 
national systems could guarantee that the st ocks held for emergencies would be fully 
available and could be effectively mobilised as needed. For example, in some Member States the current practice seems to allow that opera tional stocks of commercial operators are 
counted as emergency stocks. The extensive use of "tickets" by several Member States might 
also cast doubt on the availability of stocks. 
The International Energy Agency, establishe d in 1974, operates a parallel system. Although, 
in general, the same stocks can be used fo r complying with the EU and IEA stockholding 
obligations, the differences in calculati on methodology and reporting impose substantial 
administrative burden on Member States which are also members of the IEA.  
The EU lacks coordinated intervention pro cedures, rendering prompt decision making and 
effective actions, which are crucial in a crisis, ve ry difficult in practice. The role of the EU 
system vis-à-vis the IEA and its procedures is not clarified in the current legislation. 
Although the current legislation calls for "fair and non-discriminatory" stockholding 
arrangements, it contains little concrete provisions, potentially allowing distortion of 
competition between different categories of market operators.  
EN 3   EN Finally, the composition of the stocks may not re flect what is really needed in a crisis. 
As a result of these flaws, the system may not  deliver the desired resu lts in a crisis, running 
the risk of exposing the economy to substantial damage.  
The current system is also prone to free riding: Member States with possibly less reliable 
systems can count on countries with sound a rrangements. This however compromises the 
emergency preparedness of the EU as a whole. 
Objectives  
The overall policy objec tive of the revision is to further strengthen the system while 
optimising the administrative obligations on Member States. 
The emergency response system needs to be brought more into line with the European 
Union's needs concerning its capacity and readin ess to react to oil supply disruptions, should 
they occur, efficiently and in a fully coordina ted manner. Thereby the system has to minimise 
or at least mitigate the negative impacts of  a disruption on the EU economy and society. 
At the same time and to the extent possible, the objective is to simplify the regulatory 
environment and the compliance burden for Member States and the industry. 
Policy options  
Four policy options are considered in the imp act assessment. These options basically address 
the problem of stock availability: 
• Policy Option 0 envisages no policy change. 
• Policy Option 1 would not entail a change to current stockholding arrangements but 
envisages the introducti on of reinforced public control of  the availability of emergency 
stocks and of emergency mechanisms. This would entail audits and inspections of emergency stocks, to be carried out by or on  behalf of the Comm ission and the regular 
review of Member States' emergency procedures. 
• Policy Option 2 would require that all 90 days  of emergency stocks  are state-owned and 
managed by an agency, possibly controlled at EU level. Stocks shoul d be held separately 
from commercial stocks and at least part of the stocks shoul d be in the form of products. 
• Policy Option 3 envisages that Member States  hold an obligatory po rtion (30 days) of 
emergency stocks in the form  of dedicated government- or  agency-owned stocks. Such 
stocks should be held in the form of products, reflecting the country's consumption 
patterns. If an industry oblig ation is retained, companies would be given the right to 
delegate their obligation to the government or the agency. 
• In addition, Option 2 and 3 would introduce some  restrictions on the use of "tickets". 
Since some of the problems identified are indepe ndent of the choice from the above options, 
they are tackled separately: 
EN 4   EN • Emergency procedures are to be clarified: in an IEA action, IEA me mber countries should 
be able to participate without explicit Commission approval while the Commission should 
co-ordinate the contribution of non-IEA Member States. 
• It is proposed to align the stockholding obligatio n to that of the IEA (based on net 
imports), while retaining an obligation for significant oil producing Member States.  
• After doing some adjustments, the Monthly Oi l and Gas (MOS) questionnaire already used 
by the IEA and Eurostat could replace the special questionnaire used for reporting 
emergency stocks. 
Impact analysis  
A detailed analysis of the impacts of th e four policy option has been performed, 
systematically checking the effects on: 
• emergency preparedness, i.e. the capacity of  the EU to cope with  a possible oil supply 
disruption, 
• financial and administrative burden faced  by Member States, the industry and the 
Commission. 
Other (environmental, soci al and economic) impacts were also investigated. 
The impact analysis of the i ndividual options was complicated by the substantial differences 
between the Member States' stockholding systems.  The impacts will be inevitably different 
across Member States, primar ily depending on whether stocks  are currently maintained 
predominantly by public agencies/governments or by the industry. The way of implementing 
the possible options is also likely to affect the impacts, especially with respect to the size and 
focus of the financial burden.  
