ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(74)1961
Vol.1974/0317

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(74)1961 final
Brussels .27november 197^
ACOMMUNITY POLICY INTHE HYDROCARBONS SECTOR
AND DRAFT RESOLUTION OFTHE COUNCIL
(Communication from theCommission totheCouncil )
COM (7^)1961 final

CONSENTS
Pap-e
INTRODUCTION 1
I.Useofresources 3
II.Development ,ofreliablesourcesofsupply 3
IIT.Importsandexportsofhydrocarbons 5
IV.Thedevelopment ofinvestments :Refining.Transport
andDistribution 8
V.Apricepolicybasedonmarkettransparency 10
VI.TreasuresrecruirsdintheeventofPurmlydifficulties .12
AIPTT.X–DraftResolution onaCommunityPolicyforHydrocarbons

ACOMMUNITY POLICYIPTTHEHYDROCARBONS SECTOR
Introduction
1.Anumberoffactors,theresponsibility forwhichisdividedtoa
varyingextentamongstthepartiesconcerned,havemadetheworld
situationinthehydrocarbons sectorveryinsecure.Consequently ,
effortsmustbemadetomakesupplymorestableandtorestore
worldwideeconomicandmonetaryequilibriums thistaskisthe
responsibility ofallthevariouspartiesconcernedandentailsclose
cooperation betweenthem.TheCommunitymustplayafullpartinthis
cooperation .
Fromawillfordialogueandcooperationbetweenpartnerswiihcommon
orcomplementary responsibilities (producercountries,consumer
countries,industrialoperators),obligationsandcommitmentswillarise,
leadingtothesettingupofanewworldwideeconomicorder.
2.Constituting amarketof250millioninhabitantsattractingalmost40$
ofworldtradeinhydrocarbons ,andwiththestrengthderivingfromits
economicpowerandpoliticalinfluencewhichmustresultingreater
cohesion,abetterawarenessofidentityofinterestandthenecessityfor
greatersolidarity ,theCommunityshouldhavearealinfluenceinthis
direction.
ButthisrequiresaCommunitypolicyforthehydrocarbons sectorwhich
mustbebuiltonthreemainpillars:
–relationsbetweentheCommunityandexportingcountries ;
–relationsbetweentheCommunityandimportingcountries ;
•–aCommunitysupplypolicy.
3.ConcerningthefirsttwopillarsofaCommunitypolicyftheCommissionhas
proposeditsownguidelinesonseveraloccasionsincommunications tothe
1Council.Theseguidelinesarefoundedonthenecessityforcooperation
– ./.
DonC0M(73)1320 ,C0M(7A)90,C0M(74)110.

withimportingcountries-whetherindustrialized ordeveloping–and
withproducingcountries ;theyshouldbeexaminedbytheCouncilwith
theleastpossibledelay.
Withthisinmind,theCommissionisconfiningthiscommunication to
problemsrelatedtoaCommunitysupplypolicy.,Itemphasisesthatthe
actionsproposedinthesupplyfieldareentirelycompatiblewithits
guidelinesforexternalrelationsandemphasisesalsothatinternal
progressiscloselylinkedwiththedevelopment oftheexternalaspects
ofCommunitypolicy.
TheCommunitysupplypolicymustgenerallyalwaysdependuponthesupply
ofsufficient anduniformly–basedinformation ,thewidestpossible
consultation amongtheauthorities ,andbetweenthelatterandbusinesses.
Thepurposeofthisconsultation mustbetomaintainandtoimplement
progressively andunrestrainedly behaviourwhichrecognises ■–withinthe
rulesoftheTreatyboththepubliointerestandthelegitimate
interestsofindustry.
ThustheCommunitymarket,whichcaninnosensebeisolatedfromthe
worldMarket,must
•–bytheunityderivedfromthefreemovementofgoodskeepits
attractionforbusiness;
permitfaircompetition bywhichconsumerscanbenefitfromthebest
longtermsupplyconditionsandbusinessfromtheabilitytodirect
theiractivitywiththemaximumofdiscretion,compatiblewiththe
publicinterest ?
displayasufficienttransparency ,sothatthepublicauthorities can
assurethemselvesofitsconformitywiththeobjectivesoftheenergy
policy.
Wherenecessary,the.seprinciplesimplytheavailability ofthemeansof
action,whethernationalorcommunity.
Thisgeneralphilosophyfindsexpressioninthevariouscomponentsofa
commonsupplypolicyinthehydrocarbons sector.

