EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 13.11.2008 
SEC(2008) 2858 
  
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  
 
IMPACT ASSESSMENT  
{COM(2008) 775} 
{SEC(2008) 2859} 
 
EN 2   EN COMMISSION STAFF WORKING DOCUMENT 
Impact Assessment on the Revision of  the Emergency Oil Stock Legislation 
Lead DG : DG TREN 
Other involved services : ECFIN, ELARG, ENTR, ESTAT, SG 
Agenda planning or WP reference : 2008/TREN/001 
1. P ROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Organisation and timing 
This Impact Assessment was produced in the context of the preparation of a legislative 
proposal on the amendment of the EU emergency oil stock legislation.  
The preparation of the Impact Assessment st arted with some preliminary analyses and 
consultations in late 2006 and was intensifie d in spring 2007 after the importance of the 
subject was confirmed in the conclusions of the 8-9 March European Council which called for 
"improving oil data transparency and reviewin g EU oil supply infrastr uctures and oil stock 
mechanisms, complementary to the IEA crisis  mechanism, especially with respect to 
availability in the event of a crisis". The an alysis feeding into the Impact Assessment was 
performed internally by the Comm ission services, partly with th e use of external sources of 
information and expertise. 
1.2. Consultation and expertise 
An Inter-Service Group (ISG) was established in December 2006 by the Directorate-General 
for Energy and Transport (DG TREN) with part icipation from the Secretariat General and 
DGs ENTR, ECFIN and ELARG. The ISG met in December 2006, May 2007, September 
2007, March 2008, April 2008 and July 2008 for discussions of the scope, of interim analytical results and of draft texts for individu al elements of this Impact Assessment report, 
as well as the consultation document published in April 2008 (see below). Moreover, bilateral 
consultations with EUROSTAT were undertak en on issues relate d to reporting, most 
intensively in late  2007 and early 2008. 
In addition to the internal Commission consul tative process involving the above mentioned 
services, the Impact Assessmen t study drew on consultations with external experts and 
stakeholders who were consulted throughout the preparation of the work and provided 
invaluable expertise.  
An on-line public consultation was carried out between 22 April and 17 June 2008 to 
ascertain the views of interested parties on the possible revision of the existing legislation on emergency oil stocks. The consultation was based on a document outlining the key issues in the current regime that the Commission regard s as in need of addressing and suggesting 
possible changes to the current legislation. Th e annex of the consu ltation document provided 
additional details on the characteristics and s hortcomings of the current system and the 
 
EN 3   EN objectives to be achieved through a possible revisi on. It also served as the basis of the first 
chapters of this impact assessment. 
The public consultation resulted in a set of re actions and contributions from Member States, 
industry associations and indi vidual enterprises concerning the proposed changes and the 
various questions raised  in the consultation document. The contributions also proved to be 
instrumental in developing the impact assessment and the le gislative proposal. 
Apart from the on-line public consultation, the main platforms for the consultation of 
stakeholders were the Oil Supply Group and the Commission's Fossil Fuels (also known as 
Berlin) Forum. 
The Oil Supply Group is a consultative body comprising the experts of national 
administrations dealing with emergency st ocks and measures, chaired by the Commission. 
Although it was set up to facilita te the coordination of practical measures taken or proposed in 
the context of difficulties arising with regard  to the supply of crude oil and petroleum 
products, its meetings are also  used for presenting and disc ussing energy-related Community 
initiatives. The Group was consulted during the pr eparation of the Impact  Assessment in its 
meetings in February 2007, September 2007, December 2007, March 2008 and June 2008. 
Members of this Group also answered two de dicated questionnaires: one on the composition 
and availability of emergency oil stocks, th e other on the resources used for emergency 
stockholding in Member States under the curre nt rules. The results of these surveys are 
referred to throughout the document. 
The Fossil Fuels Forum is an annual event which was first convened in October 2005 in 
Berlin. The membership of the Forum is fo rmed by over 100 representatives of European 
energy corporations, industry associations, na tional administrations of Member States, 
Norway and candidate countries, and memb ers of civil society (non-governmental 
organisations). The Forum's Security of S upply Working Party has been consulted on the 
issue throughout the preparation of the Impact Assessment (the Working Party met in March 
2007, May 2007, July 2007, September 2007, February 2008 and June 2008)1. 
In addition to the above structured dialogues, Member States, the stakeholder community and 
external experts were consulted through severa l specialized ad-hoc c onsultative events and 
meetings organized on a bilateral basi s between the Commission (DG TREN) and the 
individual stakeholders a nd stakeholder groups (e.g. i ndustry associations). These 
consultations provided unique ac cess to up-to-date industria l expertise a nd know-how. The 
International Energy Agency (IEA) also provided  a vital source of info rmation and external 
expertise. 
Most stakeholders supported the objectives of the revision spelled out in the consultation 
document. In particular, efforts to decrease  administrative burden, to  establish coherent 
emergency procedures complementary to the IE A and to strengthen compliance by reinforced 
verification and control receiv ed general support. However, the stakeholder community, both 
Member States and industry, pr oved to be divided with rega rd to the proposals aimed at 
improving stock availability. While some stake holders insisted that all emergency stocks 
                                                 
1 Further details of this Forum, including the minutes of the wo rking party meetings can be obt ained via its dedicated website: 
http://ec.europa.eu/ener gy/oil/berlin/index_en.htm. 
 
EN 4   EN should be government-owned to ensure maximum availability, others argued that government 
ownership is not necessary and Member States s hould be able to adapt their systems to their 
special circumstances. The majority of stakehol ders, even those advocating full government 
ownership, opposed the idea of a strict physical separation of emergency stocks and 
commercial stocks. They argued that comming ling (storing emergency and commercial stocks 
in the same facilities or even the same ta nks) has clear advantages : it reduces the costs 
associated with the change/ref reshment of products and stocks  are located close to industry 
logistics. However, proper accounting and stri ct control is necessary to ensure that 
commingled emergency stocks are not used fo r commercial purposes. This was an important 
lesson from the public consultation which was ta ken into account in the conclusions of the 
Impact Assessment, in chapter 6. 
Finally, the draft of the Impact Assessmen t was examined by the Commission's Impact 
Assessment Board which provided useful comments and recommendations for the improvement of the text. As suggested by the Board, additional information was included on the relationship between the EU and IEA emerge ncy oil systems and the added value of the 
EU system compared to the IEA mechanism (including a new sectio n numbered 2.1.3.). At 
the request of the Board, the considerations be hind Option 3 and its implications were further 
elaborated in chapter 4 and 5. In addition, the policy options' impacts on reporting were 
clarified. 
 
EN 5   EN 2. W HAT IS THE PROBLEM ? 
2.1. Oil Supply Security in EU Member States 
2.1.1. Historical background The origins of emergency oil stockholding lie in early 20th century Europe
2. In the second 
half of the 20th century, oil b ecame the most important fuel in the European energy mix, 
making the economy crucially dependent on its continuous, reliable and affordable supply. 
European administrations became aware of the nece ssity to maintain oil reserves in order to 
mitigate the economy's exposure to a disruption of oil supply. Oil emergency stocks emerged 
as the best protection to cope with supply di sruption as they can swiftly and effectively 
replace missing barrels. 
Consequently, in 1968 (well before the oi l price shocks of 1973-74 and 1979-80) the 
European Communities adopted legislation obligi ng Member States to maintain minimum oil 
and/or oil product stocks.3 Originally, the obligation was equivalent to 65 days of domestic 
consumption of three distinct product categories (gasoline, middle distillates4 and fuel oil). In 
1972 this was raised to 90 days. 
After the oil price shock of 1973 seriously da maged the world economy and created a period 
of high inflation and stagnati on, the International Energy Agency (IEA) was created in 1974 
with a mission to protect oil consuming count ries. The IEA took over the 90-day stockholding 
obligation from the European Communities but in troduced different rules to make allowance 
for the oil production of some of its member countries, particularly the United States. The 
IEA emergency system is basically geared  to addressing larg e global disruptions. 
In 2002, the Commission proposed a directive to  increase the volume of stocks to be 
maintained in each Member State to 120 days, a nd to give the EU the possibility to decide 
how these stocks are used, not on ly in the event of a physical di sruption but also in the event 
of a perceived risk which would trigge r dangerous market volatility. Although the 
Commission failed to convince the European Pa rliament and the Council and subsequently 
decided to withdraw the proposal, the political  debate resulted in several consensual 
conclusions, including the need for a closer lin k between Community crisis procedures and 
IEA mechanisms. 
2.1.2. Characteristics of the EU stockholding system 
The EU legislation puts the st ockholding obligation on the Memb er States, who are free to 
choose their specific stockholding arrangements.5 As a result, the transposition of the stock 
                                                 
2 Already in 1917 the United Kingdom introduced  specific requirements on the stockpili ng of energy fuels. France introduced 
similar provisions in 1925. 
3 Council Directive 68/414/EEC of 20 December 1968 imposing an oblig ation on Member States of the EEC to maintain minimum 
stocks of crude oil and/or petroleu m products, OJ L 308, 23.12.1968, p. 14 
4 Middle distillates include gas oil, diesel oil, kerosene and jet fuel. 
5 Directive 2006/67/EC mentions that Member States may recourse to  the creation of a “stockholding body or entity” to hold all or  
part of their oil stocks. 
 
EN 6   EN directive in different Member States has br ought about very divers e stockholding systems 
across the EU. Some Member St ates have set up government-owned stocks, others have 
established government-supervised agencies resp onsible for holding the emergency stocks, in 
a number of Member States stocks are entirely  kept by the oil companies while yet others 
have opted for a mixed system (with an agency plus an obligation of a different extent on the industry). Today, 6 EU Member States rely enti rely on mandatory industry stocks while in the 
other Member States all or part of the emergency stocks ar e held directly by the government 
or an agency. Management and ownership of st ocks may be separated. For example, stocks 
held by agencies are often owned by the oil companies. 
Although the stock directive allows  holding stocks in the form of crude oil or intermediate 
products, on average, 56% of European emergenc y stocks are held in the form of finished 
products. The share of product stocks in indivi dual Member States ranges from 20% to 100%. 
Emergency oil stocks can be held on the terr itory of another Member State, provided a 
bilateral intergovernmental  agreement exists between the Memb er States. At present, there are 
about 40 bilateral agreements in force and anot her 10 or so are under c onsideration or in the 
process of being agreed. Severa l Member States, especially in Northwest Europe, have a 
number of such agreements in force. Howeve r, seven Member States have refrained from 
concluding bilateral agreements and some of them expressl y prescribe that all their stocks are 
located on the national territory. 
Most of the stocks are owned by the entity which has the stockholding obligation. However, 
11% of the emergency stocks ar e held through so-called "ticket"  arrangements. Such stocks 
are owned and physically stored by another, typi cally commercial entity for a pre-determined 
fee. The holder of the "ticket" has an option to buy the stock in a crisis situation at the price 
set out in the agreement. "Ticket" agreements are usually concluded for a short (typically 3 
months) period. This form of stockholding is us ed in several Member States, primarily for 
cost reasons. It may also give a certain flexib ility to exchange oil products for reasons of 
aging/degradation or ch anging specifications. 
Member States have to report their stock le vels to the Commission (DG TREN) on a monthly 
basis. The tables showing stock levels at the end of each month have to be submitted at the 
latest by the 25th day of the second month afte r the month to be reported. According to the 
data reported, emergency stocks held by EU Member States amounted in spring 2008 to 143.4 
million tons which is equivalent to 119 days of internal consumption. For Member States with a 90-day obligation (EU-15 plus Hungary, the C zech Republic, Slovenia, Cyprus and Malta) 
the coverage was 121 days while for countries with a transitional period
6 it was 94 days. 
2.1.3. The EU system vs. the IEA system 
While the oil stock systems of both the EU and the IEA require maintaining stocks of 90 days, 
they are independent of each other and apply different methodologies. In particular, the EU 
obligation is based on the consumption of three specific product groups while the IEA 
obligation is based on the net import of oil and oil products.7 
                                                 
6 Some of the new Member States are still benefiting from a tran sitional period for building up their emergency stocks before 
having to comply with the full 90-day obligation. 
7 See more details on calculation methodology in section 2.2.3.1. 
 
EN 7   EN The independence of the two systems does not  mean that Member States with IEA 
membership have a double (180-day) obligation. In  general, the same stocks can be used for 
complying with the EU and IEA obligations. Howe ver, as a result of the different calculation 
methodology, some of the stocks qualify in one system but not in the other.8 A convergence in 
this respect appears to be desirable. 
Nevertheless, an independent EU system is deemed  necessary because it is not likely that all 
EU Member States will join th e IEA in the foreseeable future.9 In addition, there may be 
smaller, regional disruptions which affect one or more Member States  but do not trigger the 
IEA mechanism which is focused on disruptions  with a global impact. For example, the 
disruption of supplies through an oil pipeline w ould potentially cause se rious problems to the 
country(ies) concerned. If such a disruption has no significant eff ect on the global market, it is 
unlikely to trigger an IEA action but an EU ac tion might still be required to mitigate the 
negative regional impacts.  
The above justification for an independent EU system should not lead to a competition 
between the two systems. Instead, they should function in a complementary way, reinforcing 
each other in case of a disruption. 
Similarly to the EU system, IEA member c ountries are free to choose their specific 
stockholding arrangements. Nevertheless, there is a clear tendency among the IEA countries 
towards public (government and agency) stocks . Today, 18 of the 27 member countries have 
public stocks (as opposed to 10 ou t of 21 in 1984), the share of which increased from 23% in 
1984 to 37% in 2007.10 
2.1.4. Other measures to cope with a supply disruption 
Although oil stocks are seen as the most efficien t tool to cope with an  oil supply disruption, 
possible measures to mitigate economic harm in clude: replacement of oil by other fuels (fuel 
switching), increase of indigenous production (p roduction surge) and reduction of demand by 
administrative measures (demand restraint measures). 
As an example of fuel switching, oil used for electricity generation or for heating purposes 
may be easily replaced by other fu els, provided that technical systems are in place to allow 
the switch to the alternative fu el (e.g. natural gas). In the tran sport sector, where oil is the 
dominant fuel, it is much more difficult or al most impossible to repl ace significant amounts of 
oil in the short term. The same holds for the petr ochemical sector. It is indicative that none of 
the IEA member countries used this measure to deal with the suppl y disruption following 
hurricane Katrina in 2005. 
Similarly to stockdraw, a temporary increa se of indigenous oil production can make 
additional oil available to the market. Howeve r, for technical, economic and business reasons, 
it is difficult to increase oil production quickly . Furthermore, only a limited number of oil 
producing countries such as the United Kingdom,  Denmark and Romania would be able to 
resort to this instrument in the EU and most of them have little or no spare capacity.  
                                                 
8 For example, LPG and bitumen stocks are approved by the IEA but not by the EU. 
9 See details on membership in section 2.2.2.1. 
10 Public stocks have an even bigger role in emergency response: 56% of the stocks released in the Katrina action were public 
stocks. 
 
