Oil supply fears trigger call for directive

Energy Commissioner Andris Piebalgs is to attempt to gain more control over member states’ oil reserves later this year.

The move comes after oil prices hit the psychological mark of $100 a barrel at the beginning of January, amid global worries over tight supplies and the weak US dollar.

The Commission’s previous attempts to wrestle more control over the strategic resource collapsed in 2003. The majority of the then 15 member states resisted attempts to place emergency stocks under the control of public bodies and to create a centralised EU management system for their deployment.

The oil stocks directive is to be resuscitated in the latter half of the year, but in a less ambitious form. A Commission official said that the new version, which has yet to be drafted, would focus on "reinforcing EU crisis response mechanisms and the availability of stocks in times of a crisis". It would also set stricter reporting requirements for member states.

Any moves to centralise control of oil stocks would ultimately be aimed at defending price stability in times of panic buying, but could be resisted yet again by member states. "We do not want centralised state control," said a Swedish diplomat. Sweden, which set ambitious targets last year for a wholesale move to renewable energies by 2020, has now passed on all of its oil reserves to industry.

The Commission would attempt to relieve member states concerns by working hand in hand with the International Energy Agency (IEA), which currently sets global rules for the sharing of oil reserves and collates information on stocks. Currently, 20 of the EU’s 27 countries are members of the IEA. "The problem is that some member states are members [of the IEA] and some are not," said the Commission official.

Ard van Bohemen, head of the IEA’s emergency division, said that moves to increase the transparency of EU stocks would be welcomed. "Our general viewpoint is the more transparency there is, the better," he said. "It’s not just for the Commission, but for all EU countries and countries outside the EU."

According to the Commission official, information on oil stocks is reported by member states with delay. "The problem we have is that they don’t deliver information on time. The information we receive is two months old which makes it out of date." The US, he said, is able to update stock reports on a weekly basis.

According to figures released last month by the IEA, global reserves of oil currently stand at 4 billion barrels. Of this, 1.5bn are emergency stocks in the hands of governments, while 2.5bn are commercial stocks held by industry.

"If you look at stock figures for last year, you see they are decreasing every month," said Van Bohemen. "The IEA would like countries to produce more, but they are withholding production that the market desperately needs. There’s a scarcity bonus on the prices that, to our minds, has to be removed."

Energy Commissioner Andris Piebalgs is to attempt to gain more control over member states’ oil reserves later this year.