3–
•Useofresources
Thechange■-doubtlessapermanentone>–fromaplentifulandcheap
supplyofhydrocarbons toasituationwherethereispressureasregards
bothquantitiesandespeciallypricesroust,inviewofitspolitical,
economicandfinancialimplications ,leadtopracticalattempts,which
must,asfaraspossible,beharmonizedatCommunitylevel,toeliminate
wasteandmakerationalus8ofhydrocarbons *Theresultshouldbeto
limit,ifnottostabilize,theincreaseinnecessaryimports.
>–Stepstoeliminatewaate,wheresomeMemberStatesarealreadysettingan
example,shouldbebasedprincipally uponanextensiveinformative campaign.
Ultimately ,however,therecouldbenoquestionofrulingoutmore
restrictiveadministrative measures,takingtheformofprohibitions orof
priceactions.Thistypeofaction,whichisbothnecessaryforeconomic
reasonsandbecauseitdemonstrates anessentialday-to-daysolidarity ,is
envisagedintheCommission' scommunication ontherationaluseofenergy
(DocC0M(74)1950final).Itisimportantthatsuchmeasuresshouldbe
takenbothatthenationalandCommunitylevelsinordertoavoidany
freshdistortionsofthemarket;itisimportantalsototakeaccountof
thesocialeffectsofsuchmeasuresandtoadoptthemifnecessary.
■–Effortstoachieverationalutilization ,ontheotherhand,arebynature
moreeconomicandtechnical;theyBeektodrawthemaximumuseofthe
availableproducts,improveefficiencyandreducewaste.Asregards
makingthebestuseofproducts,theCommissionhaspreparedproposalsfor
twoDirectivesonlimitingtheuseofnaturalgasandfueloilinconvent­
ionalpowerstations.
Astotheimprovementofefficiencyandreductionofwaste,thisisabasic
issue,theimportanceofwhichgoesbeyond ,thehydrocarbonssector:specific
examplesarealsogivenintheCommission *scommunication ontherationaluse
ofenergy.Inordertobetrulyeffectiveandtopreventduplication ,
theseschemesshouldbepursuedeitherbytheactionsofpublic
authoritiesorbyrelyingontheintelligentself–interestofthose
concerned.
Development ofreliablesourcesofsupply
Itisimportanttomaximise,althoughonthebasisofsoundeconomiccriteria,
thecontribution madebyhydrocarbonssituatedwithintheCommunitytothe
energysupply.Thisgenerallineofconductoatersfortheneedtoenhance

