Overview of IEA Oil Emergency Procedures and Measures in by vev19514

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									        IEA/China Seminar on
Oil Stocks and Emergency Response

      Overview of IEA Oil Emergency
        Procedures and Measures
        in IEA Member Countries

                  Kristine Kuolt
            Deputy Head of Division
      Emergency Planning and Preparations
          International Energy Agency

              9-10 December 2002
                  Beijing, China            1
 IEA Emergency Response System
The basic elements of the scheme cover:

        Maintenance of emergency reserves and a plan for
        coordinated use (stockdraw)

        Other national measures including demand restraint,
        fuel switching and surge oil production

        Operation of effective National Emergency
        Organisations

        Mechanism for industry advice and operational
        assistance (Industry Advisory Board and Industry
        Supply Advisory Group)

        System for reallocation of available supplies if      2
        necessary
National Emergency Organisation

 Established on stand-by basis in each
 participating country by Governments to:

   Co-ordinate emergency operations;

   Collect and submit emergency data;

   Implement national demand restraint measures;

   Organise national emergency oil sharing;

   Liases with IEA Secretariat and reporting and
   non-reporting company affiliates.

                                                   3
IEA Demand Restraint Measures

    Most Members have statutory powers to initiate demand
    restraint measures in both sub-crisis and supply crisis
    situations

    Oil prices have been deregulated in most IEA economies. It is
    generally accepted that price increases would assist in the
    supply demand balance.

    Persuasion and light handed measures are now preferred.

    In a severe disruption economies have the authority (some
    stand- by ) to quickly invoke more compulsory measures
    which include reduced speed limits, driving bans on certain
    days, restrictions on heating, lighting and air conditioning.

    While many members have rationing systems. These
    programmes have long lead times of 2-3 months or more.
                                                                    4
Other Emergency Response Measures

 IEA surge production capacity is rather small and
 concentrated in major oil producing countries (e.g.
 Canada, Norway, UK).

 IEA capacity to switch away from oil is also modest
 and limited mainly to power generation. Oil-fired
 electricity generation has been reduced from 25%
 of total electricity generated in mid-1970s to 7%
 now.

 In several IEA countries (e.g. Japan, Italy), the
 contribution of oil to electricity generation remains
 significant.
                                                         5
          Fuel-Switching

               Total IEA response:
        Fuel-switching out of oil = 1.2 mb/d
                Other
                 21%
                                      Spain
                                       8%




                                              Korea
United States                                  12%
     30%




                                      Italy
                                      13%

                        Japan
                         16%

                                                      6
  What is the IEA Stockholding
           Obligation?
Since 1980, each IEA Member must maintain oil
reserves equivalent to at least 90 days of net
imports (based on previous year’s average)

The calculation excludes marine bunkers and
naphtha and makes a 10% deduction for
unavailable stocks

Main types of stocks excluded are: oil not yet
produced, stocks held in pipelines and tankers at
sea, stocks held in service stations, retail stores
and by consumers, and military stocks

                                                      7
   How Is The Stock Obligation
           Monitored?
Members submit monthly oil data to the IEA
Secretariat. The time lag for data collection is two
months

Emergency Planning and Preparations Division is
responsible for the monitoring stocks with the
assistance of Statistics Division

Stockholding reports are produced quarterly and
submitted for consideration of the Standing Group
on Emergency Questions and the IEA Governing
Board
                                                       8
                 IEA Oil Reserves
           - key elements 1st July 02 -

 World oil stocks: 5.9 billion brl
 IEA stocks: 3.8 billion brl
 IEA net imports coverage 116 days
 IEA stock-holding:

       IEA stocks by holder 1st July-02                IEA stocks by type 1st July-02
Industry                                      Crude/
  68%                                          NGL
                                               58%



                                                                                         Total
                                          Govern                                        product
                                           ment                                          42%
                                           32%
                                                                                             9
Stocks Of IEA Net Importers:
    Days Of Net Imports
 150

                                                   1 April 2002
 120

 90
                       IEP MINIMUM
 60


 30

  0
  1975   1980   1985        1990     1995   2000



                Industry   Public
                                                                  10
Types of Oil Stockholding Systems

  Company stocks
     Compulsory stocks and commercial stocks

  Government stocks
      Financed with central government budget
  Held exclusively for emergency purposes

  Agency stocks
      Maintained for emergency purposes
  Held by public or private bodies