EN 8   EN Demand restraint measures have increasingly b een applied in cities to quickly reduce air 
pollution levels and a similar approach may be useful in case of a supply disruption. Measures 
such as car-pooling, speed limits, driving bans, ecodriving, bus prioritis ing, telecommuting or 
compression of the working week can offer s ubstantial additional savings. Most of these 
measures can be introduced at relatively low cost and at short noti ce but do require public 
acceptance which may sometimes be difficult to  obtain. In addition, extensive demand 
restraint in the transport sector may hamper bus iness and industry activit ies and would then be 
counterproductive. 
Overall, these measures are of different e ffectiveness in a crisis . A non-producing country 
obviously cannot increase productio n, fuel switching may be limited to sectors where this is 
technically feasible (e.g. power plants which are able to switch to gas) while demand restraint 
measures often have a limited impact (e.g. spee d limit reductions) and/or take some time to 
have an impact on consumption (e.g. encourag ing public transport). Experience has shown 
that emergency stockholding and the ability to  draw down such stocks are the easiest and 
fastest way of making large volumes of additi onal oil and/or oil product available to the 
market, thereby alleviating market shortage. 
2.2. Reasons to review and revise the current legislation 
2.2.1. Increasing risk of oil supply disruptions Oil is the most important ener gy source globally and its dema nd continues to rise in all 
regions of the world. The IEA World Energy Outl ook 2007 foresees in its reference scenario 
that total world oil consumption in 2030 woul d be 37% higher than it was in 2006. The EU 
also relies heavily on oil. The share of this fuel in the energy mix amounts to approximately 37%. Oil supply disruptions thus represent an im portant threat to the EU economy. In recent 
years the risk of disruptions has grown for a number of reas ons. These include the strong 
global demand growth, the concentration of supply and the diminishing spare capacities. 
Not only is oil a key energy s ource both globally and in the EU, but the global demand for it 
is expected to increase further in the coming d ecades. If future oil supplies are not sufficient 
to meet the rising demand in the next couple of years – as suggested by a recent IEA study
11 – 
this is likely to tighten the supply-demand ba lance, forcing spare pr oduction capacities down. 
Spare production capacity provides flexibility to  the international oil market when it faces a 
supply disruption. If such capacities are low, as can be seen today12, they may not be enough 
to make up for a larger disruption. As a resu lt of the tightening market, the EU is more 
vulnerable to oil supply disrupt ions. Also, any future supply  disruption may have a bigger 
impact than in the past and even smaller disruptions may have serious consequences. 
While oil consumption is increas ing worldwide, supply is more and more concentrated in a 
handful of countries, many of wh ich are exposed to high geopolitical risks. As a result of the 
uneven distribution of oil reserves across the wo rld, it is expected that  a growing share of 
global production (and of EU oil imports) will come from the Middle East. This raises 
concern about the risk of major oil supply disr uptions because of the instability in many 
                                                 
11 Medium-Term Oil Market Report, July 2008 
12 According to the IEA, effective OPEC spare capacity stood at 1.5 million barrels per day (mbpd) in July 2008. 
 
EN 9   EN countries of the region and past experience of disruptions from some countries in the last few 
decades13. 
The EU is particularly dependent on oil impor ts. In 2006, nearly 85% of the oil used in the 
EU was imported from third countries. Total EU oil production stood at 2.4 million barrels 
per day (mbpd) in 2006, down from a peak of  3.7 mbpd in 1999. The most important sources 
of import were OPEC countries (37% of ex tra-EU imports), Russi a (33%) and Norway 
(15%). With the decreasing indigenous productio n, the EU's dependence is expected to reach 
93% by 2030, and – due to the uneven distribution of  reserves – a growing part of imports is 
expected to come from traditionally unstable regions. 
 
Figure 1: EU-27 Imports of Crude Oil and Feedstocks 
Source: Eurostat 
Supply from some producing countries can be thr eatened by wars, internal  conflicts, export or 
import embargos and terrorism. In addition, oil movements from these countries often involve 
transport along long and vulnerable maritime and pipeline routes, susceptible to wars and 
other conflicts, terrorism, piracy and accidents.  These risks are exacer bated by the resurgence 
of "resource nationalism" in se veral producing countries, raising the risk that these countries 
could use their market dominance to influence prices and/or "select" recipients of their 
supplies. 
                                                 
13 From the 17 serious oil supply disruptions involving a loss of at least 0.5 mbpd crude oil, listed by the IEA World Energy 
Outlook 2005, 12 was related to events in the Middle East (see Table 2 in section 5.2.4.). 
 
EN 10   EN Not only it is difficult to diversify oil supplies du e to the uneven distri bution of oil reserves, 
but it is also hard to substitute it with other fuels. While oil has been mostly phased out from 
European electricity production and its role is  decreasing in heat ing, it still dominates 
transport, where it has li mited viable alternatives.14 Without a technologi cal breakthrough, oil 
may continue to have a dominant role in this se ctor in the next decades. Oil is also replaceable 
with difficulty as the feedstock for the chemi cal industry. Furthermore, for the lack of 
alternatives, oil demand appears to be increasingly unresponsive to oil price, at least in the 
short run15, aggravating the potential impact  of a disruption on oil prices. 
A disruption can certainly occur not only in producing countries or intercontinental transport 
routes but also within Europe. Many of the in land refineries, supplied by pipeline, have no or 
limited possibility to switch to another supply r oute if the pipeline is  blocked for whatever 
(political, technical, etc.) reason. In January 2007, the Dr uzhba pipeline carrying oil from 
Russia to Europe was halted due  to a conflict between Russia a nd Belarus, cutting oil supplies 
to many refineries in the EU. Refineries, in land waterways and ports  receiving oil tankers 
may also be vulnerable to acci dents, terrorist attacks or st rikes. In March 2007, an 18-day 
strike at France's Fos-Lavera oil hub threatened to  shut down a number of refineries in France, 
Germany and Switzerland and cause a regional fuel  shortage. Storage faci lities might be also 
exposed to the above risks but their large number and geographi cal spread make s them less 
vulnerable than e.g. refineries or pipelines. 
The above factors and examples imply that the th reat of oil supply disruptions is real and the 
risks are growing, as is the EU's  vulnerability. In order to c ope with such a disruption, the 
European Union has to have a robust and reliable system in place which is able to react coherently and credibly in the event of a su pply crisis. However, analysis of the current 
system presented below reveals flaws which mi ght prevent it from functioning suitably in 
case of an actual supply disruption. 
2.2.2. Current policy tools are not adequate for disruption response 
The current system developed in the EU over the last four decades has served Europe well so 
far but is certainly not ideal and fully up to  date. Although the le gislation underwent an 
overhaul in 1998
16 and a codification exercise in 200617, it suffers from some shortcomings 
                                                 
14 In 2005, the market share of biofuels, the most credible alterna tive to oil in the transport sector reached an estimated 1% in EU-
25. 
15 A recent study by Jonathan Hughes, Chri stopher R. Knittel and Dan Sperling, Eviden ce of a Shift in the Short-Run Price 
Elasticity of Gasoline Demand (NBER Working Paper No. 12530,  September 2006, http://www.nbe r.org/papers/w12530.pdf; The 
Energy Journal, vol. 29, no. 1), found that US demand for gasoline is much less sensitive to price increases than it was in the  
1970s. The study found that the price elasticity of demand for gasoline ranged from -0.034 to -0.077 during the period 2001-200 6, 
compared to -0.21 to -0.34 for 1975-1980 – a decrease of a factor  of almost 10. John C. B. C ooper's study entitled Price elasti city 
of demand for crude oil: estimates for 23 countries (OPE C Review, 2003, Volume 27, Issue 1, http://www.blackwell-
synergy.com/doi/pdf/10.1111/1468-0076.00121) found short-run price elasticity for examined EU Member States ranging from -
0.016 to -0.087. 
16 Council Directive 98/93/EC of 14 December 1998 amending Directiv e 68/414/EEC imposing an obligation on Member States of 
the EEC to maintain minimum stocks of crude oil and/or petroleum products, OJ L 358, 31.12.1998, p. 100 
17 Resulting in Council Directive 2006/67/EC of 24 July 2006 imposi ng an obligation on Member States to maintain minimum 
stocks of crude oil and/or petrol eum products, 0J L 217, 8.8.2006, p. 8; 
 
EN 11   EN which might prevent the system built on it from  functioning suitably in case the EU or the 
global oil sector comes to face a real supply difficulty. 
Below is a brief description of the aspects of th e current system which seem most in need of 
addressing. At present, they limit either the EU's  ability to react to an emergency with the 
highest efficiency and to the desi red effect, or the EU's capacity to participate most efficiently 
in collective global efforts to minimize impacts of a supply crisis. The limitations and shortcomings of the current Eu ropean system of emergency oi l stocks also jeopardize the 
much needed trust that, in case of a disrupti on, the reported stocks are indeed available and 
sufficient to fill in the gap and ensure consis tent supply. Finally, it is questioned whether the 
current structure of emergency stocks suits  the need of the economy in a crisis. 
2.2.2.1. Lack of rules for common action Current EU legislation does not provide for a sp ecial decision making pr ocess at EU level to 
respond to oil emergencies. In case of a supply disruption, the Commission's role is confined 
to consultation. It convenes the Oil Supply Gr oup, on its own initiative or at the request of 
any Member State, to "carry out  the necessary consultations in order to ensure coordination of 
the measures". However, the emergency measur es including the drawin g on emergency stocks 
are decided and executed by the individual Member  States. The only restriction is that, prior 
to the consultation in the Oil Supply Group, they should refrain from drawing stocks to below 
the compulsory minimum level. 
The IEA system, on the other hand, is clearly gear ed toward a swift and effective response to 
disruptions having a global effect . While the EU legislation merely foresees a consultation 
between Member States in case of a supply di sruption, the International Energy Program, the 
founding document of the IEA, establishes specific and well defined tasks for member 
countries and the Secretariat in an actual oil emergency. Th e same holds for emergency 
response based on voluntary agreements such as  the IEA collective acti on in response to the 
oil supply disruptions in 2005 cause d by hurricanes Katrina and Rita. 
Alas, there is no reference in the EU legislatio n to the IEA and to what should happen if the 
Agency proposes a collective action. Nine of the EU Member States (Bulgaria, Cyprus, 
Estonia, Latvia, Lithuania, Malta, Poland, Roma nia and Slovenia) are not members of the IEA 
and most of them are not likely to join in the foreseeable future.
18 (Potential future EU 
Member States, with the exception of Turkey, are not members of the IEA either.) These 
countries are obliged to hold stoc ks under the EU system but are not seen as participants in 
broader crisis management in the IEA framewor k and have no experience or training in how 
to handle emergency issues. If, in the spirit of solidarity, the EU wants these countries to participate in an IEA-led action to cope with a severe global supply disruption, this calls for 
an enhanced role for the Commission a nd improved coordination with the IEA. 
An adequate crisis management in future s upply disruptions is possi ble in Europe with 
difficulty unless the EU and the European Comm ission clarify their role s and relationship to 
the IEA and its emergency polic y. The lack of clear rules indeed caused some confusion 
during the implementation of the 2005 collect ive action of the IEA, when, although the 
Commission publicly supported the action, some Me mber States were uncertain whether they 
                                                
 
18 Poland is likely to become a member country in 2008. 
 
EN 12   EN were allowed to draw stocks below their 90-day  obligation. This certain ly was the case, but it 
took the Commission some time to announce a formal derogation. 
2.2.2.2. Doubts about stock ava ilability/reliability 
One of the problems of the current system is th at not all Member States may be implementing 
all the provisions of the existi ng legislation as required. If Me mber States report insufficient 
stock levels or report systematically late , the Commission does no t hesitate to pursue 
infringement procedure against such countri es. For example, in 2005 Commission services 
examined 5 infringement cases, of which 4 resulte d (at least) in the i ssuance of a letter of 
formal notice as the first formal step of the procedure, while in 2006, 7 cases were examined, 
5 of which resulted in issuing a letter of form al notice. The Commission also decided to issue 
a reasoned opinion in a number of  these files and to refer one case to the Court of Justice19, 
although most procedures have since been closed . However, some practices not in compliance 
with the existing legislation are relatively diffi cult to recognize and prove. The situation is 
exacerbated by the fact that some provisions of th e current directive (notably Article 3) give 
rise to different interpretations, resulting in different compliance practices across Member 
States.20 Meeting the stockholding obligation by the use of "tickets" also gives rise to 
concerns with respect to both the availability of  such stocks and the co rrect reporting of stock 
levels. These issues are further elaborated below. 
The diversity of Members States' stockholding sy stems makes it very difficult to assess the 
correct application of the dir ective. At present the Commissi on can only check the figures 
reported by Member States. In addition, the IEA emergency response reviews – if available – 
can help to understand the specific stockhol ding structure used in the given country. 
Infringement procedures can give the Commission  further insights as to where Member States 
are at fault. Another insight to an emergency system can be provided by an actual supply 
disruption in which Member States have to sh ow how robust their st ockholding systems are. 
The emergency response action of IEA and EU Member States in 20 05 to cope with the 
damages caused by Hurricane Katrina in the Gulf of Mexico was such a test. The outcome of 
this action which used, on an average, less than  three days of emerge ncy stocks indicated 
some problems, in particular related to stoc k availability and stock release management.21 
A stockholding system for emergency oil stocks ha s to ensure that such  stocks are actually 
held and are available for release in the event of an emergency. Doubts about the availability 
of stocks in the contex t of an actual or potential crisis may lead to market speculation and 
increased price volatility. An effective stockh olding system thus acts as a deterrent to 
speculation. Doubts may also undermine the e xpected positive effects of an emergency 
response. 
                                                 
19 In its judgement of 17 July 2008, the Court of Justice declared  that Belgium had failed to fulfil its obligations under the EU 
legislation. 
20 For example, it seems that current interpretations or legislati ons in some Member States may allow the pledging of emergency  
stocks. 
21 IEA document "Emergency Preparedness: Lessons from th e Hurricanes" (IEA/GB(2006)4/REV1) emphasized the lacking 
accountability of industry stocks "taken up" by the market. Some countries using industry stocks to fulfil their participation in the 
concerted action failed to demonstrate how additional oil was made availabl e to the market by their actions.  
 
EN 13   EN In this context, the main question is not the ex tent of the obligation but the volume of stocks 
which is really available in a crisis. The answer  to this question is related to the stockholding 
system which has been chosen by individual Member States. A stockholding system which 
relies on government or agency stocks and in  which public/state ownership of stocks is 
compulsory may have the full amount of 90 days at its disposal. A stoc kholding system which 
relies on mandatory industry stockholding may ha ve less oil available as in this case 
emergency stocks are typically commingled w ith working or commercial stocks. Such 
arrangements do not appear to fulfil completely the objectives of the Directive, one of which is to ensure the stocks' full availability and th eir accessibility to the consumer (Article 3). 
However, in some Member States the current  practice allows that  Minimum Operational 
Requirements
22 (MOR) and more generally any of th e operational stocks are counted as 
emergency stocks. Apparently, some administra tions have no full knowle dge of such stocks, 
putting doubt on how a government control over em ergency stocks could be put into practise 
if needed. 
The use of "tickets" can also li mit the availability of emergenc y stocks in a supply disruption, 
in particular when stocks held under such arra ngements are located ab road. Critical expertise 
confirms that "tickets" are not very transparent and are difficult to monitor with the frequently 
used three-month validity period. "Tickets" do not provide additional oil to the security 
system and, in addition, there is no guarantee for the renewal of expiring "ticket" contracts. In 
2007-2008, a number of Member States reported scar city of "tickets", making it difficult to 
buy such instruments under reasonable conditions.23  
In the public consultation, a stakeholder claimed that "ticket" stocks are often encumbered by 
forward sales contracts. Again, th is practice undermines the availabi lity of such stocks in the 
event of a crisis. 
Furthermore, there is practically no experience with  the use of "tickets" in a supply disruption. 
Critics may assume that, depending on the specific  supply disruption, it will be very difficult 
or even impossible to purchase the reserved o il. When such stocks are held abroad, the 
information on the specific "tickets" is so metimes unclear because of double counting 
problems or delays in administra tive procedures. An analysis of the IEA shows that in Europe 
total stocks reported to be held  abroad under bilateral agreements are well above the level of 
total stocks reported to be held  domestically for other countrie s, suggesting that 10-20% of 
stocks could be counted more than  once (see Figure 2). Clearly, th ere is a need to address this 
problem and avoid such discrepancies. 
                                                 
22 There is no universally accepted definition of the Minimum Operational Requirements (M OR). Nevertheless, the concept is often 
used, referring to the minimum amount of oil and oil products which is needed for the day-to-day operation of the oil industry.  It 
is affected by a number of factors, including the size of the re fining industry and whether oil is supplied by pipeline or ship s. 
MOR is narrower than working/operational stocks; the latte r may include stocks held for other business purposes. 
23 A Member State invoked this explicitly in connec tion with a recent situation of non-compliance. 
 