Communitysolidaritygenerally,inwhichenergy,despiteitsimportance,
isonlyoneelement.Thepolicymust,inanyevent,bedirectedbothto
thefurtherdevelopmentoftraditional resouroesandtothedevelopment
fromscratchoi"new,moresophisticated techniques.
–Thesubstantialriseinhydrocarbons pricesshouldmakecertain
discoverieseconomicallyinteresting (e.g.,byincreasingthesizeof
recoverablereserves),andmakeprospectinginzoneswhichhithertohave
beenpartlyortotallydisregarded amoreattractiveproposition .Any
increaseinrecoverablereservesrequiresthecompaniesexploitingthera
toconductareappraisal ,theconclusionsofwhiohshouldbepassedonin
amanneryettobedetermined,tothepublicauthorities ,thusmaking
possiblethejointconsultations whichtheCommission ,foritspart,
intendstodevelop.
TheincreaseinexplorationeffortrequirestheMemberStatestoadopt
aliberalpolicyasregardsthegrantingofexplorationlicencesand
operatingconcessions ,basedonawide-ranging andfrankconsultation
betweentheinterestedparties,observingtheTreatyrulesonnon-
discrimination andfreedomofestablishment .Ifinfutureitshouldbe
necessary,theCommissionreservestherighttosubmittotheCouncila
proposalforCommunityarrangements onthissubject.
Astothepossibility ofgrantingspecificfinancialaidtocertain
projectsofthistypewhichareespeciallyworthyofinterestbecauseof
theirpotentialcontributiontotheCommunity'ssuppliesand/orbecause
ofthecharacteristics oftheinterestedparties,theCommissionthinks
thisshouldbemetbytheextension,asitisproposingtotheCouncil,
ofthescopeofactivities(seeDocumentC0M(74')1962final)andthe
amountoffundingstipulatedintheRegulation onCommunityProjects.
Thislattershouldbeextendedto50.millionunitsofaccountayearfrom
1976onwards(seeDocumentCOM(74)final).
•–Researchintoandthedevelopmentofnewtechniquesisofparticular
importanceinthehydrocarbons sectorgiventhegrowthinoff-shore
•'exploration andproduction,inparticularonthedeepseabed.The

'-5-
Councildemonstrated ,itsunderstanding ofthisbyadoptingthe
Regulation onCommunityProjects,andtheinterestwhichthisRegulation
arousedinindustrywasreflectedinthetwenty-three applications
received.ExaminedbytheCommission ,theseapplications havebeen
passedontotheCouncil,andtheyhavebeenthoroughlydiscussedwithin
theCouncil'sWorkingPartyonEnergy;theCommission'hopesthatthe
Councilwillreachadecisiononthismatterduringthdsessionon
energyproblems.
III.Importsandexportsofhydrocarbons
Theactionrequiredisbasedontheprovisionofinformation ,onsufficient
jointconsultation ,ontheinstruments ofacommercialpolicyandonthe
.enhancedpromotionofCommunity–orientatedoperations.
(a)Theprovisionofinformationandjointconsultationarisinginconnection
withthesemattersisalreadyextensivebutmustnevertheless befurther
TheCommunityisalreadyprovidedwithinformation onaregularbasisby
virtueofEECRegulation1055/72adoptedbytheCouncil.This
Regulationhasprovedbotheffectiveanduseful.Theremight,however,
beacaseforamendingittocaterforthenewsupplyconditions.The
provisionofinformation onaregularbasisshould,inaddition,be
extendedtoimportsofrefinedpetroleumproductsandtoexportsof
hydrocarbons ;theformerwillprobablyprovetobeofgreatimportance,
thelatternotinconsiderable .Thisisthepurposeoftwoproposals
senttotheCouncilbytheCommissioninJuly1973subsequently
amendedtotakeaccountoftheviewsexpressedbytheMemberStates'
experts.
Jointconsultationisalreaelypractisedforthistypeofinformation :
itisconductedwiththeMemberStatesbymeansofperiodicreportsfirst
Jointconsultation withindustryshouldbeinstitutedwithoutdelay,by
meansofmeetingssimilartothoseonpricesrecentlyheldonatrial
Suchjointconsultationwithindustrywill,moreover,beameansof
escapingfromtheinevitablyrigidformatofregularlysuppliedinformation
andwillalso,forexample,beawaytohaveanexchangeofviewswitextended.
/discusnedwithintheEnergyCommitteeandthensenttotheCouncil.
basis.

