A large supply of energy is stored behind Europe – millions of tons of crude oil, diesel and other fuels stored for large supply crises
But as governments prepare to use these emergency reserves again, who really has the key?
Can Brussels order oil extraction in the market, or does the decision belong to national capitals?
The answer includes a complex combination of EU rules, national sovereignty and international co-ordination.
The European Commission determines rules and monitors whether member states maintain enough oil reserves.
However, the reserves themselves remain under national control, while large internationally co-ordinated rescues are managed through the International Energy Agency ( IEA), headquartered in Paris.
The decision to release the reserves and its organization belongs to the IEA. We are willing to collect the oil co-ordination group or, if necessary, the EU task force for energy security, further co-ordinate and assess the situation, a European Commission spokesman said on Monday.
Comments came after the G7 announcement that an estimated 100 million barrels of oil are expected to be marketed over the next four months.
Diesel reserves will be used earlier, with the aim of curbing price hikes and softening fears of cutting supply.
It has not yet been made clear how much crude oil and diesel oil will be released.
Before the official announcement, EU diplomats told Euronews that the amount was expected to be shared equally between crude oil and diesel.
In March, European countries contributed 107.5 million barrels to an emergency release of 400 million barrels co-ordinated by the IEA, as the US-Israel anti-Iran war triggered shocks in global markets.
The European contribution represented about a quarter of the total.
Of these 107.5 million barrels, 32.7 million came from state emergency reserves, while the rest of the mandatory reserves kept by the industry.
America contributed 195.8 million barrels, while the Asia-Peace Department contributed 108.6 million barrels.
90-day fuel
How much oil does Europe actually keep in reserve for emergency cases?
Under EU rules, each member state must maintain equal emergency reserves with at least 90 days of net imports or 61 days of internal consumption.
But there is no giant European oil reservoir that is controlled by Brussels.
The reserves are kept at the national level: directly by governments, through specialised national reserve agencies, or as mandatory reserves kept by private industry companies.
Their distribution also creates some important centres.
Out of some 39 million tonnes of metrics emergency dysel and gasoline reserves in the EU, equivalents to about 290 million barrels — France and Germany together hold about 35%.
Even smaller countries, such as Belgium and Malta, hold part of their emergency reserves in France and Germany.
This raises another question: If oil is stored in one country but belongs to another country, who decides when the reservoirs should be opened?
Eventually, major decisions remain in the hands of national governments.
Brussels can define rules, monitor reserves and co-ordinate governments, but the European Commission cannot simply order the market of millions of barrels of oil.
The reserves remain under national control. This means that governments decide when the reserves will be used and in what form the contribution of each state will be made.
The role of IEA
For a major international intervention, however, another actor comes into play: International Energy Agency.
A single country that extracts oil from its reserves can have limited impact on a global supply crisis.
That’s where the IEA comes in.
The Paris headquarters co-ordinates the release of emergency reserves among member states, enabling governments to pump large quantities of oil into the market in the same period.
It is IEA that manages the aspect of impact on prices, while member states participating in a possible release determine the level of transparency regarding concrete products to be released to the market, the European Commission’s spokesman said.
If a supply crisis is serious enough, the IEA Steering Board could approve a co-ordinated collective action.
In this case, the agency’s 32 member states contribute to the emergency response.
This mechanism has already been activated twice since U.S. and Israel’s attacks on Iran on February 28th, placing emergency oil reserves usually a slightly visible part of energy policy at the centre of government efforts to limit the consequences of the conflict.
Now the main question is how Europe will accomplish its share of the contribution.
A meeting between the European Commission, EU governments and oil industry representatives, which was originally scheduled for 15 October, is expected to take place at the beginning of next week, an EU official said on condition of anonymity.
The goal of the meeting is to assess how EU countries plan to meet their commitments to the IEA to extract the dysel reserves within the next 20 days, as well as plans for the next four months.
In short,
Brussels rules, but does not control the reserves.
Oil reserves are under the control of member states. National governments decide when and how to use them, while the IEA co-ordinates major international emissions to stem the consequences of a global supply crisis and stabilise markets. /Telegraphy/