The results of the impact assessment can be summarized as follows: 
Policy Option 0 (no policy change) would obviously not entail additional financial or 
administrative burden but cannot guarantee an effective EU-wide emergency preparedness. 
All weaknesses of the current system would remain  in place, putting at risk the EU's ability to 
react to oil supply disruptions. This gives a cause for concern since disruptions might become 
more frequent and significant in the future. In  view of EU's dependency on continuous supply 
of oil and petroleum products, impacts of such disruptions would be heavy. 
Policy Option 1 (reinforcing cont rol and coordination mechanisms  within the existing system) 
would not allow the full range of current shortc omings to be tackled, making it impossible to 
create a consistently robu st system across the EU.  
Audits, inspections and reviews would have  moderate budgetary implications. Country 
reviews could help to disseminate  best practices, reinforced cont rols would certainly help to 
unveil cases of non-compliance but the underlying cau ses of insufficient stock availability 
would not be addressed directly. In case of a significant disruption, major impact similar to 
that with Option 0 would be still likely. 
 
EN 5   EN Policy Option 2 (establishing a centralised EU system with mandatory state/public ownership 
of emergency stocks) would ensure that all 90 days of dedicated emergency stocks are state-
owned, managed by an agency, pos sibly controlled at EU level,  and held separately from 
commercial stocks. Such stocks would be unque stionably available for emergency purposes 
but some of the benefits associated with comm ingling (automatic turnover of stocks, stocks 
closer to consumers) wo uld be inevitably lost. 
The current diversity of natio nal systems would disappear, th ereby removing potential free 
riding. Furthermore, this option would facilit ate the monitoring of the stocks held and 
released.  
Today only two Member States have all thei r emergency stocks in government ownership. 
Therefore, this option would represent a significa nt change to the current stockholding system 
of most Member States, requiring substantial public expenditure in the order of €55 billion (at 
market prices in the second half of October 2008). This may not be ju stified by the experience 
of past disruptions and may be questioned fr om the point of view of proportionality and 
subsidiarity. 
Policy Option 3 (creating some dedicated EU em ergency stocks within a revised version of 
the existing system) would re sult in dedicated stocks unquestionably available as 
supplementary volumes in case of a disruption;  the proposed 30-day leve l would be sufficient 
to cope with disruptions experienced in the past. Member States would have considerable 
flexibility in choosing how to satisfy the rest of the stockholding oblig ation, with due regard 
to their geographical situation, refini ng capacities and other specific factors. 
Most Member States are reasonably close to co mplying with this option. However, the five 
Member States completely relying on mandatory  industry stocks today would need to make 
substantial efforts: they would need to establish 12.5 million tons of government/agency 
stocks. Buying these stocks would cost about €5 bi llion (at market prices in the second half of 
October 2008). Nevertheless, th ey would not necessa rily have to purch ase the stocks; the 
extent of the financial burden  would depend on the practical a rrangements chosen. As regards 
the running costs of the stockhol ding, a survey of storage cost s in Member States found that 
government/agency stockholding can be consid ered cheaper than industry stockholding. 
This option provides reasonable protection against supply disrup tions but its implementation 
costs would fall primarily on a few Member States. 
As far as the possible distortion of comp etition is concerned, under Option 0 and 1 the 
existing distortions would not be addressed. By completely removing mandatory industry 
stocks, Option 2 would help to remove possibl e competitive distortions between different 
categories of market operators. According to Option 3, the companies would have a right to 
delegate their obligat ion to the government or the agency. As a result, the potential 
discrimination between market operators woul d be significantly reduced. In particular, 
smaller companies with no access to sufficient storage capacity could comply with their 
obligation in an easy and cost-efficient way.  
The occurrence of social impacts depends on th e individual options' ability to react to 
disruptions. If the emergency oil stock syst em fails to mitigate the negative economic 
consequences (e.g. high energy pric es), this is likely to hurt pa rticularly the most vulnerable 
parts of the society.  
EN 6   EN An impact on environment might occur if a policy option requires the construction of new 
storage facilities. As the total obligation w ould not substantially ch ange under any of the 
options, in principle no additional storage ca pacities would be required. However, if the 
practice of commingling emergency and commercia l stocks would be ceased, as proposed by 
Option 2 and (for the dedicated stocks) Option 3, this may require the construction of new 
facilities in some Member States. 