1–6-
industry onforecasts ofimports forfive years ahead ,orondraft
agreements giving practical expression toaCommunity supply strategy .
(b)Commercial policy must ,according totheunequivocal provisions ofthe
Treaty ,bebased upon uniform Community principles .This matter raises
both quantitative questions andtariffs oncustom' sissues .
Thequantitative aspect isdealt with inthe same wayfor allhydrocarbons
(crude oil,refined petroleum products andnatural gas)intheproposal
1from theCommission totheCouncil ,inAnnex IIItothe "NewStrategy ".
Forboth imports andexports ,monitoring isproposed bymeans ofthe
automatic granting ofanimport orexport licence .Provision ismade
forsafeguard measures inthe event oftheCommunity 'ssecxirity ofsupply
being threatened .Intheopinion oftheCommission ,this system hasthe
merits ofsimplicity ,liberality andcompatibility with therequirements
ofagenuine supply policy .
Themonitoring system forhydrocarbons will make itpossible ,inthe
light ofthequantitative objectives fortheCommunity adopted bythe
Council ,toensure that imports andexports asawhole areinline with
theindustry 'sannual forecasts andwith thesaid objectives andwill also
provide anopportunity ,intheevent ofdiscrepancies ,toenquire about
thereasons ..Itwill thus bepossible ,bymeans ofthepermanent
statistical instrument provided bythemonitoring system ,tovary the
objectives ofthe Community' senergy policy ifnecessary .
Thetariff orcustoms problem arises only inconnection with imports
anddiffers according towhether natural gasandcrude oilorpetroleum
products areconcerned .
Crude oilandnatural gasareimported free ofduty andthis system which
isconsolidated under theGATT could notpossibly bealtered .
Imported petroleum products ,ontheother hand ,aresubject toacustoms
duty averaging approximately 3*5%•Thepresent system displays very
great diversity ,varying from thegeneralized preference system to
importation atnormal rate ofduty ,with ,.,inbetween ,complex and
DocCOM(74)550 final•Λ

'-7-
diversesystem3(preferentialagreementsatzeroorreduced,rateofduty.
1intheformofquotasorceilings).
Inviewoftheimportancethatproducercountriesmayattachtorefining
theirownpetroleumproductsandtheprobableeffectsofsuchalikely
development ontheCommunity'srefiningindustry,itisimportanttogive
carefulconsideration tothisproblemandtoworkoutsimplesolutions
whichdotheirbesttomeettheconcernsofallpartiesinvolved.
Hereitwouldbeappropriatetoretaintheprincipleofthepresentcustoms
duty;despitethelowrate,itseffectsarefarfrombeingnegligible ,
owingtotheriseinoilprices.ItprovidestheCommunitywitha
bargainingcounterfornegotiations withtheproducercountriestowhich,
inturn,itisanincentivetoopennegotiations andinanyeventitgives
asignificant degreeofprotectionfortheCommunity'srefinerycapacity
(thereisathreatofasurplusdevelopingifpresenttrendscontinue).
Whetherwithintheframeworkofgeneralisedpreferencesorwithinthatof
preferential agreements ,theaimcouldbetoinstituteauniqueregimefor
agreementswithproducingcountries,whichcouldbetheformofaceiling
whoselevelcouldbecalculatedafterjointconsulatation withtheMember
States(whichsupposesadeeperconsideration ofthedevelopmentof
refinerycapacityintheCommunity).Thiscouldpermitacertain
necessarymarginformanoeuvreinre–establishing thetariffs,andshould,
therefore,receiveafavourablereceptionfromtheproducingcountries.As
tothedistribution ofthisceilingamongstMemberStates,thiswill
requirefromthoseresponsibleforenergypolicyintheCommunity(public
authoritiesandtheoilindustry)aveiyvaluable,periodicjoint
consultation ,providinganextremelysoundbaseforthenecessarydialogue
withtheinterestedproducingcountries.Thesearrangements wouldenable
theimportsintroducedwithintheframeworkofindustrialagreements
betweenCommunityactivitiesandtheproducingcountriestobetaken
accountof.
ThetariffquotaisallocatedbetweenMemberStatesandwhenthequotais
exceeded,thedutyisautomatically restored.Whereceilingsareimposed,
however,thereisnoallocationbetweenMemberStatesendoncetheceiling
isexceeded,thedutyisrestoredonlyattherequestofaMemberStateor
theCommission .