EN 14   EN 
 
Figure 2: Bilateral Reporting Discrepancies 
Source: IEA 
2.2.2.3. Stock Composition 
The existing product categories must be adapted to changing demand patterns and the needs 
in a crisis situation. It may be necessary to in tegrate new and to delete  obsolete products from 
the current categories. A complete change or deletion of product stockholding does not appear 
appropriate, based on the experien ce of the Katrina disruption whic h, in addition to closing oil 
production facilities, also shut down a numbe r of refineries in the United States. 
The current system establishes fairly aggr egated product categories, endangering the 
availability of potentially ke y oil products. For example, je t fuel belongs to category II 
(middle distillates) but it is significantly more expensive to store than other middle distillates 
and therefore stored in relatively small volumes as part of the emergenc y stocks. In addition, 
some important products (e.g. naphtha) are not covered in the current  product categories. 
Product category 3 (fuel oils) in particular needs revision due to  its decreasing importance in 
Europe. The consumption of fuel oil today amou nts to about a quarter of what it was in the 
early 1970s as it has been continuously phased out from both electricity production and other 
sectors. 
The use of naphtha (a light dist illate) as a feedstock for the pe trochemical industry and for its 
use in energy must be also  taken into consideration. 
The increasing share of biofuels also raises so me questions with respect to emergency stocks. 
In particular, it is to be clarified whether the use of biofuels, either in pure or blended form, 
 
EN 15   EN impacts on the stockholding obligation. It is al so necessary to determine the extent and 
conditions in which biofuels or biocomponents can qualify or may be mandated for inclusion 
in emergency stocks.  
2.2.3. Other shortcomings 
The shortcomings described in this subchapter are not necess arily undermining the efficiency 
of the emergency oil stock system but might ha ve undesirable (side) e ffects which could be 
avoided or mitigated.  
2.2.3.1. Administrative burden on Member States EU Member States with IEA membership have to  ensure that their stocks comply with two 
different obligations, one set by the EU, anot her by the IEA. Member States sometimes 
complain about the administrative burden of complying with these tw o distinct obligations. 
While the IEA stockholding obligation is based on net oil imports (inc luding both crude oil 
and products but excluding naphtha), the EU obligation is based on the consumption of 3 
specific product groups (gasoline,  middle distillates, fuel oil) , covering about 80-90% of all 
petroleum products. EU Member St ates are required to hold produc ts (90 days for each of the 
three product categories)  but can also hold crude oil which is then recalculated to products. 
The IEA obligation in turn does not specify whether stocks s hould be held on the form of 
crude oil or specific products. As a result of th e discrepancies, some stocks are taken into 
consideration in one system  but not in the other.  
Concerning the calculation of stock levels, in the EU system  crude oil is converted into 
products, usually based on refine ry yields. Conversely, the IE A converts product stocks to 
crude oil equivalent. In addition, according to the IEA methodology a 10% deduction is made 
in order to account for unavaila ble stocks, such as tank botto ms. Another important difference 
is that the IEA explicitly allows the inclusion of working stocks. 
The deadline of compliance to the previous year 's consumption/net imports is 31 July in the 
case of the EU and 1 January  in the case of the IEA. 
In order to decrease the burden of responding to two different 90-day obligations, a review 
and possible harmonization shoul d be undertaken concerning: 
• the calculation base (consumption or net imports), 
• eligibility of crude and/or products (since it covers only thr ee product categories, 
the EU stockholding obligation is currently  lower than that of the IEA, which 
covers all categories of oil except naphtha), 
• deadline of adjusting the obligation to the previous year's consumption/net 
imports (immediately at the beginning of the following year or with a delay of 7 
months), 
• a deduction for unavailable stocks. 
Another issue resulting in undue administrative bur den is related to stocks held abroad. The 
existing EU legislation provides for the possibil ity for Member States to hold stocks in the 
 
EN 16   EN territory of other EU Member States. From th e perspective of a functioning internal market, 
some of the rules might seem rather restric tive. Stockholding in other countries is only 
allowed on the basis of bilateral agreements betw een Member States and is subject to specific 
conditions and notifications. This imposes additional burden on both administrations and 
companies. In addition, it can restrict the possibi lity of a company to choos e the location of its 
stocks (if there is no bilateral agreement betwee n the countries concerned). Similarly, the IEA 
takes stocks held abroad into account on the co ndition that a bilateral agreement is in place 
between the member countries concerned. 
2.2.3.2. Distortion of competition 
Although the current legislation calls for "fair and non-discriminatory" stockholding 
arrangements, this is difficult to realize if all or part of the emergenc y oil stocks are held by 
the industry. This is due to the fact that the level of operationa l stocks (i.e. stocks kept for 
commercial or logistical reasons) held by importers is generally lower than for refiners. Thus, 
imposing on everybody the obligation of keeping e .g. 90 days of stocks turns out to be more 
costly for importers since they have to top up their stock above the normal “operational” level 
by a higher amount of days than refiners. In addition, small importers may face difficulties in 
finding access to storage facilities. 
Some Member States have tried to address th ese issues by setting a lower obligation for non-
refiners or by establishing a tu rnover threshold, under which companies are not obliged to 
hold emergency stocks. However, these soluti ons are unlikely to en d the discussion of 
different market players over a "level playing field" and may encourage companies to evade 
the law (e.g. by dividing a company up into smaller ones which are not subject to the 
obligation). 
2.2.4. Other issues to be addressed 
2.2.4.1. Sufficiency of 90 days 
The EU introduced a stockholding obligation of  65 days in the 1960s, before the IEA had 
been created. Later, in the 1970s, the stockholding obligation was fixed in both the EU and 
the IEA at 90 days. The choice of the 90-day le vel is arguably arbitrar y. It is probably based 
on tradition24 rather than on economic or risk analysis. However, it has become the accepted 
standard worldwide and, for example, China has recently decided to copy the obligation to 
hold 90 days of stocks. 
Doubts about the sufficiency of stocks had been  expressed by the European Parliament which, 
in a report adopted in February 200725, called for an increase in the stockholding obligation 
from 90 to 120 days. Doubts were also expressed in the press, related to the capability of EU 
Member States to support th e United States after hurrica ne Katrina in 2005. However, 
analyses show that present stoc k levels would last for a reason ably long period even in case of 
a serious supply disruption26.  
                                                 
24 In 1925 France imposed the requirement on its oil industry to reserve stock representing 25% of the declared amount delivered 
during the last 12 month. 
25 2006/2247(INI)  European Parliament resolution on the macro-economic impact of the increase in the price of energy 
26 See chapter 5 for more details 
 
EN 17   EN 2.2.4.2. Diversity of national systems 
Directive 2006/67/EC requires Member States to  keep crude oil or petroleum product stocks 
equivalent to a minimum of 90 days’ internal consumption for each of three main categories 
of petroleum products (gasoline, middle distillate s and fuel oils) but does not specify in which 
way Member States should organise the holding of these stocks (apart  from declaring that 
they may make recourse to the creation of a “s tockholding body or entity ” to hold all or part 
of their oil stocks). Thus, the transposition of the above directive in di fferent Member States 
has brought about very diverse st ockholding systems across the EU. 
This diversity in itself does not constitute a problem. However (as it is explained in 2.2.5.1. 
below in more detail), if the systems pr ovide a widely differe nt quantity and/or 
quality/availability of stocks, this may jeopardise the emergenc y preparedness of  the EU as a 
whole. 
2.2.4.3. Transparency/reporting In comparison with other parts of the world, Eu rope's stock reporting is infrequent and has a 
long reporting lag. Emergency stock levels ar e reported to the Comm ission (to DG TREN) on 
a monthly basis with a lag of nearly 2 mont hs, based on a special Commission questionnaire. 
Stock data are collected on th e basis of Council Directive 20 06/67/EC. Reporting is confined 
to the volume and form (product category) of st ocks; no information is provided on the exact 
location of stocks and the ent ity holding/owning them. Althou gh the Commission continues to 
enforce the reporting discipline foreseen in the current legislation, it is not unusual that some 
Member States repeatedly fail to comp ly with this fair ly long deadline. 
There are no provisions on the publication of th e stock data. Nevertheless, emergency stock 
levels are frequently published on the website of  DG TREN, but the regularity and timeliness 
of this publication is largely dependen t on Member States' reporting discipline. 
Beyond the above, specific supply of stock data, Member States provide to the Commission 
(to Eurostat) responses to the Monthly Oil an d Natural Gas Statistics (MOS) questionnaire 
which, among others, comprises extensive information on oil and petroleum products stocks. 
The MOS questionnaire is common with the IEA which uses it to calculate the compliance of its member countries. Submission deadline is th ree months after the reference month (M-3)
27 
and the data is subject to revi sions in conjunction with the IE A Secretariat. In addition, oil 
stocks related information – not as detailed  as in the MOS – is also provided to the 
Commission (to Eurostat) via responses to the Jo int Oil Data Initiative  (JODI) questionnaire. 
This questionnaire is common not only with the IEA, but with other international 
organisations as well. Submi ssion deadline is 25 days after the reference month (M-1). 
MOS information is currently collected from EU Member States on a gentlemen's agreement 
basis but, together with JODI information, it  is also included in the Energy Statistics 
Regulation which has been adopted by the Europ ean Parliament in its plenary session on 12 
March 2008. With its entr y into force, Member States will have a legal obligation to provide 
this data. 
                                                 
27 MOS is reported to the IEA Secretariat two months after the reference month (M-2). 
 
EN 18   EN It is worth mentioning that the Commission is currently setting up the Energy Markets 
Observation System (EMOS), a database containi ng data and information relating to the oil, 
gas and electricity sectors. EMOS will also provid e the possibility for external entities to send in 
data through the filling in of internet-based forms. Utilizing th is feature, a m odule of the system 
is developed to simplify the re porting, analysis and publicati on of emergency stock levels. 
Although the reporting of commercial  stocks is not directly relate d to emergency stocks, it has 
to be recognized that in an emergency, commercial stocks might also contribute to an emergency response. Therefore, it can be argue d that better data on commercial stocks can 
contribute to better emergency preparedness and definitely help to achieve better market 
transparency. Insufficient transparency or reli ability of market data is often claimed to 
contribute to volatile prices. 
Commercial stocks are viewed as  an important indicator of pr ices and are one of the most 
closely watched aspects of the oil market. Howeve r, it is hard for the industry to follow global 
stocks as closely as it would like, because the United States and Japan are the only countries 
to publish comprehensive weekly stock data. China and Korea have also declared their 
intention to publish weekly stock levels. 
European commercial stock data are reported mo nthly by Euroilstock which was set up by the 
oil industry and the European Commission in 1984.
28 Stock data are based on input from 
more than 80 participating companies in EU- 15 and Norway, arriving on the 5th working day 
of each month. Participation is voluntary. Stock data are published through Reuters (available 
to subscribers), on the 7th working day of each month, reflecting stock levels at the end of the 
previous month. 
It has to be kept in mind that, contrary to the United States, emergency stocks and commercial 
stocks are not strictly separated in all EU Memb er States. This might make it more difficult to 
report and to distinguish commerc ial and emergency stock data. 
In July 2008, in view of impr oving the transparency of the oil market, the ECOFIN Council 
reached a political agreement on publishing information on commercial oil stocks on a 
weekly basis. However, during the public cons ultation many Member Stat es and stakeholders 
expressed their concerns over th e supplementary costs, administ rative burden, the potential 
inaccuracy of data and the volatility this might provoke. In order to address these concerns, to 
assess the potential impacts and to identify the desirable modalities of weekly reporting, the 
Commission will launch a feas ibility study in late 2008. 
2.2.5. Justification of action at EU level 
2.2.5.1. "Subsidiarity Test" 
Energy security is a public good and – due to th e existence of the internal market – the 
benefits of the stocks released  in a crisis cannot be limited to  a single country. The internal 
market ensures that any stock released can flow freely to any buyer EU-wide. The benefits from releasing stocks will not be captured by a single country but by the EU as a whole
29. As 
                                                 
28 Originally, coordination of Euroils tock was in the hands of the Commission. As of  July 1986, this task was taken over by the oi l 
industry and for this purpose "Stichting Euroilstock" was established in the Netherlands. 
29 In so far as the stock release helps to mitigate the oil price rise, the benefits "spill over" to other oil-consuming countries  as well. 
 
EN 19   EN a result, if the emergency syst ems adopted by individual Member  States are too diverse and 
provide different levels of preparedness and reliability (e.g. different quantity and 
quality/availability of emergency stocks), this may lead to decreased efficiency and a free 
rider problem. The countries having sounde r systems dedicate more efforts to the 
establishment and maintenance of their systems, and would probably contribute 
disproportionately more in case of real trouble. 
Since oil markets are global, any disruptions to oil supply – whether occurring in one or more 
Member States or outside the EU – will have repercussions on all Member States. Furthermore, in integrated economies such as th e EU internal market, the level of emergency 
preparedness of any single Member State will  influence the level of  preparedness of the 
Union as a whole. If minimum requirements are imposed throughout the EU, it may be easier 
to avoid the emergence of a problem  or to cope with a disruption. 
It must also be kept in mind that several Memb er States are not members of the IEA, which is 
responsible for emergency response in case of  global disruptions. The European Commission 
takes part in the work of the agency but full EU participation in an  IEA action can only be 
guaranteed through an EU mechanism involving EU  Member States that are IEA non-member 
countries. 
The above arguments all imply that the objective of  maintaining a high leve l of security in the 
supply of oil and oil products w ithin the EU can be best achie ved in a coordinated way. Clear 
rules at the Community level are therefore needed. 
2.2.5.2. Political mandate The 2007 Spring European Council acknowledged that global warming, together with the 
need to ensure security of supply and to enhanc e competitiveness, make it ever more vital and 
pressing for the EU to put in place an integr ated climate and energy policy combining action 
at the European and the Member States' level. To back up such a policy, the Council adopted 
a comprehensive energy Action Plan for the pe riod 2007-2009 which – inte r alia – underlines 
the need to enhance security of supply for th e EU as a whole as well as for each Member 
State through a number of measures. One of th ese actions addresses emergency oil stocks: the 
European Council gave a clear mandate for the revision of the current system by calling for 
"improving oil data transparency and reviewin g EU oil supply infrastr uctures and oil stock 
mechanisms, complementary to the IEA crisis  mechanism, especially with respect to 
availability in the event of a crisis". 
 
EN 20   EN 3. W HAT ARE THE OBJECTIVES ? 
3.1. General objectives 
3.1.1. To strengthen security of supply by an effective instrument based on solidarity, 
transparency and practicality 
The EU, like all advanced economies, depends heavily on continuous, reliable and affordable 
supply of oil and oil products. Any difficulty, even temporary, having the effect of reducing 
these supplies, could cause serious disturban ces in the economic activity of the Community. 
The EU must therefore be in a pos ition to offset or at least to diminish any harmful effects in 
such a case. 
Provided that emergency stocks exist, their rele ase constitutes the easiest and fastest way of 
making large volumes of additional oil and/ or oil product available to an undersupplied 
market, thereby alleviating market shortage. In  order to allow an effective response to oil 
supply disruptions, the emergency oil stock system has to ensu re the solidarity of Member 
States in case of ac tivation. It has to allow for correct  monitoring through transparency of 
calculations and reporting. Ov erall, it has to be characterized by practicality in order to ensure 
the effectiveness of its use. The general objective of the proposal is therefore to strengthen the capacity of the system to react to an emergenc y, by improving its efficiency and effectiveness. 
3.1.2. To minimise negative impacts  of a disruption on EU economy 
The economy's reliance on oil is esp ecially true for transport, the main user of oil, which at 
present has no real alternatives to the use of oil at its disposal. Considering the important role of transport in the economy, a phys ical shortage of fuel would have serious repercussions in 
other sectors, as well as on the mobility of citizens. 
Emergency oil stocks are not meant for market  intervention or price manipulation. A release 
of stocks should be real ized only in case of a severe disr uption that significantly reduces oil 
supplies. It will then be important to compen sate for missing volumes and to ensure the 
integrity of supplies to consumers and ther eby to mitigate negative economic impacts. 
However, a disruption of oil supply (e.g. ou tages in a major produc ing country) may not 
necessarily entail a physical shortage of oil in Europe and yet may – due to the low price 
elasticity of oil demand – bring about skyrocketing prices which could also impact negatively 
the economy. A well-grounded and credible syst em of emergency stocks, by its pure 
existence, can have a moderating impact on ma rkets in case of a disruption. The release of 
stocks can replace disrupted volumes and ther eby it might be possib le to avoid physical 
shortage and/or large price hikes. As a result, negative impacts on the economy could be 
mitigated. 
Oil stocks thus have a crucial role in minimi zing the negative impact of a temporary supply 
disruption on the EU economy. This holds as long as they are available in required quantities, 
qualities and degrees of accessibility. 
 
