London — Emergency oil stocks that the UK is obliged to maintain as a member of the International Energy Agency are "more than sufficient" to ensure security of supply after Brexit, when the country will no longer be obliged to hold the extra stocks required of European Union members, the government has told S&P Global Platts.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
Emergency or "strategic" stocks are seen as a buffer against disruptions to oil supply, and the UK is part of stock holding arrangements with both the EU and the IEA.
The amount of emergency stocks the UK has to hold is expected to fall by more than half after it leaves the EU, to around 5 million mt, as the IEA's requirements are less onerous than those of the EU, in volume terms and in the type of oil held.
The current expected date for Brexit is October 31.
Asked about post-Brexit stock arrangements, a spokeswoman for the Department for Business, Energy and Industrial Strategy said: "We will be leaving the EU on October 31 whatever the circumstances and we are making all necessary preparations to make sure we are fully ready. International Energy Agency obligations are adopted around the world and are more than sufficient to ensure security of supply."
The IEA requirement that members hold emergency stocks equal to 90 days of net imports is "widely considered appropriate to protect against oil disruption," BEIS said.
It added that the UK has the "necessary arrangements" in place with other EU countries that hold a portion of the UK's emergency stocks under so-called "ticketing" arrangements, such as Belgium and the Netherlands.
Unlike in the US, the UK devolves its stock holding obligations to refiners and importers. Over a quarter of UK emergency stocks were held in EU countries outside the UK at the end of 2016. Last September the government warned that Brexit could mean an end to those ticketing arrangements, prompting some to call for the setting up of a centralized stock holding agency.
However BEIS on Thursday offered reassurances on the issue.
Under IEA rules, "any oil stocks held outside the UK must be underpinned by a bilateral government-to-government agreement stating that countries will not obstruct the transfer of these stocks. We have the necessary arrangements in place with EU countries in which UK obligated companies, including refineries and importers, currently hold the majority of the oil stocks they choose to hold outside the UK," BEIS said.
As an EU member with its own crude oil production the UK is obliged to hold the equivalent of 67.5 days of oil consumption, or around 12 million mt, whereas as an IEA member it is obliged it to hold the equivalent of 90 days of net imports, or around 5 million mt.
-- Nick Coleman, firstname.lastname@example.org
-- Edited by Jonathan Loades-Carter, email@example.com