i–8–
(c)MoreemphasisonCommunity-orientated operations,whereimported
petroleumproductsareconcerned,wouldbe.theresultofthesystem
describedabove.Consideration shouldalsobegiventothisproblem
asregardsnaturalgasandcrudeoilInthisfield,however,the
actionrequiredfallsessentiallywithinthecompetanceoftheindustrial
concernsthemselves .
Withregardtonaturalgas,theCommunityisfortunatethatmanyofthe
importoperationseithercarriedoutorcontemplated aretheconcernof
widely–basedindustrialconsortia.Itisamatterforregret,however,
thatthisisnotalwaysthecase.
Asregardscrudeoil,itisdifficulttoconceiveofsuchconsortium-based
importoperations ,althoughtheymaybeoomeattractiveintheeventofthe
producercompaniestakingfurtherstepstowardsthedirectmarketingof
theirowncrude.
Thedevelopment ofinvestments ;Refining,TransportandDistribution
An,energystrategycanbeadoptedbythepublicauthorities !itcanbe
implementedonlyifdecisionsconcerningthenecessaryinvestmentsaretaken
ingoodtime,whichimpliesthatinvestorsmustbefairlywellinformedabout
themeasurestobeimplemented andnruethavesufficientfunds.
•–Aharmoniousexpansionofinvestmentsisnotpossibleunlesssufficient
infcmationisprovidedandunlessextensivejointactionprogrammesare
initiated.
AtCommunitylevel,prospectiveinvestorscouldbeprovidedwithinformation
moreeasilyifcommonobjectivesintheformoffiguressimilartothose
proposedbytheCommissioninitscommunication totheCouncilof5June1974
entitled'"TowardsanewenergypolicystrategyfortheCommunity"were
drawnt\pbytheCcrrmunity.InitsResolutionof17September1974,the
Councilstated,furthermore ,that"quantitative objectivesare
importantguidelinesforproducers..ofenergyintheCommunity"
(paragraph3oftheResolution).
\
./•

Thesupplyofinformation oninvestmentsisensuredbytheEECCouncil
RegulationNo1056/72,"bywhichtheCommissionisinformed ,eachyearfor
threeyearsaheadoftheinstalledcapacitiesorcapacitiesunder
construction orscheduledtobedecommissioned inthehydrocarbons
sector.Thisinformation coversoilandgaspipelines,storage
facilitiesandrefinerycapacity.
TheinformationtobeprovidedunderthatRegulationwouldnotbeofany
realvalueifitwerenotaccompanied byjointactionanddiscussions
ontheproblemsraisedandthesolutionstobeimplemented .Theobjective
istoensurethatthegrowthofinvestmentsiscompatibleandconsistent
withtheobjectivesandguidelinessetoutinaCommunityenergypolicy.
Itisobvioiisthatinthisrespect,theproblemofrefinerycapacityis
ofparticularimportance.
Atpublicauthoritylevelsuchjointactionnormallytakesplacewithin
theEnergyCommittee:itisapermanentfeaturetherebut,where
investmentisconcerned,itmaybescheduledtotakeplaceregularly,i.e.
whentheannualreportontheimplementation ofRegulationNo1056/72is
presentedtotheCouncilbytheCommission .
Jointconsultations betweenthepublicauthorities andtheindustrial
operatorsshouldbestartedquicklyinthewaydescribedintheNew
Strategy.Itshouldconcernlonger-term (e.g.fiveyears)investment
programmesbyindustryandshouldgraduallybeextendedtocoverallthe
fieldsinwhichitcouldproveusefulornecessary,givenageneral
acceptanceoftheproblemstobestudied.
Finally,oncethenecessarydiscussions havebeenheldwiththeproducing
countriesonimportantquestions,suchastheexpansionandlocationof
refiningcapacities ,suchjointactionshouldresultinthebest,though
flexible,useoftheinvestments ,andshouldthusmeettheproblemsboth
ofthepublicauthorities andoftheindustrialoperators.

