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Energy: Oil and Gas Storage

Volume 698: debated on Monday 21 January 2008

asked Her Majesty's Government:

What are the current levels of (a) crude oil; (b) petroleum products; (c) natural gas; (d) liquid natural gas; and (e) liquid petroleum gas currently maintained in strategic storage for United Kingdom use; what is the cost of storing each of these products; and, in the event of disruption to supplies, how long these reserves would last assuming current demand. [HL1203]

The UK does not hold strategic stocks of oil and gas. As a member of the European Union and of the International Energy Agency, the UK is required to hold oil stocks equivalent to 67.5 days' national consumption for release in the event of disruption of international supplies. It meets these obligations by directing oil companies to hold stocks under powers derived from Section 6 of the Energy Act 1976. These stocks are held by companies together with the stocks they hold for commercial purposes and the cost of storage is not separately recorded.

At the end of October 2007 the following stocks were available to the United Kingdom:

crude oil and refinery process oils—7.42 million tonnes;

petroleum products—7.66 million tonnes;

of which

liquefied petroleum gas—0.21 million tonnes.

These stocks were equivalent to 75 days' national consumption.

asked Her Majesty's Government:

Whether they plan to increase the levels of strategic storage of (a) crude oil; (b) petroleum products; (c) natural gas; (d) liquid natural gas; and (e) liquid petroleum gas. [HL1204]

Member states of the European Union (EU) are required to hold stocks of oil and oil products equivalent to 90 days' national consumption. Because the UK is a producer of crude oil its obligation is reduced by 25 per cent to 67½ days. As UK production declines, this reduction will be phased out and the obligation will gradually increase to 90 days when UK production ends.

As a member of the International Energy Agency (IEA) the UK is required to hold stocks of oil or oil products equivalent to 90 days' net imports. Unlike the EU, the TEA excludes “tank bottoms” from qualifying as emergency stocks; this effectively means the obligation is equivalent to 99 days' net imports. The UK became a net importer of oil and oil products in 2006 and had an obligation to hold stocks as an IEA member with effect from 2007.

Member states can use the same stocks to meet both sets of obligations. We currently expect the obligation to hold stocks as an IEA member to result in a net increase in the UK obligation from about 2016.

The Government believe that these measures are sufficient and have no plans to increase the levels of stocks held beyond those already referred to.

There are no similar requirements for natural gas or liquefied natural gas and stocks data are not supplied to the department.

asked Her Majesty's Government:

Whether any other country maintains strategic stores of crude oil, petroleum products or gas products within the United Kingdom. [HL1205]

The European Union Oil Stocking Directive 2006/67/EC allows member states to hold strategic stocks of oil and oil products in, or on behalf of, other member states provided that appropriate inter-government bilateral agreements are in place to release these stocks in an emergency. At present the UK has bilateral agreements with Belgium, Denmark, France, Ireland, the Netherlands and Sweden. Currently, Denmark, Ireland and Sweden hold some of their strategic stocks in the UK.

There are no obligations to hold strategic stocks of gas products.