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
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- 4.1Ticket market changes
- 4.2Ticket costs and availability
4.Summary of ticket marketsThe ticket market and the ticket contract structure are covered in detail in Section 2.2 of the 2012 Report. Ticketed stock (tickets) is the name given to a stockholding arrangement under which a seller agrees to hold (or reserve) an amount of oil on behalf of a buyer in return for an agreed fee. The buyer is purchasing an option to buy physical oil that can only be exercised in an oil supply emergency declared by the IEA. The purchaser of the ticket gets the right to count the reserved stock as part of its IEA stockholding commitment, and the seller of the ticket does not count the stock in its commitment. Tickets were developed in Europe as a flexible way for companies to manage their compulsory stock obligations. This is why they are linked explicitly to being exercised in an IEA disruption event and counting towards stock commitments. Ticket agreements can be between parties in different countries as long as the respective countries have a bilateral agreement allowing such deals (also referred to as a government to government agreement). The advantages and disadvantages of ticket stock are noted in Table . Table : Advantages and disadvantages of ticket contracts
With a stockholding in another country, the ticket buyer is dependent on the stock owner and the government of the host country honouring the contract in an emergency. However, this possible risk is mitigated by the contracts being made under the auspices of IEA membership in which countries have agreed to work together in an emergency. Ticket stock held offshore is only able to be exercised in an IEA declared emergency. If there was a domestic disruption in Australia, tickets could not be exercised. However if international markets are still operating (which they would be in a disruption only impacting Australia), normal commercial supplies can be obtained just as quickly (if not more quickly) than ticketed stock so there would be little value in having the option to exercise contracts in this circumstance. Offshore tickets do provide value in a global disruption either through release to add to the general market supply in the region it is held, or through purchase and shipping to Australia to supplement the restricted supply availability. Due to the limited number of countries active in the ticket market, particularly in the Asia Pacific region, this report assesses the value of opening up ticket markets in non-IEA countries within the region. This is covered in Section 5 (Part A). Ticket stock held domestically is likely to increase Australia’s stock holdings either through direct contracting or through the development of an industry obligation. As well as providing more stock towards the compliance commitment, it is likely to provide additional security against domestic distribution events. This is addressed in more detail in Section 10 (Part B). 4.1Ticket market changesThe main change that has affected the stock ticket market since the 2012 Report has been changes in the European compulsory stocks market at the end of 2012. The changes were made to more closely align European compulsory stock regulations with those of the IEA. The main impact of these changes on the ticket market has been a narrowing of the price differential between the cost of different types of product tickets and an increase in tickets offered for crude oil stock. 4.2Ticket costs and availabilityTicket purchasers pay a monthly fee based on a cost per tonne of stock held. This single fee covers all costs relating to holding the stock. There is not a regulated market for tickets – sellers and buyers deal directly or through a tender process. Direct deals are also facilitated by brokers who are active in this market. With no regulated market, price information can be hard to obtain. The 2012 Report gave a range for ticket costs between USD0.80-3.50/tonne/month based on a range of sources. For most of the time over the past couple of years, the oil market in Europe has been in 'backwardation' whereby it is more expensive to buy crude or product for immediate delivery than for a future delivery time. This means there is no incentive (actually a penalty) for a company to hold more stock than they need to. This is reflected in higher prices for tickets as lower volumes of discretionary stock are held in storage. For the preceding period (which covers most of the time in which prices were analysed in the 2012 report), the market was primarily in 'contango' where forward prices are higher than those for immediate delivery, therefore encouraging storage. Based on tender information provided by the New Zealand Ministry of Business, Innovation and Employment (MBIE), along with public agency information from Europe, the average ticket price since 2011 has been in the range USD2.00-3.50/tonne/month, which is at the higher end of the range analysed in the 2012 report.3 New Zealand has also noted in a recent tender (February 2013) that with the change in EU compulsory stock regulations there is no longer a significant difference in the cost of tickets for different products. In addition, at the time, availability of tickets was limited (although New Zealand did receive advice that this may have primarily been due to the uncertainty created by lack of clarity on the domestic application of the new European Union rules). The volume of tickets available in the market for purchase by Australia is not clear. While some countries (e.g. Ireland) have reduced ticket purchases in recent years it also appears that falling production in other countries (e.g. United Kingdom) and the new European Union rules may have reduced the overall ticket volume available. Until Australia actually enters the market, the volume availability and stock costs will remain uncertain. Given the uncertainty of availability, the cost assumption used in the 2012 Report—that the ticket cost will increase toward the cost of holding physical stock in dedicated tanks as volumes increase—continues to be used for this update. Table shows the update in ticket cost assumptions. Table : Ticket cost assumptions
In the Oil Storage Options & Costs Auxiliary Report, it was calculated that the cost for physical storage in Australia is equivalent to around AUD9.00/tonne/month for crude and AUD10.00/tonne/month for product. Based on the IEA cost estimates it may be a little cheaper in Europe. To reflect the ticket cost approaching the cost of physical storage we assume that if Australia requires ticket volumes over 1,000,000 tonnes the cost will be USD9.00/tonne/month. While this assumption is well above where ticket contracts are currently trading, like any commodity market if a large new buyer comes into the market, prices will rise. Ultimately the price will rise to the cost of providing more supply, hence the assumption of a similar cost of holding physical stock for large volumes. Exactly how much volume would shift the market this high will not be known until Australia enters the market. The prices could go above the cost of physical stock holdings if companies were also factoring in the stock price exposure between the start and end of the ticket contract or using a higher cost of capital to work out their cost. 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:
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