EN 21   EN 3.2. Specific objectives 
3.2.1. To assure that the stocks have the potential to address shortage 
In a supply disruption, it is essential to re place disrupted oil swiftly and effectively. 
Therefore, emergency stocks have to be full y available in the required quality and in the 
required quantity. At least a part of the stocks have to be in the form  of finished products, 
serving as an instant remedy even  if refineries came to a halt.  Moreover, unle ss the reporting 
of stocks is appropriate, in terms of frequency, timeliness and report quality, the available 
quantity and quality of st ocks cannot be assessed. 
3.2.2. To be able to release stocks effectively 
Although the directive stipulates  a consultation betw een Member States in case of a 
disruption, up to now the EU has not created a clearly defined framework for oil emergency 
policies and for adequate procedures and measures  to use in an oil supply disruption. Crisis 
management has to be swift and effective. Therefore the EU's relationship with the IEA, which has an internationally accepted mandate to deal with global oil supply disruptions, needs to be clearly defined. At the same time, the relati onships between the European 
Commission and Member State administrati ons, which are in charge of emergency 
stockholding, have to be better defi ned, and, thus, needs to be revised. 
Decision making procedures have to be better defi ned and there is explicitly a need to define 
complementary procedures to the IEA crisis ma nagement. This is part icularly important for 
Member States which are not members of the IEA, since they are not enabled to receive regular information on emergency issues through the relevant IEA committees. 
3.2.3. To increase the credibility of  the system and show readiness 
When the system of emergency stocks is credib le, market players are convinced that reported 
stocks are available and, if necessary, can be offered to the market in a swift way. This can 
prevent extreme market reactions when supp lies are potentially or actually disrupted. 
Therefore, price hikes and speculation may be a voided or at least mitigated. If, however, not 
all 90 days of emergency stocks can be availa ble to the market, in a very severe supply 
disruption this may hamper the trust that  the system is working effectively. 
3.2.4. To simplify compliance burden for Member States 
In addition to the costs of buying and holding st ocks, emergency stockholding entails for the 
Member States also administrative burden re lated to calculation, cont rol and reporting on the 
stock levels. Member States have to ensure that the stocks are at their disposal. This requires a 
reporting and control system. If stocks are held abroad and/or by way of "ticketing" or other 
similar instruments, controls are especially impo rtant. If a Member State wants to hold stocks 
abroad, it has to negotiate a bilateral agreement with the Member State concerned. This is time consuming and checking these stocks involves extra efforts. 
 
EN 22   EN Member States which are also members of the IEA30 have to comply with two different 
stockholding obligations, with different calcula tion methods and separate reporting. The IEA 
calculation and reporting methodology is interna tionally employed and accepted. In addition, 
some EU Member States intend to join the IEA.31 Aligning the calculation and reporting 
method within the EU to that of the IEA woul d reduce the administrativ e burden which arises 
through the duplication of  administrative work. 
Notwithstanding the importance of  reporting and control, the Commission has to make an 
effort to ease the administrative burden on Member States and the industry. This is in line with the Commission's Better Regulation stra tegy and the simplification programme. In 
particular, the Commission may approximate th e EU and IEA system (e.g. common reporting 
and the uniform calculation of the stockhol ding obligation and compliance). Further 
simplification can be achieved by replacing bilateral agreements with a multilateral 
framework, coupled with an enhanced control sy stem. In addition to reducing administrative 
burden, this would be also more in  line with the internal market. 
3.3. Operational objectives 
3.3.1. To select best practises/arrangements Oil security and energy security is not for fr ee. Sometimes Member States may have chosen 
low-cost policies which are in a crisis less efficient as they do  not provide 90 days of stocks. 
These practises may have negative impacts on Member States' ability to act adequately in an emergency and may explain to some extent wh y emergency preparedness is divergent across 
the EU. The Commission's role in this context is to moderate excessive divergences and to 
avoid a serious lack of solidarity from some c ountries in an emergency response to a crisis. 
In the spirit of subsidiarity, the Commission s hould not prescribe in detail to Member States 
ways and means of fulfilling emergency or stoc kholding obligations. However, in reviewing 
Member States' emergency policies, there mi ght be a need for the Commission to indicate 
specific deficiencies of existing systems and to  highlight existing best practices in Member 
States, particularly concerni ng stockholding arrangements. 
In addition to choosing an appropriate stockhold ing arrangement, it is also important to have 
the right emergency policies and measures to address an actual disruption. It may be useful to 
establish what policy tools and procedures are most suitable in an emergency. In the context 
of stocks, the procedures should facil itate swift and visi ble stock release. 
Stock release is not the only policy tool at th e disposal of Member States. They can also 
implement demand restraint measures (e.g. restric tion of passenger car us e), in some sectors it 
is possible to replace oil by other fuels (fuel switching), while oil-producing countries might 
also resort to the increase of indigenous pr oduction (production surge). In a severe supply 
disruption, the combination of the above measures might be desirable. 
                                                
 
30 EU Member States who are also members of the IEA are: Au stria, Belgium, Czech Republic , Denmark, Finland, France, 
Germany, Greece, Hungary, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Sl ovakia, Spain, Sweden, United Kingdom.  
31 Poland is likely to become an IEA member country in 2008. 
 
EN 23   EN 3.3.2. To optimize the stockholding system in te rms of quantities of st ocks held (90-day 
stockholding obligation vs. 120 days etc.) 
The Commission has started to analyse the availa bility of emergency stocks and at the same 
time is aware of the fact  that the extent of th e 90 day obligation has been questioned by some 
stakeholders. The optimal size of emergency stocks is inevitably a compromise between 
security and costs. It has to ensure the repl acement of disrupted oil volumes for a sufficiently 
long period of time, without induc ing excessive financial burden. 
In strengthening the system, there may be no n eed to increase the 90 day obligation but the 
availability and reliability of stocks should be improved. However, if the difference between 
the "nominal" 90 days stocks and the really availa ble level of stocks in a crisis is significant, 
the request of the Parliament to increase the stock obligation to 120 days might be a very 
reasonable proposal. 
It is worth noting that the harmonization of th e EU stockholding obligation with that of the 
IEA may slightly increase EU stock levels in compar ison to the existing levels. 
3.3.3. To optimize the stockholding system in te rms of frequency of data reporting for oil 
stocks and the nature of such reports 
Considering the low volatility of the level of emergency stocks, increasing the reporting 
frequency on such stocks is probably unne cessary. Conversely, the long reporting lag 
specified in the current legisl ation can and should be reduced. 
On the other hand, the request of some stakehol ders to introduce more frequent reporting on 
commercial oil stocks seems more reasonable. Higher transparency of oil market developments may give higher benefits to the end consumer of oil products. These benefits 
might outweigh the potential, often disputed di sadvantages (e.g. increased market volatility). 
Europe might have a need to follow important consumer regions like North America or Asia 
(Japan, China, Korea) where more frequent repor ting of commercial stocks is already in place 
or will be soon. 
3.3.4. Establishing the rules fo r EU interaction with IEA 
It is necessary to define the role of the Co mmission vis-à-vis the IEA. In addition to the 
majority of EU Member States, the European Commission participates in the work of the 
IEA
32. However, this is not the case for the EU Member States which ar e not members of the 
IEA. It is to be decided if the latter should be involved in  common actions. If so, this 
obviously necessitates some action/co-ordination from the Commission. 
A smaller, regional disruption may not trigger an IEA action. Nevertheless, such a disruption 
might have serious implications on the supply on  one or more Member States which requires 
an action at the EU level. The EU needs therefor e to have at its disposal its own instruments, 
independent from the IEA, to solve energy supply problems which do not require solidarity 
actions from countries outside Europe such as Japan or the United States. Nevertheless, 
                                                 
32 The Commission is not a full member of the IEA but practically has an "active" observer status: it has the right to have access  to 
meetings of IEA bodies, to receive docume nts, and to speak and make proposals, but has no right to vote in those bodies. 
 
EN 24   EN considering the expertise and the market knowledge  of the IEA Secretaria t, co-operation with 
the IEA might be useful even in such  a case (e.g. exchange of information). 
In summary, the Commission and the IEA mech anism should function in a complementary 
way, without undermining the efforts of each other. 
3.3.5. Simplification of the regulatory environment 
The regulatory framework in which businesses operate is a key factor of their 
competitiveness, growth and employment performance. Therefore, a key objective of the European Union's enterprise policy is to ensure that the regulatory environment is simple and 
of high quality. To make sure that regulation is used only when necessary and that the 
burdens it imposes are proportiona te to their aim, the Commission has a number of processes 
and tools in place, including measur es to simplify existing legislation. 
There is possibly scope for simplification with  respect to the EU legislation on emergency 
stocks, which could help not only businesses but also Member State administrations which are 
involved in the management and/or control of stocks. An approximation of EU and IEA rules 
would definitely be beneficial to those countries which have to  comply with the stockholding 
obligation of both institutions. It could simp lify the calculation of the obligation and also 
reporting (see also section 3.2.4.). 
A further possibility for simplifying legislation is to replace the bilateral intergovernmental 
agreements, which are at present necessary for holding stocks abro ad, with an EU-wide 
framework. This measure has also been  suggested by several Member States. 
 
EN 25   EN 4. W HAT ARE THE POLICY OPTIONS ? 
The proposed policy options aim to address th e issues of ownership and management of 
stocks, quality and quantity of stocks, th e calculation and reporting methodology, crises 
management and monitoring of compliance. 
The following generic policy options were anal ysed in order to address the problems and 
challenges presented in chapter 2: 
• No policy change 
• Reinforcing control means and coordination mechanisms within the existing system 
• Establishing centralized EU system with ma ndatory state/public ownership of emergency 
stocks 
• Creating "dedicated" EU emergency stocks within  a revised version of the existing system  
However, there are a number of issues whic h are independent from the above options but 
should be tackled in order to overcome some of the shortcomings of the current system. These 
issues, primarily relating to the calculation of  the obligation and of compliance, to reporting 
and to the role of the Commission in case a di sruption, are addressed in 4.5, separately from 
the above-mentioned gene ric policy options.  
4.1. Option 0: No policy change 
This option supposes that the existing legal and regulatory framework remains unchanged and 
that the current policy instruments and measures continue. It can be considered a "business as 
usual" scenario. 
The most important elements of this option: 
• A 90-day stockholding obligation based on the consumption of three product categories 
(gasoline, middle distillates and fuel oil); 
• Product stocks can be replaced by crude oil or intermediate products;  
• Member States are free to choose their stockholding arrangements, including the 
ownership, the management and the location of stocks; 
• Stocks may be held in another Member State if there is an intergovernmental agreement in 
place; 
• Stock levels are to be repor ted every month by completing a special questionnaire with a 
time lag of 1 month and 25 days; 
• In case of a supply disruption, the Commissi on's role is confined to consultation. 
 
EN 26   EN 4.2. Option 1: Reinforcing co ntrol means and coordination  mechanisms within the 
existing system 
There can be some doubts about th e full availability of mandato ry industry stocks in the 
meaning of Article 3 of the present stocks di rective in some Member States. Parts of the 
industry and some Member Stat es have on several occasions proposed to overcome these by a 
reinforcement of public control on the ava ilability of emergency stocks, including a 
reinforcement of verification means at the di sposal of national and/or EU authorities. 
According to the provisions of the directive in fo rce, it is the Member States' responsibility to 
ensure control and supervision of stocks. However, administra tions' ability and willingness to 
ensure effective control on mandatory industr y stocks is varied (some do not carry out 
physical checks at all) and occasionally uncertain.  
As regards release procedures, the need for in creased coordination with in the EU and between 
the EU and the IEA is sometimes raised in view of the fact that the current provisions for mere consultations of national releases via th e Oil Supply Group may not be sufficient in an 
integrated internal market achieved by now in the EU.  
In view of the above, this pol icy option would mainly entail: 
• Audits performed by or on behalf of the Commission.
33 The auditors would be entitled to 
carry out on-site inspec tions of companies and other enti ties holding emergency stocks;  
• Improvement of the EU's emergency manageme nt (including coordination through the Oil 
Supply Group). 
• Regular reviews of Member States' emergency systems as well as identification of best 
practices related to crisis ma nagement and stock release. 
4.3. Option 2: Establishing centralized EU system with mandatory state/public 
ownership of emergency stock 
This option endeavours to address the pr oblems identified in chapter 2 through a 
comprehensive reshaping of th e existing legislation. The pro posed option would decrease the 
current diversity of stockholding systems adopt ed by individual Member States through the 
introduction of an optimized common system. This option would larg ely follow the changes 
proposed in the earlier attempt to revise th e stockholding legislati on in 2002 (mentioned in 
section 2.1.1.), with the omission of its most controversial elements (increasing the obligation 
to 120 days and providing a po ssibility for market manageme nt using emergency stocks). 
The most important elements of this option: 
• The level of the stocks would c ontinue to be 90 days but st ocks should be owned in the 
form of physical oil or oil product by the government and managed as necessary by the 
government or a stockholding agency which is directly controlled by a national 
administration; 
                                                 
33 The Commission already has such powers in other sectors: the in spectors employed by Directorat e I of DG Energy and Transport 
check nuclear facilities while DG Competition can carry out  surprise inspections in the offices of companies.  
 
EN 27   EN • Member States would be free to establish jo int stockholding entities together with other 
Member States in order to comply with the above obligation; 
• At least part of the stocks should be in th e form of products (as opposed to crude oil and 
other feedstock), ensuring suppl y even if refineries are disrupted; the composition of 
product stocks should reflect co nsumption patterns, with a fo cus on products the shortage 
of which may cause serious disturbances  in the economic activity of the EU; 
• Emergency stocks are to be stored separate ly from commercial stoc ks and are therefore 
clearly visible and fully available as supplem entary oil in a crisis; moreover, it also 
facilitates effective control and swift reporting of stock levels; 
• None of the concerned crude oil and products shoul d be transferred, mortgaged, assigned, 
conveyed, charged, leased, pledged or otherwis e encumbered, ensuring that they are fully 
at the disposal of Member States; 
• Subject to the above conditions, stocks may be  held in the territory of another Member 
State, without compromising prompt  availability in a crisis;  
• The use of "tickets" written by the oil industry is limited to the turnover of products for 
quality reasons (to prevent degr adation or to comply with ch anging product sp ecifications); 
• Running costs could be financed by a levy included in the fina l consumer price of the oil 
products. 
4.4. Option 3: Creating "dedicated" EU em ergency stocks within a revised version 
of the existing system 
This option would entail a revision of the curre nt system in order to remove its main 
weaknesses other than possible cons traints on the availability of stocks in time of crises. On 
top, the system would be amended to require Memb er States to maintain some part of their 
stockholding as compulsory government or agen cy stocks. The rest of the full stockholding 
obligation could be undertaken in any manner suitable to each Member State, including by 
leaving it to the industry, which could be partly covered by the minimum operational 
requirements (MOR).  
Additional characteristics of this system would include: 
• prohibiting that the emergency stocks be transferred, mortgaged, assigned, conveyed, 
charged, leased, pledged or otherwise encumbered; 
• if an industry obligation is retained, giving the right to companies to delegate their 
obligation to the government or  the agency, thereby not disc riminating small and medium 
sized importers with no acce ss to storage facilities; 
• requesting to hold at least some product stocks; 
• limiting the agencies' possibility to use tickets to those drawn against stocks satisfying the 
same requirements of government control in another Member State 
 
EN 28   EN • Member States would be free to resort to ex isting stockholding entities across the EU or to 
establish joint stockholding entitie s together with other Member States in order to comply 
with the obligation. 
When defining this policy option, the Comm ission examined the practice of large IEA 
member countries, like the United States and Ja pan. In these countri es part of the IEA 
obligation is covered by stocks held by the govern ment and destined for use in more serious 
disruptions while the other part of the obligation is covered by the oil industry.34 This 
provides a reasonable mix of dedicated emerge ncy stocks with unques tionable availability 
and the more flexible stockholding arrangem ents of the industry. The Commission also 
looked into the lessons learned from recent disr uptions which confirmed that industry stocks 
can be put on the market faster but govern ment/agency stocks have better accountability. 
The extent of the obligation to be held by the government or an agency was determined after 
investigating past disruptions and current stoc kholding practices. It was found that the largest 
disruption since the 1970s required 16 days of st ocks to replace the disrupted oil. Therefore, a 
requirement to hold 90 days of "waterproof" go vernment/agency stocks would be difficult to 
justify. At the same time, the survey of nationa l stockholding systems in the EU showed that, 
on the average, 38% of emergency stocks ar e held by government or agency, which is 
equivalent to well over 40 days of consumpti on. Considering these findings, the proposed 30-
day government/agency obligation seem s to be a reasonable compromise. 
Furthermore, a survey of storage costs in Me mber States refuted th e common assertion that 
industry stockholding is cheaper (s ee Table 3 in section 5.3.1.). 
4.5. Addressing the problems related to  crisis management, calculation and 
reporting 
Since the issues of crisis  management, calculation (o f stockholding obligation and 
compliance) and reporting are independent of the choice from the above options, it is 
proposed to tackle them in case of each opti on except the no policy change case (i.e. under 
each of Option 1, Option 2 and Option 3). 
Calculation 
In order to decrease administra tive burden of Member States w ith membership in both the EU 
and the IEA, it is proposed to switch to the IEA methodol ogy which is internationally 
accepted. Accordingly, the stockholding obligation will be based on the net import of oil, 
including both crude oil and oil products. It is  however necessary to retain some of the 
obligation for oil producing countries as their pr oduction is also exposed to disruption, e.g. as 
a result of natural disasters, accidents or strikes. An abolition or significant reduction of their obligation would also weaken the emergency syst em as a whole and unde rmine the solidarity 
amongst Member States. (As a net oil exporte r, Denmark has no stockholding obligation in 
the IEA regime, while the UK, as a marginal o il importer has a very low obligation. Romania 
is not a member of the IEA but would also face a lower obligation under the IEA regime.) 
                                                
 
34 In the United States, the government-owned Strategic Petroleum Reserves hold stocks equivalent to nearly 60 days of net imports ; the rest of the 90-day IEA 
obligation is covered by industry stocks. In Japan, government stocks amount to about 80 days of net imports and are complement ed by 70 days of mandatory 
industry stocks. 
 
