EU Proposes Law to Publish Commercial Oil Inventories

By Jonathan Stearns

Nov. 13 (Bloomberg) -- The European Union moved closer to publishing weekly data on commercial oil stocks in a bid to match U.S. practices and enhance market transparency.

The European Commission included the provision in a draft law that also seeks to improve the EU's ability to cope with any oil-supply disruption. Weekly publication of commercial inventories may start within three years, depending on how long it takes EU governments to approve the law and the procedural details the commission plans to draw up afterward.

Europe needs ``reliability and transparency on available stocks,'' the commission, the 27-nation EU's regulatory arm, said in a statement today in Brussels. The plan is to publish commercial inventories each week on an ``aggregated'' basis.

The proposal follows four years of discussions in the EU, which relies on imports for half of its energy, about increasing market transparency. The initiative was accelerated by subsequent price disputes between Russia and transit countries Belarus and Ukraine that threatened disruptions in oil and natural-gas supplies.

The U.S. Energy Department and the American Petroleum Institute each publish weekly commercial oil-inventory data that provide a snapshot of supplies in the country that uses about a quarter of the world's oil. Oil traders watch the reports, which move prices.

Start Date

The commission stopped short of specifying a procedure for disseminating data every week on commercial oil inventories across the EU, saying more study is needed of the best method. The commission intends to push through approval of the details within months of any final endorsement by national governments of today's draft law, which entails a commitment to begin publishing weekly data.

The actual start date also depends on whether the EU decides to let this provision enter into force before the rest of the law, which is due to take effect two years after any approval by national governments. Were such a step to be taken, and the law approved next year, publication of the information could begin before the end of 2009.

The draft legislation also aims to strengthen EU policy over emergency oil stocks, which can be held by governments or industry. EU law already requires countries to hold at least 90 days of reserves.

Calculation Method

The commission recommended that governments hold some of these stocks. A review is planned after three years on whether this should become an obligation.

The commission also proposed giving itself the authority along with national officials to verify that governments hold and manage their emergency stocks properly.

In addition, the draft legislation would change the method for calculating the minimum 90 days of strategic stocks by basing it on imports instead of consumption. This is to bring the EU practice into line with that of the International Energy Agency.

Furthermore, the commission proposal would prohibit emergency stocks that are held by companies from being used for other purposes such as collateral for loans.

``All this will make oil supplies more certain for European citizens and ensure that emergency stocks are fully available and can be mobilized when needed,'' the commission said.

Energy Security

The oil-stocks proposals are part of an EU energy-security package that also includes draft legislation to promote energy savings. The EU aims to reduce energy consumption by a fifth by 2020.

One new proposal would expand a 2002 EU law on the energy performance of buildings. Another would widen the scope of 1992 European legislation on labeling the energy efficiency of household appliances including refrigerators and televisions to cover other goods with an impact on energy consumption such as elevators, windows and water pumps.

A third draft law would introduce labeling on the fuel efficiency of automobile tires. Tire manufacturers would be required to declare the fuel efficiency, wet grip and external rolling noise performance of tires.

The package also includes policy-option papers on gas, wind power and nuclear reactors as well as on European energy networks in general.

`Collective Approach'

``We need a collective approach to key infrastructure to diversify our energy supply, pipelines in particular,'' said commission President Jose Barroso.

The commission said a new ``Southern Gas Corridor'' to tap supplies from the Caspian region should be among six priority network projects. The commission pledged to work with the countries concerned to obtain ``firm commitments'' within a year for constructing the OMV AG-led Nabucco pipeline, which aims to bring Caspian gas via a route from Turkey through southeast Europe starting in 2013.

In that context, the commission also said it would consider establishing a ``block purchasing mechanism'' for Caspian gas while ensuring ``full respect of competition rules.'' The idea for such a consortium may move ahead in late 2009 or early 2010 after a study involving groups including the World Bank, said EU Energy Commissioner Andris Piebalgs.

A North Sea offshore power grid is also among the priority projects. The commission called for a blueprint to be developed for connecting national electricity grids in northwestern Europe together and plugging in planned offshore wind projects.

The other four priority network projects are a Baltic interconnection plan, liquefied natural gas capacity, a Mediterranean ``energy ring'' and central and southeastern Europe gas and electricity interconnections.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net