This report was produced using data, forecasts and price information current at the time of writing (2013). It should be noted that these inputs are likely to
Download 130.89 Kb.
|
- Navigate this page:
- 2.Background
- 3.Methodology
- 3.1Scope of Work
- PART B: A domestic ticket market within Australia
1.IntroductionThis report is one of a number of reports updating the work covered in the National Energy Security Assessment (NESA) Identified Issues: Australia’s International Energy Oil Obligation report (2012 Report) produced by Hale & Twomey (H&T) for the then Department of Resources, Energy and Tourism in 2012. This auxiliary report updates the information on ticket markets, including updating the likely cost of tickets, before analysing two specific areas: PART A: Using a non-International Energy Agency (IEA) country as a provider of ticket stock PART B: Creating a domestic ticket market within Australia Using a non-IEA country as a provider of ticket stock is a new subject whereas the section on a domestic ticket market expands and clarifies work in the 2012 Report. 2.BackgroundAustralia is a member of the IEA where, as a signatory to the Agreement on an International Energy Program (the “IEP Agreement”), it benefits from the coordination of crude oil and petroleum product supply in the event of a major disruption to international oil markets. Under the IEP Agreement, member countries accepted a treaty commitment to hold crude oil and petroleum product stocks equivalent to a minimum of 90 days of the previous year's daily net import demand, and participate in collective actions1 initiated by the IEA during a liquid fuel emergency. In the last few years Australia has not achieved the minimum inventory commitment set by the IEA. With local production of crude and condensate falling and petroleum demand increasing, the commercial stocks held by market participants are no longer sufficient to cover the minimum commitment which is based on 90 days of daily net imports. The IEA includes 28 member countries and was founded in response to the 1973/4 oil crisis. The majority of members are in Europe as shown in Figure . Australia, Japan, New Zealand and the Republic of Korea (South Korea) are the only IEA members in the Asia-Pacific region. Figure : IEA membership map 
The majority of IEA member governments hold emergency stocks, although there are a wide variety of approaches to holding physical stock and obtaining storage facilities. Some governments have developed and own storage facilities; others lease storage from the market and leave it to private providers to own and manage the facility. In this case, storage facilities are normally secured through a tender process (which is applicable for both existing and new facilities). With regard to physical stock, many governments own the oil even if the storage is leased, unless they devolve the obligation to hold stock to the petroleum industry operating within the country. Even where industry is responsible for holding stock, there is usually some approved central structure (e.g. stock agency) to ensure the facilities and stock are developed and held in the most efficient way. Some IEA countries fund emergency stock from the general government budget, particularly non-European countries. However, many of these countries established reserves over a long period when petroleum prices were at lower levels. Direct funding via a consumer levy is common in Europe, and most IEA countries tax petroleum in some way. The levy provides an annual income stream to the government or stock agency. Large upfront costs associated with initial fuel purchases are funded by loans to the stock agency, which are repaid through the levy income. In the 2012 Report, four stockholding models were developed to cover a range of options that might be suitable to help Australian meet its IEA obligations. All four models used stock ticketing as a proportion of the stocks held because of the flexibility provided by stock tickets.
The 2012 Report briefly covered setting up a ticket market in Australia, whereas this report reviews options in more detail. Issues covered include: Benefits of domestic ticket stockholdings; Options for how ticket stock could be held in country; Market incentives to offset any deadweight costs of a domestic ticketing system; Length and pricing of ticket contracts; How a domestic ticket market could be integrated with other countries; and How ticket stock would be released in a disruption event. The scope of work for this report is outlined in the Terms of Reference at section 3.1. This report uses H&T’s knowledge of ticket markets developed through assisting with New Zealand’s stock ticket tenders, along with information available from the IEA on ticket markets and how individual IEA countries participate in ticket markets. Some central stock agencies also publish information around their activities in the ticket markets.
PART A: Using a non-IEA country as a ticket stock provider (with Singapore as a case study)Work addressed in the 2012 Report is further developed, and issues associated with Australia storing ticketed stock in a generic non-IEA member country are assessed. Pages 5 and 6 of the 2012 Report, for example, note that: “Storing and owning stock in another country only makes sense if there is a strong cost driver…a lower cost is only likely if a country has under-utilised facilities that could be leased at significantly lower costs than the cost of a new domestic facility”. Ticketing arrangements are examined via (i) the Australian Government (government-to-government agreement), and (ii) industry. Any implications associated with arrangements related to the ticket holder entity are noted. Other issues are also investigated, including (not limited to) shipping availability, reliability and cost, storage availability and cost, security of supply routes, other costs, emergency situation protocols (to prevent gazumping of supply and/or vessels, for example, and to guarantee delivery), and sovereign risk2. The Republic of Singapore is used as a case study, and the pros and cons of storing and accessing stock at the Singapore energy hub are investigated. PART B: A domestic ticket market within AustraliaThe rationale for requesting further information on this item relates to the following excerpts from the 2012 Report: “The options Australia has in developing a domestic ticket market are: Give the market an opportunity to offer ticket contracts to hold stock with the contract ensuring that stock is additional to normal commercial stocks in a similar manner to the New Zealand contract. Put stock obligations on the industry at some level that would then enable companies to make their own decision to hold more stock and offer ticket contracts if they choose to.” (p13). “Australia’s emergency stock volume requirement is expected to be significantly higher than the volumes reported as purchased by other governments… [the implications] could move the ticket cost up to an equivalent level as holding physical stock or even higher…Australia will need to carefully manage any entry into the ticket market including…pursue(ing) stock options within Australia under a ticket structure (also likely to be longer term) that may prove as cost effective as offshore options.” (p16). The concept of the formation of an Australian ticket market is expanded to cover:
Directory: Energy Energy -> Work performed under agreement Energy -> Energy Invention Suppression Cases Energy -> Privacy impact assessment: org name system name Energy -> Project Fact Sheet Sustainable marketdriven terminal solutions for efficient freight transport (smartset) Main information Energy -> Strategic Energy Policy Challenges for the 21 Energy -> Table of Figures Energy -> Office of Indian Energy Financial and Technical Assistance Fact Sheet Energy -> Doe agency plan appendix a doe best practices Energy -> Statement of work for the transaction advisor 0 the power africa program in liberia Download 130.89 Kb. Share with your friends:
|