EN 29   EN It is also imperative to retain the obligation to hold a part of the stocks in the form of 
products. Product stocks serve as an instant remedy even if refi neries would come to a halt. 
However, the extent of this obligation should not induce a significant change to current stockholding practices.  
Regarding the date of compliance to the pr evious year's consum ption/net imports, a 
reasonable compromise is to be  sought between IEA rules (1 January) and EU rules (31 July) 
which would provide sufficient time for Member States to adjust stoc k levels to changing 
consumption/net imports.
35 
Reporting 
Due to the low variation of emergency stock le vels, there is no advantage in normal times in 
increasing the frequency of their reporting.36 However, there is cert ainly scope for decreasing 
the long reporting lag. In case of a supply disrupti on it is particularly important to have up-to-
date stock data. 
Once the EU obligation is approximated to that  of the IEA, the Monthly Oil and Natural Gas 
Statistics (MOS) or the JODI questionnaire would logically repla ce the current special 
questionnaire of the Commission used for the m onthly reporting of emergency stock levels. 
The MOS questionnaire might need some fine-t uning so that it is fully in line with the 
updated EU rules (in particular, if additional ru les are introduced compared to those of the 
IEA). Also, the definitions used in  MOS have to be clarified in or der for the data to be used in 
infringement procedures. These modifications ca n be carried out with comitology procedure. 
In addition to the MOS questionnaire, it is also  justifiable to demand additional information 
from Member States on the location and owners hip of stocks, and on the measures taken to 
ensure their availability. Such reporting would help to verify th at emergency stocks are at the 
full disposal of Member States. This is partic ularly important for emergency stocks held by 
the industry, often commingled with stocks  held for commercial  purposes. An annual 
periodicity of this reporting is probably sufficient.  
Certain stakeholders argue that European comme rcial oil stock data sh ould be reported and 
published more frequently than on a monthly basis and the ECOFIN Council reached a political agreement on the necessity of such re porting. Data on oil stocks is relevant as it 
provides an indication of the tightness of the market and could therefore have a significant 
influence on oil prices. Its re levance is suggested by the example and practice of large oil 
consuming countries (United States, Japan a nd possibly China and Ko rea) which report oil 
stocks on a weekly basis. Improved and more complete data on global oil stocks could 
contribute to improve oil market transparency. In order to better  address the concerns of other 
stakeholders, further analysis of the issue and the US and Japanese example is necessary. The 
Commission will launch a feasibility study in orde r to review the costs, the benefits, the 
impacts on industry and possible modalities of weekly reporti ng, as well as the issue of 
confidentiality.  
                                                
 
35 The IEA Secretariat expressed its readiness to find such a compromise. 
36 Current monthly reporting is in line with th e intentions of the IEA which plans to increase the frequency of examining complian ce 
from quarterly to monthly. 
 
EN 30   EN Crisis management  
For an effective crisis management within the EU, procedures are required for actions 
triggered by the IEA, as well as in case of regional/European crises not addressed by the IEA 
mechanism.  
The IEA remains the main entity to deal with  disruptions on the global scale. In an IEA 
action, EU Member States which are also memb ers of the IEA should be able to release 
stocks without the Commission' s explicit approval but shoul d nevertheless consult the 
Commission. The Commission in turn, has to keep those Me mber States which are not 
members of the IEA informed, provide them with  guidance and coordinate their participation 
in the action. For these countries trainings mi ght be also necessary on how to respond to a 
specific supply disruption. The IEA could provide  help in this respec t. The role of the 
Commission should also include a responsibility for coordinati ng actions of all EU Member 
States, regardless of their status vis-à-vis the IEA, and this in the interest of providing a 
coherent reply and enhancing the effectivenes s of any IEA action. At the same time, the 
Commission has to ensure that steps taken by the EU collectiv ely or by way of individual 
Member State actions respect existing EU legislation.  
If a (regional) disruption does no t trigger an IEA acti on, a decision on an EU  action is to be 
made in consultation with the Oil Supply Group. Nevertheless, information exchange with the 
IEA would be desirable even in such cases. 
In order to enable swift acti on, decision making within the Commission should be streamlined 
in case of a crisis. It should be useful to nominate a "crisi s manager", mandated to take 
appropriate action in case of a supply rela ted crisis (e.g. conveni ng the Oil Supply Group), 
interact with the IEA and enter into communi cations with other stakeholders (including 
press), without such decisions being delayed by  the regular hierarchical approval procedure. 
The draft rules for an "Oil Crisis Management Task Force" to be set up within DG TREN have been prepared. This small and operati onal task force would execute the Commission's 
role in case of oil supply disrupti ons requiring action at EU level. 
 
EN 31   EN  Option 0: No policy 
change Option 1: 
Reinforcing 
control Option 2: 
Centralized 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 32   EN 5. W HAT ARE THE LIKELY ECONOMIC , SOCIAL AND ENVIRONMENTAL IMPACTS ? 
HOW DO THE OPTIONS COMPARE ? 
The four options have been assessed on the basi s of their most important likely impacts:  
• impact on emergency preparedness, i.e. the capac ity of the EU to cope with a possible oil 
supply disruption,  
• financial and administrative burden faced  by Member States, the industry and the 
Commission,  
• environmental, social and economic impacts.  
The impact analysis of the indi vidual options is complicated by th e fact that the transposition 
of the existing legislation has created importa nt differences between the Member States' 
stockholding systems. Member States have op ted for different regimes and have dedicated 
unequal costs and efforts to the compliance with their obligations. As a result, the impacts of 
the individual options will be inevitably diffe rent across Member States, primarily depending 
on whether stocks are currently maintained pr edominantly by public agencies/governments or 
by the industry. The way of implementing th e possible options (e.g.  how government or 
agency stockholding would be financed) is also lik ely to affect the imp acts, especially with 
respect to the size and focu s of the financial burden37.  
The above factors make it very difficult to qu antify the impacts. As the policy options refer 
mainly to changes in the organisation and na tional management of the stockholding systems, 
a correct quantification of imp acts across the EU proves hardly possible. Therefore, a more 
detailed, qualitative analysis was preferred. Nevertheless, approximate  numerical data are 
provided where possible. 
Not only it is difficult to quantify the costs, th e quantification of benef its is probably even 
more challenging. The current system was never put  to a real test by a large-scale disruption 
(even the IEA collective action after hurricane Katrina in 2005 used only 2.5 days of stocks 
out of 90) so we have limited knowledge on th e potential consequences of a major supply 
disruption on the economy and the society, and to what extent these can be avoided or 
mitigated by using emergency stocks. Neverthele ss, in section 5.1. an attempt is made to 
specify the potential impacts of a disruption. 
5.1. Potential impacts of a supply disruption 
Emergency oil stocks provide benefits to the economy. The principal be nefit is the avoidance 
of economic losses in case of a supply disruption, due to the ab ility of stocks to replace 
missing supplies and thereby to dampen or eliminate potential price hikes. 
An oil supply disruption is likely to have serious negative impacts on the economy, depending 
on the relative size and the duration of the disrup tion. Some sectors are pa rticularly dependent 
on the regular supply of oil and/ or petroleum products. Transport is by far the biggest user of 
oil in the EU (see Figure 3) and oil accounts for 97% of energy consumption in this sector. 
Households spend 13.6% of their total final consum ption on transport, mostly by road and air, 
                                                 
37 If stockholding is financed by a levy im posed on the final consumer, impact on the government budget can be largely avoided. In  
contrast, financing through public expenditu re would either reduce other public e xpenditure or result in increased taxes. 
 
EN 33   EN i.e. transport modes most dependent on oil-ba sed fuels. Part of this expenditure is 
discretionary (holidays, leisure travel) but an important part is underpinning more than just 
contemporary lifestyle, ensuring social organiza tion and adequate labour force mobility on 
which modern EU economy depends. 
 
Figure 3: Petroleum products use by sector, 2004 
Source: Eurostat 
In the chemical industry, oil is the main feedstock and energy s ource at the same time. In the 
fisheries sector, at current price levels, fuel cost s constitute more than 30% of the value of EU 
fish landings. Oil-based fuels (mainly heavy fuel  oil) play a limited role in the electricity 
sector – in 2005 they accounted  for 4.2% of power production in the EU. Nevertheless, in 
countries such as Greece, Ir eland, Italy and Portugal, pow er supply depends 13-19% on oil-
fired power plants while the sector in Cyprus and Malta is practically completely dependent 
on oil. 
This underlines the importance of  regular and integral supplies of oil and petroleum products 
to the economy. The principal role of emergency st ocks is to ensure such integral supplies at 
times of crises and/or disruptions, particularly  in cases where the severity of situation may 
lead to a temporary suspension of  trading on the local or even gl obal oil markets either due to 
technical reasons or because of physical unavailability of need ed oil volumes.  
The damage to the economy that could be caused in such situations without the possibility of 
drawing on emergency stocks is intuitively under stood but hard to quantify precisely. If we 
had no emergency stocks to replace disrupted volumes, this would first and foremost bring 
most of the transport to a standstill which is in itself an important economic sector38. In 
addition, the lack of oil would al so paralyse the activities of ot her sectors like the chemical 
industry. Considering the importa nt role of transport in m odern society and economy, other 
                                                 
38 Enterprises with transport services as their main activity employed 8.2 million persons and generated EUR 363 billion value add ed in 2004, accounting for an 
estimated 6.9 % and 7.3 % respectively of the EU's total non-financial business economy (Panorama of Transport, Eurostat, 2007) 
 
EN 34   EN sectors would be also seriously affected. Th e impact on households, es pecially those using 
heating oil, would be immense as well. 
However, there is hardly any quantitative analysis on the potential impact of a large-scale 
supply disruption which, in additi on to skyrocketing prices, would result in a lack or scarcity 
of oil. In fact, there is hardly  any experience of such disruptions to date. Even during the first 
oil crisis in 1973, when the Arab oil producers enforced an embargo against the Netherlands 
and the United States, and othe r countries also faced partia l cutbacks, there was no real 
shortage of supply and it is more correct to refe r to it as an oil price shock (the price of oil 
quadrupled by 1974). 
The potential damage to the economy and society from an oil supply disruption therefore has 
in practice to be gauged by analysing a case of a sudden price increase of the kind that could 
be associated with any unmitigated supply disr uption. This impact could be considered an 
assessment of a minimum damage level. Eff ective damage from a physical disruption would 
be somewhere above that level,  taking into account  that the sudden pr ice hike would be 
coupled with further economic losses stemming  from actual physical unavailability of oil 
supplies.  
There is indeed a wealth of analysis on the impact of increasing oil prices on the economy. 
Already after the second oil shock in 1980s, Ja mes Hamilton published an  influential article 
demonstrating that an oil price increase had pr eceded all but one recession (that in 1960) in 
the United States since the end of World War II.39 More recently, the IEA's World Energy 
Outlook 2005 claimed that a $10 rise in the oil pri ce, if sustained for a year, would cut GDP in 
OECD countries by 0.4%. 
In 2008, the Commission also inve stigated the issue of the m acroeconomic impact of oil 
prices, based on the simulati ons of ECFIN's QUEST model.40 The results show that the 
impact of an increase in oil prices of 100% over a period of three ye ars would decrease GDP 
by 0.9% below baseline after th ree years and slightly more  than 1% after 10 years. 
Considering the current size of the EU GDP, th is is equivalent to a GDP loss of about €120 
billion. This loss would be unevenly spread; in  some sectors (e.g. some segments of the 
transport sector), fuel costs can represent up to 50% of income and these sectors would 
obviously suffer the most. 
The impact on consumption according to the mode l is much stronger, 2% lower after three 
years and 3% lower after 10 years. Consumer pr ices are 2% higher after three years than in 
the baseline scenario. The increase in energy prices does not have a significant impact on 
energy consumption in the short run due to the small short-run elastici ties of substitution, but 
energy consumption by households is 6% lower after ten years.  
A second scenario takes the previous simulation as a new baseline and shows the effects of a 
further oil price increase of 25%. In this case  the negative impact on real GDP is around 0.2% 
in the first year, rising to 0.7% after 10 years. This implies that, propor tionally, the effect of 
oil price shocks is non-linear, i.e. larger when the starting price level is higher. This is an 
important conclusion considering that a supply di sruption resulting in physical shortage of oil 
                                                 
39 Hamilton, J. D. (1983) “Oil and the Macroeconomy sin ce World War II,” Journal of Political Economy 91: 228-248. 
40 Results were published in the Quarterly Report on the Euro Area, Volume 7 N° 1 (2008) 
(http://ec.europa.eu/economy_finance/publi cations/publication_summary12329_en.htm). 
 
EN 35   EN or petroleum products (if not countervailed by em ergency stocks releases) would be likely to 
lead to a temporary pr ice hike with unavoidable price over shooting. Indeed, the price rises 
caused by the 1973 oil s hock had a much greater impact on the economy than the temporary 
fuel shortage caused by the embargo: oil importing countries saw sudden inflation and 
economic recession.  
5.2. Impact on the EU's capacity to effectively react to an emergency 
The first criterion to be used when compar ing the various policy op tions should be their 
impact on the EU's ability to co pe with an oil supply disruption, i.e. the extent to which the 
option can improve the security of supply. In this respect it is important to emphasize that 
emergency stocks should only be used in a se vere supply disruption and should provide the 
system with "fresh", additiona l oil by replacing the disrupted volume. At least this should 
provide a buffer to avoid or to mitigate negative impacts to the economy.  
5.2.1. Option 0: No policy change 
Option 0 would mean that the weaknesses of th e current system would remain in place, 
putting at risk the EU's ability to react to, and ultimately withstand, possible adverse 
developments. This could have more serious conse quences in the future given that the risk of 
supply disruptions might be higher in the future  than in the past (as described in section 
2.2.1.). Oil production in the future  may not keep pace with hi gher oil demand from countries 
outside the OECD like China, India or Middle East countries41. As a result, even if a global 
shortage of oil is not imminent, spare capacitie s are likely to decline and even smaller oil 
supply disruptions may have a stronger impact in the future than they had in the past. 
Shortcomings of the current system have been outlined in chapter 2 and can be further 
analyzed. In this context, the main point determ ining the impact of oil stocks on security of 
supply is not the amount of emergency stocks he ld but the volume of stocks which can really 
be available in a crisis and the certainty of their availability. 
A stockholding system which relies on government or  agency stocks and in  which public/state 
ownership of stocks is compulsory may have th e full amount of 90 days at its disposal. This 
oil is usually very visible because of dedicat ed storage tanks or underground facilities. This 
oil is in a crisis available as  "fresh", additional oil which has not yet been linked to the 
existing commercial system. 
A stockholding system which relies on mandato ry industry stockholding may have less oil 
available in final analysis, as emergency stocks are typically commingled in such system with 
businesses' Minimum Operational Requirements (MOR). In a disruption, businesses will use 
MOR to maintain their operations, reducing the am ount of stocks that ca n be considered as 
additional emergency stocks available for the state administration's use.  
A survey undertaken by the Commission in ear ly 2007 in the context of this impact 
assessment yielded data on the breakdown of emer gency stock held in the EU by the character 
of stockholding entity as shown in Figure 5. In th ree EU Member States, all stocks were held 
                                                 
41 The latest (July 2008) Medium-Term Oil Market Report of th e IEA warns of increasing market tightness beyond 2010, with 
OPEC spare capacity declining to minimal levels by 2013 
 
EN 36   EN by the government or an agenc y. In eight, all stocks were held by the oil companies42, while 
the majority of Member States had a mixed system. The survey has also showed a huge 
variety in MOR ranging from 2 to 94 days of domestic consumption (see Figure 6)43. 
Government
3%
Agency
35%
Industry
62%
 
Figure 5: Share of Emergency Stock Volumes Held by Governments, Agencies and the 
Industry 
Source: European Commission DG TREN 
                                                 
42 In the meantime, Belgium has established a stockholding agency. In Austria and Denmark, most of the emergency stocks are held 
by a privately owned stockholding entity which can be regarded as an agency. 
43 This was an informative questionnaire wh ich did not provide a precise  definition of MOR and thus allowed for flexible 
interpretation of what counts for MOR. 
 