-10-
i–Nomatterhowmuohinvestmentisrequired,mostofthenecessaryfunds
shouldcomefromthemarketitself*However,thisfundamentalguideline
presupposes anadequatepricelevelandtheabsenceofunjustified
distortions'ofcompetition betweenindustrialoperators.
Nevertheless ,thepublicauthorities mayprovideincentives ,particularly
whenCommunityoperatorsareendeavouring tocoordinatetheireffortsto
increasethesecurityofsupplies.Thisisalsotheobjectiveofthe
CouncilRegulation onCommunityProjects,andiswhytheCommissionis
proposingtoextendthescopeofthatRegulation(seeDocumentC0M(74)196
final).
Apricepolicybasedonmarkettransparency
Thisisafundamental issuetoallthoseconcernedwiththeproper
functioning ofthemarket.
Itisalsoaproblem,andaparticularly complexone,sincetheobjectives ■
pursuedmustbematchedtotheconcernsofallthoseinvolved.
Inanattempttoseetheproblemclearly,therefore,theseconcernsand
objectivesmustfirstbeanalysed,andthismustbefollowedbyanoutline
ofaCommunitypolicyofthiskindinspecificterms,oratleastofhow
suchapolicymightlook.
(a)Theobjectivesofapricenolicy
Theadoptionofcommoncriteriaortheacceptanceofharmonized
behaviourregardingpricesontheCommunitymarketisanecessityfor
consumers,thecompaniessupplyingthemarketandforthepublic
authorities .
<–Consumersmustbeprotectedagainstunwarrantedpriceincreases.
Pricetransparency basedonaclearestimationofcostsisabasic
factorhere:anestimation madeatthestageofpricesnetoftaxes.
Taxesanddutiesonpetroleumproduotsshouldeventuallybeharmonized
atCommunitylevelsothatthetrueeffectofthecostofenergyis

~11'-
comparableinthevariousMemberStates.Theactuallevelofthese
taxesand.dutiesisitselftheresultofbudgetaryrequirements orof
political–economicdecisions(taxationbeingregardedasan
instrumentofeconomicend/orenergypolicy)allaspectsofwhich
shouldbeclearlydefinedandexplainedtothepublic.
•–Thelevelofconsumerprices,excludingtax,mustbesuchasto
enabletheindustrytooperatewithanadequateamountofself-
financingsothatitcansuccessfully conductitspresentandfuture
operations onthehydrocarbons market,orevenontheenergymarket
ingeneral.Thisimpliesthattheindustrywillmakeknownandwill
explainobjectively areasonablelevelofself-financing ,aswellas
itsoverallfinanceneedsendtheinvestments towhichtheyrelate.
Moreover,thepolicyadoptedregardingpricesmustbesuchasto
provideasatisfactory degreeofcompetition betweenfirmsor
categoriesoffirmssupplyingthemarket.Inthisconnection ,there
aregroundsforfearingthatpresenttrendsinsupplyconditions may
resultinexcessivedistortions ofcompetition betweentypesof
company.Thisisadelicate,and.possiblyatemporary,problem;
itssolutionisinanyeventnotamatterforatraditionalprice
policy.
>–Finally,observanceoftherulesoftheTreatyofRome,togetherwith
thedesiretoensurethatthemarketoperatesproperly,requiresthat
thepricelevelsrulinginthevariousCommunitycountriesbe
sufficiently harmonizedastopermitthefreemovementofgoods,
withoutirrationalmovements.Thisistheresponsibility ofthe
publicauthorities .AtMemberStatelevel,bothpricesthemselves
andthepricingsystemmust,atoneandthesametime,providea
sufficientassuranceofsuppliesfortheimportingcountrieswithout
producinganyriskofcausingashortageofproductsintheexporting
countries .
Generallyspeaking,thelevelofpricesisdeterminedprincipallyby
costsaloneandbyactualsupplyconditions .
(b)ACommunitypricespolicy
InitsNewStrategy(pages31,33and34)theCommissionsetouttheguide­
lineswhichitthinksnecessarytoguaranteetransparency ofprices.The
Commissionconsidersthatthoseguidelinesarestillapplicablebutcannot