The proposed changes in crisis management, cal culation and reporting are independent of the 
four options and therefore their impacts were assessed separately. 
The proposed crisis management rules and procedures will allow the EU to be able to 
contribute better to an IEA action, by avoiding delays and confus ions experienced in the past 
and by being able to coordinate and cha nnel the actions of non-IEA Member States. 
A better alignment with the internationally accep ted rules of the IEA would not only decrease 
administrative burden (at least for IEA member c ountries) but would also allow the use of EU 
stocks to have a better  impact in an IEA action. 
A switch to the MOS questionnaire as the main  reporting tool would reduce administrative 
burden and provide a co mmon basis with the IEA for eval uating emergency preparedness. 
However, this questionnaire will probably need some fine-tuning so that it is fully in line with 
the updated EU rules and in order for the data to  be valid in possible in fringement procedures. 
It is also to be investigated whether the reporti ng lag could be shortened in order to have more 
timely data on emergency stocks (e. g. by using the JODI questionnaire). 
The impacts of a possible introduction of week ly reporting of commercial stocks were not 
addressed by the impact assessment. These will  be addressed by a separate analysis when 
detailed implementing provisions for such reporti ng are drafted. 
Conclusion  
Since Option 1 would not directly  tackle the shortcomings of the current system, it is not 
expected to significantly improve the availabi lity of emergency stocks. Option 2 would bring 
about a significant improvement of emergency prep aredness, but at a cost which is difficult to 
justify. Considering the balance of  benefits and costs, Option 3 appears to be the most suitable 
choice, especially if complemented by practical  provisions for verifica tions (audits, reviews). 
Consideration however needs to be given to the disproportionate impact of the 
implementation costs which may make this option politically less acceptable to the few Member States most heavily impacted. 
 
EN 7   EN  Option 0: No policy 
change Option 1: 
Reinforcing 
control Option 2: 
Centralised system Option 3: 30 days of dedicated stocks 
90 days 
Total obligation 90 days 90 days 90 days 
min. 30 days the rest 
Calculation basis consumption net imports 
Ownership of stocks no specific rule no specific rule government  government/agency no specific rule 
Management of 
stockholding no specific rule no specific rule government or agency agency or specific 
government control no specific rule 
Commingling with 
commercial stocks Not explicitly prohibited allowed not allowed not allowed allowed 
"Tickets" no restriction no restriction limited limited  "intermediated" (through 
agency) 
Minimum product 
share no no yes yes no 
Regular audits and 
reviews no yes no no no 
Reporting monthly, based on special 
questionnaire Monthly, based on MOS/JODI 
Crisis management Consultation in the Oil 
Supply Group Complementarity to the IEA emergency policies and measures, clear stock release mechanisms, 
increasing role of the Oil Supply Group for crisis management 
Table 1: Summary of the policy options
 
EN 8   EN Criteria Option 0: No policy change Option 1: Reinforcing 
control Option 2: Centralized system Option 3: 30 days of 
dedicated stocks 
Impact on 
emergency 
preparedness and 
stock availability Doubts about the availability 
of stocks in certain 
stockholding systems Stock availability is expected 
to improve after conducting 
infringement procedures but 
other problems would remain Full availability of emergency 
stocks as “fresh oil” in an 
emergency in all MS Sufficient dedicated 
emergency stock to address 
disruptions experienced in the 
past  
Financial burden No change Some additional cost for the 
Commission (for MS only if 
inspections/audits unveil non-
compliance) Immense additional costs for 
most governments, while 
burden on industry ceases Additional cost for 
government/agency in about 
half of MS, while lower burden 
on industry 
Administrative 
burden No change Commission’s administrative 
burden increases (reviews, 
inspections/audits) Increasing burden on most 
governments, while the burden 
on industry ceases Increasing burden on some 
governments (establishing 
stockholding agencies) 
Economic impact Possible competitive 
distortions Possible competitive 
distortions Discrimination between market 
players is fully eliminated Mitigation of competitive 
distortions 
Social impacts Increasing risk of social 
tensions Reduced risk of social tensions Reduced risk of social tensions Reduced risk of social tensions 
Environmental 
impacts No impact No impact Additional storage capacities 
might be necessary Additional storage capacities 
might be necessary 
Table 2: Comparison of the options' impact