EN 37   EN 94
46
41
383634
27 27
24 24
11
8 86
32
0102030405060708090100
NL LT FI RO IT SE FR BG IE PL CY AT UK LU BE ELdays
 
Figure 6: MOR Expressed in Days of Consumption44 
Source: European Commission DG TREN 
Furthermore, and as already touched upon in ch apter 2, current rules a nd practices regarding 
the use of "tickets" may lead to further limitations on the capacity of the current system to act adequately in a supply disruption. Yet, Member States hold according to data collected in the 
aforementioned survey about 18 million tons of o il and oil products in th e form of "tickets", 
which represents an 11% share of the overall  emergency stocks. Ten Member States do not 
hold or do not permit "tickets" to be held while  eight Member States hold more than 20% of 
their stocks in "tickets" (see Fi gure 7). Almost half of such st ocks are located abroad. 70% of 
"tickets" are held by the industry, 30% by agencies. 
                                                
 
44 Only Member States where part of the stocks are held by the indus try were requested to answer this question; still, some of the se 
countries did not provide data. 
 
EN 38   EN 74%
43%
36%
31%
27%
25% 25% 24%
18%
12%10%
4% 4%2% 1%0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
0%10%20%30%40%50%60%70%80%90%100%
LU CY UK BE IE EE NL SI FR IT SE PT DK PL DE ES AT BG CZ FI EL HU LV LT RO SK
 
Figure 7: Share of "Ticket" Stocks in EU Member States 
Source: European Commission DG TREN 
All the above is likely to lead to a situation wh ereby in a severe supply  disruption some of the 
EU Member States' emergency stocks may not be as fully available as Article 3 of Directive 
2006/67/EC stipulates. In a first step this would impact the solidarity of Member States to act 
on an equal basis in a supply disruption. It would require t hose Member States complying 
with Article 3 to take a larger burden and to allow room for "free-riding" of other Member 
States. In a severe and long lasting supply disruption this could negatively impact the 
effectiveness of the whole emer gency and stock draw system. 
Other issues which can impact negatively on the effectiveness of the EU's capability to act 
adequately in a supply disruption are linked to  crisis management issues, to insufficient 
linkages to the IEA and to the fact that most of the new Member States are not members of 
the IEA and are therefore not  included in the globally working oil emergency response 
system. 
5.2.2. Option 1: Reinforcing control means and coordination mechanisms within the 
existing system 
Option 1, i.e. the option to reinforce public control by giving the Commission a role for 
special inspections/audits may definitely increase the credibility of the system, at least in the 
long run. Country reviews, carried  out in conjunction with the IEA, would help to identify 
shortcomings of national stockholding systems a nd to disseminate best practices. Inspections 
 
EN 39   EN could identify countries which may formally comply with the 90 day obligation but whose 
effective stock levels may be lower or not fully available to the administration45. 
If several countries would prove to be non-co mpliant, this would le ad to a number of 
infringement procedures, possibly undermining th e credibility of European emergency stocks. 
It could take several years to achieve complia nce and restore credibility. Increased control 
could also help to avoid illegal practices with  "tickets" and/or stocks  held abroad (e.g. double 
reporting of the same molecules). 
However, even a fully ensured and strict compliance with the provisions of the existing 
legislation coupled with improved release me chanisms guaranteeing proper and effective 
coordination would not remove the structur al mismatches of the current system.  
One of such mismatches concerns the compos ition of emergency stocks. Analysis of inland 
deliveries and emergency stocks of petroleum products in the EU shows that current product 
categories cover only 81% of cons umption (see Figure 8). It was also found that the coverage 
of jet fuel is relatively low (7% of product stocks as opposed to 10% of consumption) while 
fuel oil stocks are dispropor tionately high (19% of produc t stocks while only 7% of 
consumption). 
Inland deliveries (2007)
Gasoline
17%
Kerosene and 
jet fuel
10%
Gas/Diesel Oil
47%Residual fuel 
oil
7%Other
19%Product stocks (30 June 2007)
Gasoline
19%
Kerosene and 
jet fuel
7%
Gas/Diesel Oil
55%Residual fuel 
oil
19%Other
0%
 
Figure 8: Composition of oil product consum ption and of product stocks in the EU-27 
Source: Eurostat, DG TREN 
Moreover, even full enforcement of current rule s would not insulate th e existing system from 
risks associated with current  practices on "tickets". Even with full transparency and 
accountability of tickets, logis tic problems may intervene and undermine the possibility of 
using stocks held under "ticket" arrangements in  a prompt manner in times of supply crises. 
For the most extreme example, a local supply disruption in Cyprus c ould be addressed only 
with difficulty by using stocks located in Finland, unless a swap46 can be arranged. Moreover, 
if the coverage for "tic kets" is in the form of crude oi l or blending components (e.g. naphtha 
to be used for gasoline production), this also ca lls the prompt availability of products into 
question. 
                                                 
45 Such cases could indeed be revealed by in-depth inspections. For exam ple, the case of Belgium showed that, after switching from  
mandatory industry stockholding to an agency system, the newly created agency failed to collect the stocks (e.g. by way of 
"tickets") previously reported by the country , resulting in a non-compliance in Category II.   
46 In a geographical swap stocks in different locations are exchanged. 
 
EN 40   EN 5.2.3. Option 2: Establishing centralized EU sy stem with mandatory st ate/public ownership 
of emergency stocks 
Stocks owned directly by Member States are easy  to monitor since they are held by a single 
entity and commingling with commercial stocks  is avoided. Furthermore, stocks held by the 
industry as part of their assets  are established in line with their commercial strategies and 
contractual obligations and are primarily meant to be used for generating profit – in a supply 
disruption, public and commercial interests may not coincide and may even become 
contradictory.47 The quality (availability) of stocks would thus definitely increase as they 
would be separated from any commercial stocks and be fu lly dedicated to emergency 
purposes. Each Member State would have 90 days of  "fresh oil" for use in an emergency. This 
option would thus delete possible "free rider" positions and avoid current distortions between 
Member States deriving from the fact that the co sts and the level of oil security vary too much 
from one country to another. 
It is also easy to monitor the volume of stocks released (usua lly by means of tenders), which 
is not the case if emergency st ocks are held by the industry (usually "released" by decreasing 
the stockholding obligation). 
This option thus can be seen as considerably improving the capability an d effectiveness of the 
whole EU emergency response system. For the purposes of comparison of this option with 
others, particularly the ne xt/last one, it may be useful to c onsider the effective coverage this 
option would provide. 
The calculations of the IEA show that public st ocks alone (the availability of which is not 
questioned) held by IEA member countries w ould last for about 2 years in case of a 
continuous stockdraw of 2 million barrels per da y (see Figure 9). This is equivalent to the 
stock release rate of the 2005 IE A action, although the latter lasted  for less then four months. 
The sufficiency of the 90-day obligation might  depend, on the one hand, on the availability of 
the emergency stocks and, on the other hand, on the risks of an oil supply disruption and 
particularly its possibl e extent and duration. 
                                                 
47 For companies it might make economic sense to make use of th e emergency stocks for commercia l operations and neglect their 
stockholding obligation, even if this enta ils penalties. In anticipation of increasing prices, companies might be also inclined  to opt 
for holding on to stocks instead of alle viating the shortage by releasing them. 
 
EN 41   EN 
 
Figure 9: The Ability of IEA Public Stocks  to Replace 2 or 4 mbpd of Disrupted Oil 
Source: IEA 
5.2.4. Option 3: Creating "dedicated" EU emergen cy stocks within a revised version of the 
existing system  
Judging on past experience, even the biggest di sruptions experienced to date required the 
deployment of much less emergency stocks than  the 90-day obligation (see Table 2). This 
option would thus seek to improve the availa bility of emergency stocks by establishing a 
minimum level of dedicated emergency stocks wh ich is sufficient to cover, with sufficient 
margin, even the most serious disrupti ons experienced in previous decades.  
 
EN 42   EN  
Date No. 
of 
days Gross 
supply 
loss 
(mbpd) % of 
world 
oil 
demand Days of 
stocks 
needed48 Reason 
5/70-1/71 270 1.3 2.5 7 Libyan price controversy 
4/71-8/71 150 0.6 1.1 2 Algeria-France nationalisation 
dispute 
3/73-5/73 90 0.5 0.8 1 Lebanon civil unrest 
10/73-3/74 180 4.3 7.1 13 Arab-Israeli War & Arab oil 
embargo 
5/77 30 0.7 1.1 0 Accident at Saudi oilfield 
11/78-4/79 180 5.6 8.5 15 Iranian Revolution 
10/80-1/81 120 4.1 6.2 7 Outbreak of Iran-Iraq War 
4/89-6/89 90 0.5 0.8 1 UK Cormorant platform accident 
8/90-1/91 180 4.3 6.5 12 Iraqi invasion of Kuwait 
4/99-3/00 360 3.3 4.5 16 OPEC production cutbacks 
11-12/99 60 1.1 1.5 1 Iraqi oil export suspension 
(rejection of phase V1 extension) 
12/00 30 1.6 2.1 1 Iraqi oil export suspension 
(price disagreement with UN) 
6-7/01 60 2.1 2.7 2 Iraqi oil export suspension 
(rejection of UN resolution 1352) 
4-5/02 60 1.8 2.3 1 Iraqi oil export suspension 
(rejection of UN resolution 1352) 
12/02-3/03 120 2.6 3.4 4 Venezuelan strike 
3/03-12/03 300 2.3 2.9 9 Iraqi conflict 
9-12/05 120 1.5 1.9 2 Katrina Hurricane damage to US 
crude oil production facilities 
Table 2: Major Oil Supply Disruptions since 1970 
Source: IEA World Energy Outlook 2005 
These stocks would be separated from commercia l stocks and, as a result, would be clearly 
visible and fully and surely available as supple mentary oil in a crisis. Obliging Member States 
to hold a minimum of 30 days under a system managed through a state-controlled agency 
would improve the preparedness of the EU in practical terms equally as option 2.  
This option is also in line with the practice of the United States where the government-owned 
Strategic Petroleum Reserves ( SPR) hold stocks equivalent to  nearly 60 days of net oil 
imports while the rest of the 90-day IE A obligation is held by the industry. 
                                                 
48 Number of days of stocks needed to replace the disrupted oil [This calculation assumes that all consuming countries dispose of 
emergency stocks which is obviously not the case; basically the OECD countries have to replace all the missing oil whilst in 20 04 
they consumed 58% of oil.]  
 
EN 43   EN 5.3. Financial and administrative impacts 
In addition to the impact on emergency preparedness, the impact on financial and 
administrative burden has to be taken into acco unt as well. Member St ates, the oil industry 
and the Commission may all face additional (or possibly lower) fi nancial or administrative 
burden depending on the policy option chosen.  
Any additional burden imposed by the amendment of the current legislation should be 
proportional to the additional benefit provided in  terms of better emergency preparedness. In 
addition, the amendment should not contradict  the endeavour of the Commission and a 
number of Member States to simplify existing legislation. Also, disp roportionate financial 
burden should be avoided. 
5.3.1. Option 0: No policy change 
Option 0 implies no change to the current fina ncial and administrative burden. A survey 
undertaken by DG TREN in the contex t of this impact assessment re vealed that, on average, it 
costs Member States 31 €/ton/y ear to maintain their emerge ncy stocks (see Table 3).  
Government/agency stocks Industry stocks Total Country Costs (€/t) Stock level (kt) Costs (€/t) Stock level (kt) Costs (€/t) Stock level (kt) 
AT 31 3 400   31 3 400
BE 20 1 880   20 1 880
BG 625 161 1 124 170 881 331
CY 50 280   50 280
CZ 24 2 000   24 2 000
DE 18 22 300   18 22 300
EE 323 95   323 95
ES 27 6 094   27 6 094
FI 2 3 600   2 3 600
FR 29 13 076   29 13 076
HU 49 1 240   49 1 240
IE 40 927   40 927
IT   39 17 389 39 17 389
LT 77 200 146 136 105 336
LU   25 750 25 750
NL 19 4 260   19 4 260
PT 34 1 082   34 1 082
SE   35-50 4 081 35-50 4 081
SI 43 549   43 549
SK 19 512   19 512
Total 25 61 656 48 22 526 31 84 182
Table 3: Costs of emergency stoc kholding in Member States (2007) 
Source: European Commission, DG TREN 
Emergency stockholding entails one-off costs (buying stocks, bu ilding storage facilities) and 
running costs (renting storage facilities, ticket fees etc.). The high costs faced by some new 
Member States reflect the fact that these coun tries are still building up their emergency stocks 
and therefore incur significant one-off stocks . Such stocks can be minimized by using 
“tickets” or by buying stocks on credit and storing them in rented facilities.  
 
EN 44   EN 5.3.2. Option 1: Reinforcing control means and coordination mechanisms within the 
existing system 
Option 1 does not envisage changes in the requ irements for stock ownership or management, 
so it is not expected to entail supplementary co sts for the administration or the industry of the 
Member States. However, additional costs would certainly occur as a re sult of the audits and 
reviews foreseen under this option (auditors, missions, meetings).  
Audits would not necessarily requ ire additional Commissi on staff. It might be more beneficial 
and cost-efficient to mandate external auditors as this task requires special expertise in both 
accounting and oil issues, and only  a limited number (3-6) of reviews can be foreseen each 
year. The estimated cost of a comprehensive a udit of a single country is in the order of € 
50,000. This estimate was confirmed by a medi um-sized Member State which mandates 
external auditors to carry out yearly audits of companies with a st ockholding obligation and 
the total costs are of th is order of magnitude. 
Country reviews, on the other ha nd, even if carried out together  with the IEA, would probably 
necessitate the expansio n of Commission staff. Depending on the results  of the audits and 
reviews, the number of infringement  procedures might also increase. 
Specific costs to be born by Member States or th e oil industry could only be determined if the 
audit would detect serious faults on Me mber States' compliance with stockholding 
obligations. 
5.3.3. Option 2: Establishing centralized EU sy stem with mandatory st ate/public ownership 
of emergency stocks 
Financial and administrative requirements of this option would vary  significantly across 
Member States. This is a consequence of the current diversity of stockholding systems which 
is described schematically in Table 4.  
 
