The UK Government wants to find out if its current system for oil storage is efficient enough or if Britain needs an alternative model.
DECC launched a new consultation for the future of the UK’s oil stocking system yesterday to get different views on whether the UK should have a system similar to that of other EU countries such as a centralised stocking agency.
Energy Secretary Ed Davey said: “The UK has a strong history ensuring a resilient and responsive oil stocking system that meets our international obligations and provides energy security.
“A large part of that success has been the close working relationship we have with industry. We are launching this consultation to ensure our oil stocking system continues to follow best practice, remains fit for purpose and provides the foundation to a vibrant UK oil industry.”
Under the terms of the Oil Stocking Directive, an EU member state is required to hold oil stocks equivalent to 90 days of average daily imports or 61 days of average daily usage. Members of the International Energy Agency (IEA) commit to storing emergency oil reserves of at least 90 days worth of imports and as a member state of the EU and the IEA, the UK is also required to hold emergency stocks for use during supply disruptions.
The UK is an oil producer, which reduces reliance on daily imports and according to DECC, the highest obligation the UK must currently meet is the EU requirement of 61 days of average usage. Companies must supply at least 50,000 tonnes of oil to the UK market for that.
The UK Petroleum Industry Association (UKPIA), which represents oil refining and marketing companies in the UK welcomed the consultation. Director General Chris Hunt said: “UKPIA would support the establishment of an independent stockholding agency to manage the CSO (Compulsory Stocking Obligation) going forward.”
Responses to the consultation need to be submitted to DECC by the first week of June. The news follows an oil and gas strategy announced by the Government last week, which is expected to help secure billions of pounds of future investment and thousands of jobs.