Frequently asked questions on supply during an oil crisis
An overview of frequently asked questions concerning oil crisis management and their answers.
An overview of frequently asked questions concerning oil crisis management and their answers.
An oil crisis is a situation in which the supply of crude oil and/or oil products is disrupted in a way that significantly hampers the normal distribution toward the end users.
Predicting the length of oil crises is no easy task. Their duration can vary depending on their cause and the solutions implemented.
International oil crises can occur for a wide variety of reasons:
In addition, national or local one-off situations (such as civil unrest, low water levels in certain rivers, or an accident in a refinery) can also lead to local supply problems.
In order to curb the effects of oil crises (such as in the 1970s), the International Energy Agency (IEA) was created within the Organisation for Economic Co-operation and Development (OECD).
The governments of most OECD member countries have adopted the Agreement on an International Energy Program. Each country that signs it (30 to date):
In addition to this IEA programme, the European Union (EU) has established comparable regulations to ensure security of supply for its member States. For members countries of these two institutions – which is the case of Belgium – both regulatory frameworks apply.
The IEA and the EU regularly evaluate their member states’ crisis policies.
APETRA (Agence de Pétrole – Petroleum Agentschap) manages Belgium’s emergency stocks. APETRA injects these stocks into the market when national or international oil crises occur to limit the crisis impact on society.
As a member of the International Energy Agency (IEA) and the European Union (EU), Belgium maintains emergency oil stocks to comply with the obligations imposed by these two international bodies. Belgian emergency stocks can be used:
These emergency oil reserves correspond to at least 90 days of net oil imports.
The minimum amount of emergency reserves that each country must maintain to meet International Energy Agency and European Union requirements represents the equivalent of 90 days of net oil imports in the preceding year. Countries are free to maintain larger emergency stocks.
Belgium complies with this 90-day requirement. However, the actual size of the stocks varies from year to year. On average, it is equivalent to 3.5 million tonnes of crude oil.
Belgium’s emergency stocks are made up of crude oil and refined petroleum products (such as diesel fuel).
Member countries can entrust the management of their emergency stocks to oil companies active in their country and/or to an agency created specifically for this purpose – which is the case in Belgium.
The International Energy Agency (IEA) and the European Union (EU) provide for two systems of emergency stocks management:
In Belgium, the emergency stocks are managed by APETRA (Agence de Pétrole – Petroleum Agentschap), a “société anonyme de droit public à finalité sociale” (public limited company with a social purpose).
These management tasks include:
APETRA works with the Directorate General for Energy of the FPS Economy on several fronts, including drafting and amending the national oil crisis policy and reporting to international bodies. APETRA maintains close ties with similar agencies in other IEA countries.
APETRA (Agence de Pétrole – Petroleum Agentschap) is a “société anonyme de droit public à finalité sociale” (public limited company with a social purpose) created by Belgium’s Law of 26 January 2006. The Belgian federal government is its sole shareholder.
APETRA’s activities are funded by a contribution on the volumes of transport and heating fuels (gasoline, diesel, heating oil, lamp oil, jet fuel and heavy fuel oil) sold in Belgium.
This contribution is calculated by the FPS Economy on a quarterly basis taking into account a number of cost factors. It fluctuates more specifically according to the international oil price and interest rate.
Belgian emergency stocks are located both within Belgium and in neighbouring countries. For stocks located abroad, agreements on control, declaration and repatriation in case of an oil crisis have been signed with the governments of the countries concerned.
Since the creation of the International Energy Agency, the emergency stocks have been deployed three times in an internationally co-ordinated action:
At a country level, Hungary, Germany and France – to name just a few – have recently injected emergency oil reserves into their local markets. These injections were in response to issues with a pipeline, low water levels in certain rivers or a state of civil unrest.
If there is a threat of an international oil shortage, the Governing Board of the International Energy Agency (IEA) decides whether there is an oil crisis. It then assesses whether a coordinated action should be undertaken and determines its scope, nature, and duration. When the IEA decides that collective action is necessary, Belgium’s participation is mandatory.
If Europe’s oil supply is threatened, the European Union (EU) can also declare an oil crisis. As most EU Member States are also members of the IEA, unilateral action by the EU is highly exceptional. As a general rule, when the IEA makes a decision, the EU follows suit. These two bodies work together closely, and the EU defends the position of its member states who are not IEA members.
In the event of national or local supply or distribution problems, national authorities have the authority to declare an oil crisis. In Belgium, it is the Federal Council of Ministers that decides whether the government should take action; the Federal Energy Minister then sets the concrete conditions for this action.
Yes. Other International Energy Agency and European Union member States can make their emergency reserves available to Belgium, and vice versa. These two institutions operate on the basis of international solidarity.
When an event occurs somewhere in the world that might have an impact on global oil supplies or supplies in International Energy Agency (IEA) member countries, the IEA’s Secretariat enters a state of alert. Events are closely monitored and their potential impact on oil supplies is assessed in light of the current state of the oil market and the level of stocks available. The IEA Secretariat shares this information with all its member countries.
If the event begins to show signs of becoming an actual oil supply disruption, the IEA’s Governing Board may decide to take “collective action”. When this occurs, the European Commission acts as a go-between between the IEA and
the EU member states who are not part of the IEA.
In Belgium, the state of the market and possible disruptions to this market are monitored by the National Petroleum Board (BNP). This body has a comprehensive view of the available commercial and emergency stocks, as well as of the oil operators and their infrastructure.
In the event of an imminent oil crisis, the BNP advises the Federal Energy Minister on whether emergency stocks should be used, how best to inject them into the market, and what quantities and period of intervention will be required. On the basis of this advice, the minister issues a decision that may or may not be made after discussion in the Federal Council of Ministers.
APETRA (Agence de Pétrole – Petroleum Agentschap), which manages Belgium’s emergency stocks, maintains stocks of crude oil and refined oil products. To a limited extent, it also acquires purchase rights on stocks held by oil companies (also called “tickets”).
APETRA’s emergency stocks are kept in Belgium or near the Belgian border. They can generally be transported in bulk.
To plan ahead for the possibility of an oil crisis, APETRA has implemented general terms of sale applicable to its emergency stocks. It has also concluded agreements with its potential buyers and optimised the underlying logistical aspects.
APETRA (Agence de Pétrole – Petroleum Agentschap) does not have its own logistical resources. Were an oil crisis to occur, APETRA would sell the oil products from its emergency stocks to market operators who then would distribute them as they do in normal market conditions.
APETRA, thus, sells them the amounts necessary to ensure proper supply levels in accordance with the strategic decisions made by the minister.
APETRA (Agence de Pétrole – Petroleum Agentschap) sells its emergency stocks at the going market price at the time of the oil crisis. They are sold to the operators who ordinarily supply the bulk of the oil market.
Emergency reserves cannot be used, whether nationally or internationally, for the sole purpose of curbing high oil prices.
Oil companies are legally required to comply with existing contracts (purchase or sale between operators, transport, distribution to end users). The use of emergency stocks simply aims to ensure the best possible supply of oil products.