EN 45   EN  
Member State EU Membership IEA Membership Stockholding system 
Austria 1995 1974 Agency/Industry 
Belgium 1957 1974 Agency/Industry 
Bulgaria 2007 - Government/Industry 
Cyprus 2004 - Agency/Industry 
Czech Republic 2004 2001 Government 
Denmark 1973 1974 Agency/Industry 
Estonia 2004 - Agency/Industry 
Finland 1995 1992 Agency/Industry 
France 1957 1992 Agency/Industry 
Germany 1957 1974 Agency 
Greece 1981 1977 Industry 
Hungary 2004 1997 Agency 
Ireland 1973 1974 Industry/Government 
Italy 1957 1974 Industry 
Latvia 2004 - Agency/Industry 
Lithuania 2004 - Government/Industry 
Luxembourg 1957 1974 Industry 
Malta49 2004 -  
Netherlands 1957 1974 Agency/Industry 
Poland 2004 2008 Industry/Government 
Portugal 1986 1981 Agency/Industry 
Romania 2007 - Industry/Government 
Slovakia 2004 2007 Government 
Slovenia 2004 - Agency 
Spain 1986 1974 Agency/Industry 
Sweden 1995 1974 Industry 
United Kingdom 1973 1974 Industry 
Table 4: Current stockholding systems of EU Member States 
Source: Oil Supply Security (IEA, 2007), Commission survey 
For most Member States this option would entail  a major change to the current system and – 
depending on the practical implementation – th is might have an imp act on the financial 
burden. In summary: 
– Six EU Member States (BG, CZ, LT, PL, RO , SK) dispose at present of government-held 
stocks, representing less than 3% of EU emergency oil stocks.  
– Only two of these countries, the Czech Republ ic and Slovakia hold all emergency stocks 
under such a regime. For these two countries , Option 2 is not likely to cause major 
organisational changes or a dditional financial burden.  
                                                 
49 Malta did not answer to the Commission survey. 
 
EN 46   EN – Five Member States (EL, IT, LU, SE, UK) co mpletely rely on mandatory industry stocks 
today. These countries would also need to pur chase emergency stocks and might have to 
establish agencies to manage them.50  
– All other Member States (AT, BE, BG, CY , DE, DK, EE, EI, ES, FR, HU, IE, LT, LV, 
NL, PL, PT, RO, SI) have some government or  agency stocks in their present systems. 
However, only a few of them have the full 90 days of stocks at their disposal, under 
conditions approaching the model envisaged un der this option. Even in Member States 
with agencies, stocks are often not state-owne d, so do not comply with the requirements of 
this option. 
The cost of buying oil for reaching the 90 day leve l required for emergency stocks at EU level 
(about 135 million tons in crude oil equivalent), at current market prices (about $70/barrel in 
the second half of October 2008) c ould be of the order of €55 bil lion. If part of  these stocks 
would be in the form of products, costs would be obviously even higher. These costs could be 
financed either by the taxpayer through the government budget (either through higher taxes or 
by reallocating public expenditure ) or directly by the consumer (through a levy). Bank loans 
could be used as well for covering the initial co sts. In addition to buying the stocks, building 
new storage facilities to hold the physical crude oil and products might be also necessary. The 
mode of financing such facili ties would be similar to th at of purchasing oil stocks. 
It should be emphasized that switching to a di rect government ownership and agency system 
does not entail automatically a si gnificant increase of running cost s. Costs of building storage 
facilities, buying and storing st ocks should not be essentially higher if the stocks are owned 
by the Member State instead of the oil industry. This is conf irmed by a recent survey, the 
results of which show that the average costs of government/agency stocks are actually lower 
than those of industry stockholding (see Table 3) . Lower costs can be e xplained by the fact 
that these entities are not  profit-oriented and usually have acc ess to credits at favourable terms 
(often helped by state guarant ee). Managing an agency certainly involves some administrative 
costs but these are almost negligible compared to the costs related to  physical stockholding: 
the survey mentioned above f ound that it adds up to 1.5% of total stockholding costs (see 
Figure 10).  
                                                 
50 Italy established a stockholding agency in 1998 which is not opera tional for the time being. The Swedish Energy Agency has a 
role in supervising emergenc y stocks but is not responsible for holding the stocks. 
 
EN 47   EN Management/administration
1.6%
Financing costs
30.5%
Ticket fees
10.5%Storage costs
52.2%Other costs
5.2%
 
Figure 10: Cost structure of  government/agency stocks 
Source: European Commission, DG TREN 
If emergency stocks are held by the industry, costs are obviously incorp orated into consumer 
prices. Unless financed by taxpayers, this would not change in case of state-owned 
stockholdings but, by establishing  a special fee incorporated in to price, the costs would be 
more apparent, thereby in creasing transparency.  
The burden on the industry in th e countries concerned would s ubstantially ease : they would 
no longer face an obligation to hold  stocks and to report the level of such stocks. In fact, they 
could realize a huge one-off (windfall) profit by selling their emergency stocks. Nevertheless, 
it has to be emphasized that even if all emer gency stocks are state-owned and managed by the 
government or agencies, Member States cannot cope with a disruption without the industry 
and its logistic system. The industry may also ha ve a role in collecti ng a fee from consumers 
to finance the stockholding system. 
If all stocks are managed by the government or  a single agency (inst ead of a number of 
companies), administrative burden in terms of reporting is likely to moderate.  
5.3.4. Option 3: Creating "dedicated" EU emergen cy stocks within a revised version of the 
existing system  
Option 3 could entail additional financial burden for a number Member States, but this should 
be much lower than in Option 2 and it would concern fewer countries. In fact, many Member 
States may be reasonably close to complying wi th the obligations enta iled in this option.  
Similarly to Option 2, the financial burden on Member States will depend on how close their 
current system is to the proposed one and on the decision of how it will be financed. The estimated impact on individual Member States' stockholding is presented in Table 5. The 
calculation takes the proposed alignment with the IEA methodology into account. 
 
EN 48   EN Stock levels on 30/11/20061 2008 1/3 of Government/ "Missing" 
Government+agency Industry Total obligation the agency gov./agency stocks MS 
crude  products total crude  products total crude  products total in coe2 obligation3 stocks in coe4 in 1000t in % 
AT     1 655 1 524 3 179 1 655 1 524 3 179 3 120 1 040 0 1 040 100% 
BE     1 313 3 005 4 318 1 313 3 005 4 318 4 439 1 480 0 1 480 100% 
BG 98 95 192 0 122 122 98 217 314 1 235 412 190 222 54% 
CY 0 297 297 0 101 101 0 398 398 688 229 321 0 0% 
CZ 916 1 024 1 940    916 1 024 1 940 2 138 713 1 931 0 0% 
DK     544 2 225 2 768 544 2 225 2 768 1 424 475 0 475 100% 
EE 0 50 50 0 47 47 0 97 97 210 70 54 16 23% 
FI 300 1 050 1 350 1 067 979 2 046 1 367 2 029 3 396 2 415 805 1 404 0 0% 
FR 2 695 10 126 12 822 4 664 3 968 8 632 7 359 14 095 21 454 20 010 6 670 13 362 0 0% 
DE 14 112 11 243 25 355 4 909 3 833 8 742 19 021 15 076 34 097 23 119 7 706 24 843 0 0% 
EL     2 064 3 110 5 174 2 064 3 110 5 174 4 051 1 350 0 1 350 100% 
HU 547 644 1 192 0 213 213 547 857 1 404 1 189 396 1 188 0 0% 
IE 0 1 605 1 605 250 799 1 049 250 2 404 2 654 2 068 689 1 733 0 0% 
IT     5 966 12 779 18 745 5 966 12 779 18 745 17 818 5 939 0 5 939 100% 
LV 0 12 12 0 143 143 0 154 154 414 138 13 125 91% 
LT 0 190 190 9 113 122 9 303 312 523 174 205 0 0% 
LU     0 753 753 0 753 753 756 252 0 252 100% 
MT NA NA NA NA NA NA NA NA NA 270 90 NA NA NA 
NL 2 419 1 551 3 970 5 176 397 5 573 7 595 1 948 9 543 4 959 1 653 3 852 0 0% 
PL 663 157 820 1 618 1 185 2 803 2 281 1 342 3 623 5 397 1 799 766 1 033 57% 
PT 777 1 068 1 845 798 2 419 3 218 1 576 3 487 5 063 3 042 1 014 1 853 0 0% 
RO 0 476 476 366 241 606 366 717 1 082 1 741 580 514 66 11% 
SK 276 223 499    276 223 499 687 229 489 0 0% 
SI 0 442 442    0 442 442 682 227 477 0 0% 
ES 1 954 3 459 5 413 4 738 6 778 11 516 6 692 10 237 16 930 16 597 5 532 5 495 38 1% 
SE     1 219 3 081 4 300 1 219 3 081 4 300 2 908 969 0 969 100% 
UK     8 225 6 328 14 553 8 225 6 328 14 553 11 934 3 978 0 3 978 100% 
Total 24 759 33 712 58 471 44 580 54 142 98 723 69 339 87 854 157 193 133 834 44 611 58 692 16 982 ` 
Table 5: Estimated impact of option 4 on Mem ber States' stockholding  obligation (in 1000 tons) 
1composition of emergency stocks as reported by Member St ates in an ad hoc questionna ire (Malta did not answer) 2estimated obligation in crude oil equivalent after the proposed 
alignment with IEA rules (in case of Denmark, Romania, and the United Kingdom this corresponds to 67.5 days of domestic consump tion, in case of other IEA member countries it 
is the actual IEA obligation, in case of Malta it is an esti mation based on average difference between EU and IEA obligations, in case of other countries it is calculated based on 
MOS data) 3this corresponds to the proposed 30-day obligation 4Stocks held by government or agency on 30/11/2006 recal culated into crude oil equiva lents, with a 10% deduction 
 
EN 49   EN According to the calculations, about half of th e Member States (CY, CZ, FI, FR, DE, HU, IE, 
LT, NL, PT, SK, SI) would practically be compli ant with such a modified obligation as they 
have dedicated emergency stocks (held by govern ment, agency or other entity) covering more 
than 30 days. In addition, all these countries have  at least 30 days of dedicated stocks in the 
form of products. Meanwhile Belgium has esta blished agency stocks so most probably it 
would be also compliant. In cas e of Austria and Denmark, most stocks are held by a privately 
owned stockholding entity; these arrangements might need some improvement but by and 
large appear to be compliant as well. 
Based on the November 2006 stock levels, six Member States (BG, EE, ES, LV, PL, RO) 
would be partly compliant, with dedicated emergency stocks covering less than 30 days. In case of Spain the missing volume was insignifican t and according to more recent data the 
country would be compliant. The other five Me mber States have part of their emergency 
stocks held by the government or an agency and could be expected to be compliant after the 
end of current transition period related to accession. 
The five remaining Member States  where all stocks are currently held by the industry (EL, IT, 
LU, SE, UK) would need to establish 12.5 million tons of government/agency stocks. They would need to establish a stockholding entity with  the appropriate management structures or 
entrust the like entity of another Member State. Even some of the latter countries have public 
or semi-public bodies/agencie s in place (sometimes dorma nt) whose missions could be 
enlarged towards a control over the dedicated stocks.
51  
If the above volume was to be pu rchased in the form of crude oil at current market prices 
(about $70/barrel in the second half of October 2008), the tota l cost shared amongst the 5 
Member States concerned would be about €5 billion. However, it  should be emphasized that 
the required volumes are already present in th e EU and the Member St ates concerned do not 
necessarily have to buy the stoc ks to satisfy the new requirements. If they opt for an agency-
based solution, each Member State concerned can  create an agency/entity in which oil 
companies would have an inte rest/obligatory membership (a s is already the case e.g. in 
Germany) and to which stocks could be tran sferred/delegated without  requiring purchase by 
the Member State.52 Another option is to resort to other Member  States which have 
substantial "surpluses" compared to the pr oposed 30-day government/agency obligation and, 
under some agreement, can make those stocks available to those in need. 
If government/agency stocks are to be stored sepa rately from commercial st ocks, this is likely 
to require the building of additional tanks. Ho wever, subject to adequate recording and 
control, these stocks co uld continue to be held in the comp anies' storage facilities, even if 
commingled with operational stocks (this is a standard practice in several Member States, 
including France). This would also remove or lessen the possible necessity of building 
additional storage facilities in the MS concerned. 
As it was spelled out in section 5.3.3., costs would not necessarily be higher than for 
mandatory industry stocks. Costs of physical st ockholding should be similar while the scale of 
administrative costs for existing stockholding entities is marginal. This conjecture is 
                                                 
51 Italy established a stockholding agency in 1998 which is not opera tional for the time being. The Swedish Energy Agency has a 
role in supervising emergenc y stocks but is not responsible for holding the stocks. 
52 The archetype of the stockholding agencies, the German EBV receives no government funds; its operating costs are covered by a f ee paid by member 
companies on every tonne of eligible product delivered for domestic consumption. Membership in the EBV is compulsory for refine rs and importers. 
 
EN 50   EN confirmed by the cost data received from Memb er States: industry-held stocks do not appear 
to be consistently cheaper than governme nt or agency held ones (see Figure 11). 
5049
4343
4039
34
31 31
29
27
25
24
2019 1918
2
0102030405060
CY HU SI SE IE IT PT AT EU FR ES LU CZ BE NL SK DE FIEUR/ton
 
Figure 11: Cost of emergency stoc kholding in Member States* (2007) 
Source: European Commission, DG TREN 
Blue columns indicate government/agency stocks while purple columns indicate industry-held stocks.  
*Some Member States which are still building up their stocks face signifi cantly higher costs 
In the countries which may decide to establish a new stockholding entity, a step by step 
procedure for the switch should be envisaged.  
Companies would continue to f ace a stockholding ob ligation in the countries concerned, but 
its extent would decrease in a number of thes e countries. Administrati ve burden related to 
compliance would not decrease (in countries  setting up a new agency it would probably 
increase), but this could be compensated by the approximation of the EU and IEA systems 
(setting the obligation and reporting ) which would reduce such burden. 
5.4. Economic, social, environm ental and external impacts 
The impacts of the various policy options are not restricted to particular economic sectors or 
social groups. Considering the important role oil plays in the European energy mix, a supply 
disruption would inevitably affect  the economy and the society as a whole. Therefore, it is in 
the interest of all sectors and social groups to have a reliable system in place to cope with 
such a disruption. This does not preclude the possibility that some economic sectors or 
particular social groups would be affected more than others  by a disruption and by Europe's 
ability or inability to cope with it. The choice from among the options could, for example, 
definitely have an important effect on the o il industry, in particular the companies which 
currently have an obligation to  maintain emergency stocks.  
 
EN 51   EN 5.4.1. Economic impacts with re spect to competitiveness 
Economic impacts – in addition to those alread y touched upon above – may include those on 
the competition between different  players in the oil industry.  
As the stockholding arrangements vary widely between Member States, the effects on the 
competition are also different for each country. For example, in countries where the obligation 
to hold stocks relies on the industry, the burde n on the companies is higher in comparison to 
countries where the emergency stocks are state- owned. Furthermore, impacts are different for 
enterprises with or without storage capaci ties, as well as for refining and importing 
companies. Such distortions we re presented in section 2.2.3.2. 
Option 0: No policy change 
This alternative means that existing competitiv e distortions remain unchanged, and the costs 
will also remain the same both in terms of level and distribution. 
Option 1: Reinforcing control means and coordina tion mechanisms within the existing system 
As the decisions regarding ownership and ma nagement of stocks would remain at the 
discretion of the Member States, the proposed  option will not have a significant mitigating 
effect on the existing competitive distortions. This option would not help to create equal 
burden for the market participants. 
Option 2: Establishing central ized EU system with mandat ory state/public ownership of 
emergency stocks 
An agency system, as envisaged under Optio n 2, can easily cease discrimination between 
refiners and non-refiners or between compan ies with and without storage facilities and 
thereby can avoid any resulting distortions to competition. It would thus  help to create "fair 
and non-discriminatory conditions" speci fied in the current legislation.  
Option 3: Creating "dedicated" EU emergency st ocks within a revised version of the existing 
system 
This option would entail a possibility of compan ies to delegate their remaining obligation to 
the entity which holds the "dedicated" emergency stocks. In return, they would have to pay a 
fee not exceeding the costs born by the stockholding entity. As  a result, the potential 
discrimination between different types of market  operators would be si gnificantly reduced. In 
particular, smaller companies with no access to sufficient storage capacity could comply with 
their obligation in an easy and cost-efficient wa y. This option would also allow for eradication 
of the problematic use of "ticket" contracts, thereby contributing to th e improvement of stock 
availability.  
5.4.2. Social impacts 
The social impacts related to the emergency o il supply legislation mainly derive from the 
economic impacts of the stockholding arrangeme nts and their functioni ng or non-functioning 
in case of an emergency. Disruptions often lead  to high energy prices which, either coupled 
with physical shortage of oil pr oducts or not, would particularly  hit the most vulnerable parts 
of the society which would have to face increased heating and tran sport costs. In the event of 
sustained disruptions, expected economic lo sses could lead to increased unemployment, 
 
EN 52   EN which would have adverse effects on the society. Th e release of stocks in severe and sustained 
disruptions would mitigate such economic harm. Already the existence of a buffer of 90 days emergency stocks may calm markets and help to avoid exaggerated price movements and 
extreme market reactions. 
Since emergency stocks contribute to the integr ity of supplies in case of a supply disruption 
and can therefore help to avoid surging oil prices, they are bene ficial to economic and social 
welfare. Should the system of emergency stoc ks, for whatever reason, fail to replace the 
disrupted oil supplies, this would have seri ous negative consequences on the society. Any 
policy option which strengthens the ability of th e EU to cope with a disruption will reduce the 
risk of such a failure. 
Assuming that the existing legislation will not e ffectively work in some Member States, we 
cannot mitigate as necessary the impact of se vere supply disruptions under Option 0. Reduced 
effectiveness and efficiency of stock release ca n lead to price rises,  escalation of market 
uncertainty, and indirectly tri gger unemployment. The most vul nerable groups in society will 
face difficulties with respect to pa ying for transport and heating.  
As it proposes a consistent system across the EU with high effectiveness and efficiency in 
case of stock release, Option 2 is  likely to best prevent nega tive economic and social effects 
from occurring. Option 1 and 3 are also expect ed to mitigate adverse social impacts. 
5.4.3. Environmental impacts 
The presented policy options ar e not expected to have a ny particular impacts on the 
environment. The impact on the environment would be relevant only in the case of the construction of new storage facilities. New facilities and tanks w ould be subject to 
authorisation procedures and would have to  meet prevailing safety and environmental 
specifications. Acquiring the necessary permits can be a lengthy process and could in some cases face opposition from local citizens ("not in my backyard" syndrome) countering the 
projects for building new storag e facilities. However, if the specific requirements are met, 
environmental risks to soil, water and air are contained to the minimum. 
No new storage facilities would be required under Option 1, unless it  turns out during the 
audits that a country does not actually have 90 days stocks at its disposal. In this case it may be necessary to build new storage facilities. 
Under Option 2, with no further commingling of  emergency stocks and commercial stocks, 
the overall physical oil and oil product stocks within the EU would probably increase. This 
may require the construction of new f acilities in some Member States.  
Under option 3, the establishmen t of the 30-day dedicated emergency stocks, if held 
separately from commercial stocks, might requi re additional storage capacities in some 
Member States, especially in those where at  present all stocks are held by industry. If 
commingling is allowed, this would remove or  lessen the possible necessity of building 
additional storage facilities. 
 