                                                11
Stockholding Systems by Member

 Only Company Stocks:
     Australia, Austria, Belgium, Greece, Italy,
     Luxembourg, New Zealand, Portugal, Sweden,
     Switzerland and Turkey
     (Net exporters:Canada, Norway and the UK)
 Company and Government Stocks:
     Japan and the United States
 Company and Agency Stocks:
     The Czech Republic, Finland, France, Hungary,
     Germany, Korea, the Netherlands and Spain
     (net exporter: Denmark)
 Company, Agency and Government Stocks:
 Ireland

                                                     12
                                                                    0%
                                                                         10%
                                                                               20%
                                                                               30%
                                                                                        40%
                                                                                                50%
                                                                                                         60%
                                                                                                               70%
                                                                                                                     80%
                                                                                                                           90%
                                                                                                                                 100%
                                                            Australia

                                                              Austria

                                                            Belgium

                                                             Canada

                                                             Greece

                                                                Italy

                                                        Luxembourg

                                                        New Zealand

                                                             Norway

                                                            Portugal

                                                            Sweden

                                                          Switzerlan
                                                                                              INDUSTRY




                                                              Turkey

                                                      United Kingdom

                                                         Netherlands

                                                              Ireland
                                                                                                                                        (1st July 2002)




                                                               Spain

                                                              France

                                                        United States

                                                             Finland

                                                            Denmark

                                                            Hungary

                                                               Japan
                                                                                                                                                          Industry v Public Stocks




                                                               Czech
                                                                               PUBLIC




                                                            Germany



                                                            IEA Total
     *Korea excluded for reasons of confidentiality




                                                          IEA Europe
13
          Government and
           Agency Stocks
Priority : government/agency stocks or
company stocks?
- Circumstances of a disruption
- National policy

Trend of reduction in government stocks

Move to shift responsibility to agencies

Declining share of company stocks,
increasing share of agency stocks

                                           14
   Compulsory Company Stocks

Company stocks are counted towards IEA the
IEA stockholding obligation.

Many IEA countries impose compulsory
stockholding requirements on companies

Compulsory stocks are normally commingle
with operation stocks so they are quickly
available to markets.
IEA members have powers to reduce
mandatory stock obligation on companies in
case of emergencies
                                             15
          Development of Stockholding
                  Systems
     Development of Member Countries' Emergency Stockholding Systems
                            - No. of Countries-

Stockholding System                                      1980       1985         1993         2002

Company Stocks only                                      11(2)1     11(3)        15(3)        14(3)

Company and Government Stocks                              6           6           4            3

Company and Agency Stocks                                  3           3           3          8(1)

Company, Government and Agency Stocks                      1           1           1            1
Number of the IEA Countries                               21          21          23²           26³

1. The numbers in brackets indicate net oil exporters. These countries have no stockholding obligation
in accordance with the IEP Agreement. Canada was a net oil importer in 1980. Since 1981, Canada,
together with Norway and the UK, have been net oil exporters. Denmark has also been a net exporter
since 1994. All of these countries, however, hold company stocks.
2. Finland and France formally joined the IEA in 1992.
3. Hungary joined the IEA in 1997. Czech Republic joined the IEA in 2001. Korea joined the IEA in
2002


                                                                                                         16
       Composition of Stocks
                    1st July 2002


100%

80%
        Crude Oil and NGLs

60%

40%
                                    Oil Products
20%

 0%




                                                   17
               Maximum Drawdown Profile for
                  IEA Public Stocks, 2002

       14000   12.9                    (SPR)     (JNOC)   (EBV)
                                       (CORES)   Other
       12000
                      9.4    8.6
       10000

       8000
kb/d




                                        5.4
       6000
                                                 3.7
       4000
                                                          1.6     0.8
       2000

          0
               1      2      3          4        5        6       7

                                   Months


                            Lead Time: 1-32 days
                                                                        18
         Public Crude Oil Quality

            Heavy
                                Light
             Sour
                                Sweet
              7%
                                 27%




Medium
                                Light
 Sour
                                Sour
 57%
                                 9%


                                        19
 Conclusion on IEA Measures
High flexibility in national arrangement of emergency
measures to meet IEP obligation

Stockdraw as effective and efficient emergency response

Diversity of stockholding arrangements with
development towards stockholding agencies

Strong statutory power over company stocks

Statutory power to initiate demand restraint measures

Surge production and fuel switching: supplementary
measures maintained in some Members

Standby National Emergency Organisation
                                                          20
 Regional Shares in World
 Primary Energy Demand
100%
        13
                  24
                              30        34
80%                                                  43
        18

                  19
                              11
60%                                     11
                                                     10

40%
        69
                  57          58        54
                                                     47
20%



 0%
       1971      1990        2000      2010         2030

       OECD    Transition economies   Developing countries

62% of the increase in world demand between 2000 and 2030
                                                             21
   comes from developing countries, especially in Asia
22

								
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