I-12-
makeanyconcreteproposalsbeforetheEnergyCommitteehasgiven
furtherdetailsonhowitwouldlikethissystemoftransparency to
work.
Nevertheless ,theCommissionnotesthatdiscussions havebeenbegun
oraretakingplace,eitherwithinorincooperation withtheEnergy
Committee,withnationalexpertsandrepresentatives ofcompanies,
thusenablingtheCommunitytomakeabetteranalysisofandbecome
morecloselyacquaintedwiththeconditionsgoverningtheformation
ofcostsandpricesofpetroleumproductsandthecomponentsofthose
costsandprices.
VT»Measuresrequiredintheeventofsupplydifficulties
ThemannerinwhichtheCommunity,assuch,reactedtothesupply
difficulties whicharosefromOctober1973onwardsshouldbealessonfor
thefuture.IntheopinionoftheCommission ,theoilcrisisshowedthe
needforadequateemergencystocksandforaspecialframeworkinwhich
thebenefitofgenuineCommunitysolidaritycouldprevailoverthe
temptationtoadoptdifferent '–orevenwidelydiverging <–national
attitudes.
Theavailability ofpermanentemergencystocksofaminimumlevelisthe
simplestandmosteffectivewayofcopingwithanysupplydifficulties .
Inthisfield,theMemberStatesoftheCommunityundertook,bythe
CouncilDirectivesof20December1968and19December1972,tohold65
days*stocksofpetroleumproducts,andtoincreasethisto90days'from
1January 1975•
Thisobjectivemustbeattainedandanydifficulties inthewaymustbe
overcome.Promthelegalangle,thisassumesthatallMemberStatesmust
enactthenecessaryregulations assoonaspossible.Fromthefinancial
andeconomicangles,thedifficulties experienced bycertainMemberStates
wouldbegreatlyeasedifmutualassistanceagreementsbetweenthemwereto
becomegeneral,asisprovidedforintheDirectiveof20December1968.
Furthermore ,theCommission ,whilecontinuingitsinvestigations intothe
bestwayoffinancingthese'stocks,will,induecourse,submittothe
Councilproposalstostandardize ,onaCommunity-wide basis,the
arrangements governingthewayofcalculatingandmanagingemergencystocks
andforcuttingoutanydiscrimination whichmayarisefromtheexisting
Directives .

-1"V-
Theimportance ofemergency stocks asameans ofreducing theeffects of
asupply crisis also provides the justification fortheproposal from the
Commission (Doc00^(73)2245 final )ontheholding ofstocks atacertain
minimum level atfossil-fired power stations .
Lastly ,theCommission considers that the share likely tobeaccounted for
bynatural gasin19^5 (25$oftheenergy balance ,40ofwhich imported )
should prompt theCommunity toexamine theadvisability ofholding stocks
ofnatural gas ,inaccordance with specific detailed rules .
Asudden drop inimports ofhydrocarbons ,which typifies adifficult
supply situation ,generally affects allimporting countries .Tocope with
such asituation ,far-reaching international cooperation isnecessary .
Theproblem ofallocating available oil supplies inthe event ofsupply
difficulties should therefore beexamined inparallel with that ofthe
Community 'sexternal relations .
Complementary action isneeded atCommunity level ,however .TheDirective
adopted bytheCouncil in1973 onmeasures designed tomitigate theeffects
ofsupply difficulties isafirst step inthis direction ;itsusefulness
was shown atthe time ofthe last crisis when itled toregular joint
consultations between therepresentatives oftheMember States .
These provisions should beadded to,however ,bybuilding onthelessons
learnt atthetime ofthelast crisis ,when Community solidarity and
observance oftheprovisions oftheTreaty (inparticular those relating to
free movement ofgoods )were sorely tried .
Tothat end ,anumber ofpolicy measures ofapermanent natiire mentioned
inthis document will beuseful ;monitoring ofimports andexports ,and
moves towards price harmonization areexamples .These moves should be
supplemented bytheadoption oftwoareas ofpolicy –making yettobe
implemented .The first ofthese would bedesigned toreduce energy
consumption intheCommunity :this would beachieved byharmonized measures