EN 53   EN 5.4.4. Impacts outside the EU 
With the exception of candidate countries wh ich will have to take into account any 
amendments to the current legislation, no significant external impacts are foreseen from any of the options. 
Oil supply disruptions to which th e oil stock system is to react often happen  in third (producer 
or transit) countries. However, the locatio n of the disruption has no specific practical 
implications on emergency stocks procedures. 
On the other hand, in case of a serious disruption with a global im pact, the release of stocks in 
Europe can bring relief to the global market irrespec tive of the location of  the disruption. This 
impact is likely to be realized und er all policy opti ons (1, 2 and 3). 
Provided that the revised rules require an increase of stock le vels in some Member States (and 
thereby increase oil demand), a short-term specu lative effect on oil prices cannot be excluded. 
The EU’s position within the IEA might strengt hen by being able to coordinate and channel 
the actions of non-IEA Member States in case of an IEA emerge ncy response action. 
5.5. Impacts of proposed changes in crisis management, calculation and reporting  
Calculation To the extent that options 1, 2 and 3 woul d entail a switch to the IEA calculation 
methodology, we have to analyse the potential impacts of this change. 
Since for most countries the IEA obligation is hi gher than the current EU obligation, a switch 
to the IEA methodology would mean an increa sing obligation for non-IEA Member States, 
many of which are still enjoying a transitional period. However, this switch should not be a 
problem for IEA member countri es which already have to comply with both systems. 
It is difficult to directly compare the extent of  EU and IEA obligations since the former is set 
in product equivalent, while the la tter is established in crude o il equivalent. In addition, in the 
IEA system a wider range of products can qua lify as emergency stocks. By comparing the 
compliance of IEA member countries (with the exception of Denmark and the United 
Kingdom
53) in the two systems, it was found that the average compliance is 118 days (of 
consumption) under the current EU rules while it is 112 days (of net imports) under the IEA system (see Table 6). This ratio suggests th at a 90-day IEA compliance corresponds to a 95-
day EU compliance. In other words, on average,  the IEA obligation is about 5% higher. It 
should be noted that these averages hides cons iderable differences: the ratio of EU and IEA 
compliance is largely dependent on the comp osition of products consumed and stored. In 
several countries the IEA compliance is actually hi gher, suggesting that in  these countries it is 
easier to comply with  the IEA obligation. 
                                                
 
53 These countries were not taken into account because under IEA rules they have no or minimal obligation. 
 
EN 54   EN  
2007 EU latest EU latest EU 2008 IEA latest IEA latest IEA 
Member State 
Obligation1 Stocks1 compliance 
in days3 Obligation2Stocks2 compliance 
in days3 
AT 2 610 3 623 125 3 120 3 721 107
BE 4 022 2 881 64 4 439 4 620 94
CZ 1 570 1 747 100 2 138 2 621 110
DE 22 302 28 897 117 23 119 32 125 125
DK 1 337 2 088 141 0 2 335  - 
EL 3 783 4 679 111 4 051 4 730 105
ES 12 683 16 074 114 16 597 17 142 93
FI 1 967 3 683 168 2 415 3 420 127
FR 16 299 20 459 113 20 010 23 800 107
HU 1 188 1 362 103 1 189 1 959 148
IE 2 040 2 364 104 2 068 2 423 105
IT 12 591 17 198 123 17 818 19 951 101
LU 711 714 90 756 792 94
NL 3 897 7 892 182 4 959 10 306 187
PL4 3 590 4 830 121 5 397 7 159 119
PT 2 378 3 477 132 3 042 3 407 101
SE 2 670 4 267 144 2 908 3 592 111
SK 560 538 86 657 965 132
UK 11 206 12 989 104 1 088 12 769 1057
Total 107 405 139 762 117 115 770 157 836 123
Total except DK,UK 94 862 124 685 118 114 683 142 732 112
Table 6: Comparing current EU and IEA obligations and compliance for Member States 
with IEA membership 
1The EU obligation and stock level is in product equivalent, stock levels are from end of March 2008 or April 
2008, the obligation is based on 2006 consumption 2The IEA obligation and stock level is in crude oil 
equivalent, stock levels are as of 1 January 2008, the obligation is based on 2007 net imports 3The obligation is 
90 days for both the EU and the IEA 4Poland is likely to become an  IEA member country in 2008 
From the 8 EU Member States which are not members of the IEA, Romania is a significant 
producer, and according to the proposed rules would not face an increasing obligation. The other 7 countries have an EU-obligation of about 3 million tons
54, which (according to the 
above rough calculation) should be topped up by about 150 thousand tons.  
This estimation was not confirmed by further, country-by-country analysis. Eurostat and the 
IEA Secretariat prepared a simulation of thes e countries' compliance with the IEA obligation, 
based on their responses to the MOS questionnaire (see Table 7) . It was found that five of 
them (CY, EE, LT, RO, SI) are already comp liant with such a hypothetical obligation. 
Bulgaria is not yet compliant but its IEA compliance is higher than its EU compliance, suggesting that a switch to the IEA methodol ogy would not entail an increasing burden for 
this Member State. Latvia appears to be the only country which would need to make 
additional efforts after the proposed changes in calculation. 
                                                
 
54 This calculation disregards the transition pe riod some of these countries still enjoy. 
 
EN 55   EN  
2007 EU latest EU latest EU 2008 Latest Calculated Member 
State Obligation1 Stocks1 complianceObligation under 
IEA rules2 Stock level 
under IEA rules2 compliance 
under IEA rules 
BG 698 315 41 1 235 619 45
CY 573 647 102 688 740 97
EE 230 150 59 210 335 143
LT 377 388 93 523 1 240 213
LV 289 203 63 414 171 37
MT 218 270 112  
RO 1 226 1 129 83 1 159 1 252 97
SI 554 556 90 682 712 94
Total 4 165 3 658 79 4 911 5 069 93
Table 7: Comparing current EU and estima ted IEA obligations and compliance for 
Member States without IEA membership 
1The EU obligation and stock level is in product equivalent, stock levels are from end of March 2008 or April 
2008, the obligation is based on 2006 consumption 2The IEA obligation and stock level is in crude oil 
equivalent, calculated from latest MOS submissions 3Malta does not report MOS 
An obligation based on net imports  would also mean that the stock levels should reflect the 
development of import dependency, i.e. as import dependency rises, oil stock levels will have to increase to provide the same  coverage in terms of days. 
The higher IEA obligation currently provides some  cushion in case of an IEA stockdraw (i.e. 
EU stock levels are not expected  to go under 90 days immediatel y) – this woul d change with 
the harmonized obligation. 
A switch would also clarify the handling of biofuels which is not clearly addressed in the 
current EU legislation. In the IEA methodology, pur e biofuels are considered as renewables 
and their import does not entail a stockholding obligation. (Further more, it is not possible to 
meet the stockholding obligation with pure biofuel stocks, unless they are stored in the same 
facility with fossil fuels, ready for blending.) However, if biofuels  are blended into  fuels, they 
are incorporated into net imports and th erefore entail a stoc kholding obligation.  
Reporting 
The current reporting lag for emergency stoc ks, as provided for under Council Directive 
2006/67/EC, is unduly long. With current informa tion technology, reporting with a shorter lag 
is unlikely to induce significant additional ad ministrative or financial burden. If Member 
States would report within shorter time limits , the Commission would have a more up-to-date 
picture on the development of stocks and – by  publishing this data – the industry and the 
general public would also benefit from this information. 
A switch to the Monthly Oil and Natural Gas Statistics (MOS) ques tionnaire as a reporting 
tool would not entail difficulties to Member Stat es since Eurostat is already collecting this 
questionnaire from them. As a result, they could get rid of the current double reporting 
obligation. However, this would not improve th e timeliness of reporti ng as the deadline is 
even longer (3 months after the reference month) . The reporting deadline can be modified by 
comitology procedure. The use of the Joint Oi l Data Initiative (JOD I) questionnaire would 
provide less detailed but more up-to-date data : it is reported 25 days after the reference 
 
EN 56   EN month. The Commission asked Member States on the potential impact of a switch to IEA 
methodology on administrative burd en and they reported that no or only marginal reduction 
(some man-hours) is expected. 
The confidentiality of IEA compliance might cha nge after the harmonization (for EU Member 
States) if the Commission conti nues to publish stock levels. This is not opposed by the IEA 
Secretariat which regards it as  a good incentive to comply. 
The proposed annual reporting on the location a nd ownership of stocks, and on the measures 
taken to ensure their availability, would not entail a significant additional administrative 
burden for Member States. This information s hould be already available to Member State 
administrations, even for stocks held by the i ndustry. The current legislation (Article 3) 
specifies that Member States have the emergency stocks at their disposal. This is not possible 
without knowing who is holding the stocks and in which lo cations. This was confirmed 
during formal and informal consultations, wh en several Member States with mandatory 
industry stocks claimed that  such stocks are under full government control.  
As it was mentioned in section 2.2.4.3., the repor ting of commercial stocks  is also important 
from a security of supply perspective. Neverthele ss, views are contradictor y as to the benefits 
of more frequent reporting of commercial stocks. Stakeholders  tend to acknowledge that the 
consumers are likely to benefit from the better  transparency provided by frequent reporting. 
However, many are worried that this could be  offset by some disadvantages: the increased 
costs and administrative burden would in part icular hit smaller enterprises, while the 
potentially decreasing data accu racy could lead to increased volatility and the need for 
subsequent revisions of data. In addition, weekly reporting make s sense only if the reporting 
gap is not more than a couple of days. Fu rther investigations on how other countries 
(particularly the United States) have solved these difficulties will help to decide on the 
modalities of a European reporting system. 
Since the reporting of commercial stocks is no t directly related to the emergency stocks 
system, this impact assessment does not underta ke to evaluate its potential impacts in a 
comprehensive way. In order to better unders tand the possible impacts on industry and the 
benefits and drawbacks from more frequent  but possibly less relia ble data reporting, the 
Commission will launch a feasib ility study on the issue.  
Crisis management 
Past events showed that there is a need for a swift and eff ective emergency response system. 
In particular, if a disruption is addressed by an  IEA action, clear rules are necessary to enable 
a coordinated EU participation in it. The rules outlined in se ction 4.5. would enable Member 
States which are also IEA memb er countries to join an IE A action without a formal EU 
authorisation but should inform the Commissi on about their actions. On the other hand, the 
Commission would be mandated to  coordinate the actions of Member States which are not 
members of the IEA and channel the input of these countries to  the IEA Secretariat. As a 
result, the Commission would be able to enha nce and complement the effects of an IEA 
action. 
The proposed rules would provide sufficient fl exibility to address smaller (regional) 
disruption which will not  trigger an IEA action. 
 
EN 57   EN 6. S UMMARY OF THE OPTIONS  
Option 0: No policy change Although Option 0 would not entail additional burden on Member States and the industry, 
with no policy change an effective EU-wide emergency preparedness cannot be guaranteed. 
This gives cause for concern since supply disr uptions might become more frequent in the 
future, calling for the improvement of emergency preparedness in order to avoid adverse economic and social impacts.  
Option 1: Reinforcing control means and coordina tion mechanisms within the existing system 
This option would not necessarily entail a ch ange to current stockholding arrangements. 
However, the realization of regular inspections /audits may give us unpleasant surprises: it 
may turn out that in some Memb er States the 90 days of stocks  are not fully available. In 
these countries it may take a long time to switch to a better system and to comply with the 
current obligation. 
Option 2: Establishing central ized EU system with mandat ory state/public ownership of 
emergency stocks 
This option is very ambitious: it would comple tely transform the current stockholding system 
of many Member States. By provi ding 90 days of dedicated, st ate-owned emergency stocks, it 
would definitely improve preparedness, but at the expense of increased government 
expenditure/debt. This may not be justified by th e experience of past disruptions which never 
necessitated so high stockdraws. 
Option 3: Creating dedicated EU emergency sto cks within a revised version of the existing 
system  
Requesting Member States to hold a minimum of 30 days stocks under strict government 
control, and possibly to establis h a state-controlled agency to ma nage these stocks, may be the 
reasonable compromise between the ideal model (Option 2) and the business as usual option. 
This option may also be able to overcome the problems of Option 1. It would result in a 
minimum level of dedicated stocks which is full y available as supplementary stock in case of 
a disruption and which is sufficient to cope w ith disruption experienced in the past. For the 
rest of the obligation it would provide Member States considerable flexibility. Many Member 
States are reasonably close to  complying with this option. 
Conclusion 
The most important positive impact of Opti ons 1, 2 and 3 is the better availability of 
emergency stocks and, as a consequence, the improved capacity of the EU to face with a 
supply disruption and to manage the associated risks. As a negative impact, these options can 
entail additional financial and/ or administrative burden, the exte nt of which largely depends 
on the starting point (i.e. the current stockho lding structure) and the modalities of the 
implementation. 
In a realistic view options 0 and 2 may be th e options which are less opportune or the most 
difficult to achieve. Option 1 (better controllin g) is probably only an intermediate solution 
 
EN 58   EN because it may detect failures in  Member States' existing systems and has then to be followed 
by infringement procedures and at the end a switch of the existing procedures to a better 
system. Option 3 seems to provide for a possibl y better and more secure system which could 
be achieved without harmful legal procedures. 
Nevertheless, it might be useful to combine Option 3 with elements of Option 1 (audits, 
reviews). During the public cons ultation, most stakeholders ar gued that physical commingling 
of emergency and commercial stocks does not po se a problem provided that such stocks are 
properly recorded and controlled. Allowing commingling would reduce the necessity of 
building additional storage facilities in the Member States concerned and thereby would reduce financial and environmental implicatio ns. However, commingled emergency stocks 
have to be strictly controlled  in order to ensure that such  stocks are not moved without 
government consent. 
 
EN 59   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 (depending on 
implementation) 
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 8: Comparison of the options' impacts 
 
EN 60   EN 7. M ONITORING AND EVALUATION  
The Commission will monitor the impleme ntation of the proposed changes by: 
• Regular analysis of Member States’ reporti ng on the level and composition of emergency 
stock;  
• Periodic review Member States’ emergency systems; 
• If doubt arise about reported stock levels, audi t of Member States’ stock levels performed 
by or on behalf of the Commission; 
• If necessary, infringement procedures.  
The above activities would be partly carried out  in conjunction with the IEA Secretariat. 
Meetings of the Oil Supply Group will be  utilized to follow up and discuss the 
implementation and share experiences of Member States.