-14-
..tailored "totheinherentenergypatternofeachMemberStateandarranged
soasnottointerferewiththefreemovementofgoods.Thesecondwould
"beaninformation systemaboutand,ifnecessary,controlofintra-
Communitytradeincrudeoilandpetroleumproducts(seedocument
C0M(74)196final).

ANNEX
DRAFTRESOLUTION ONACOMMUNITY POLICYFORHYDROCARBONS
TheCounciloftheEuropeanCommunities ,
havingtakennoteoftheCommission'scommunication (DocCOM(7*01961final)
entitled"ACommunitypolicyforoilandgas":
1.Recognisesthatthiscommunication formspartoftheprocessof
formulating aCommunityenergypolicywhosepurposeistoguaranteea
_certainandlastingsupplyundereconomically satisfactory conditions ,
whichnewinformation ontheconditionsprevailingintheworldenergy
marketmakesmoreurgentandnecessary.
2.Observesthatoilandgaswillkeepapreponderant shareofthe
Community'senergysupplyforalongtimetocome.
3.EmphasisestheneedtoreducethedependenceoftheCommunityon
externalsourcesofoilandgassupplies.
4.InsiststhereforeonthenecessityforaCommunitypolicyforoiland
gastobedefinedandimplemented .
5.ConfirmsthataCommunitypolicyforoilandgasmustbebuilton
cooperation betweenconsumingcountriesandwithproducingcountries,
cooperationinwhichtheCommunityassuchandtheMemberStates
intendtoparticipate .
6.Declaresthatthispolicymust,attheCommunitylevel,findexpression
inasupplypolicybasedonCommunityandnationalmeansofaction,and
forwhichpreciseandconsistentinformation andaflexiblesystemof
consultation withindustrialinterests,onacontinuingbasis,are
indispensable .
•/.

RecognisesthatthisCommunitysupplypolicyimplies:
(a)anefforttoobtaintherationaluseoftheoilandgas
resourcesconsumedontheCommunitymarket;
(b)theoptimaldevelopment ,basedoneconomiccriteria,ofthe
Community'soilandgasresources,whichrequiresconcertedaction
bythepublicauthorities andtheoperatorsintheindustryand,
shouldtheneedarise,supportforthedevelopment ofnew
techniques(forexample,toexploittheseabedindeepwater)and
forintensifying theexplorationeffort;
(c)thesearchforadiversifiedandsureexternalsupplybyagreater
effortofinformation andconsultation ,byadoptingCommunity
measuresforcommercialpolicyandjointinitiativesforthe
industrialorcommercialactivitiesundertakenbyfirmssupplying
themarket;
(d)informationandconsultation onexistingorproposedinvestmentin
theCommunity,especiallyintherefiningsector;
(e)apricepolicyforconsumersbasedoncompetitionandontransparency
ofcostsandpricestoguaranteethatthelevelsofprices,basedon
theactualdevelopment ofsupplyconditions ,shallbecoherent
betweenMemberStates;
(f)theavailability ofCommunitymechanismswhich,shouldtherebesupply
difficulties ,ensurethattheunityofthecommonmarketwouldbe
maintained .
Invitesthenationalgovernments ,producers,importersandconsumersof
oilandgasintheCommunitytofollowtheguidelinesestablished above,
eachaccordingtohisresponsibilities andcapabilities .