PART A: Using a non-IEA country as a provider of ticket stock

5.PART A: Using a non-IEA country as a provider of ticket stock

5.1Current IEA rule for counting stock

The system relies on both the host country and the beneficiary country reporting to the IEA. The ticket contracts require the entities entering the contract to report to their respective governments and the IEA requires ticket contracts to be governed by a bilateral agreement between the countries involved meaning that both governments are cognisant of the undertakings they (and/or entities within their country) are making. These agreements must include a guarantee that the host country will provide the purchaser with access to the stocks when required.

The IEA defines the requirement of the bilateral agreements in the IEP Agreement as follows.

A Participating Country may credit towards its emergency reserve commitment oil stocks in another country provided that the Government of that other country has an agreement with the Government of the Participating Country that it shall impose no impediment to the transfer of those stocks in an emergency to the Participating Country.⁴

The IEP Agreement does specify what stock types can be reported in the IEA submission but doesn’t detail the reporting requirements. In recent information releases to IEA members⁵ the IEA outlined its requirements for counting stock in other countries when detailing the differences with the European Union compulsory stock system:

It further noted that in order for stocks in an “EU Member State not being an OECD Member country” to be counted:

“…the IEA must be able to verify the reports where the other country is not a Member country of the OECD. Therefore it is necessary to have the agreement of the European Commission to provide the IEA Secretariat with data of EU non-IEA Member States upon request.”

This has clarified that while a bilateral agreement is a necessity for stock held in another country to be counted, it is not exclusive to IEA members; it can include OECD non-IEA member countries (Chile being an example) and EU Members which are not OECD countries. However in these cases the IEA expect to be able to verify the stockholdings from stock reports it can obtain.

5.2Possible IEA requirements for acceptance of a non-IEA country as a ticker provider

IEA’s reporting requirements for stock held in another country indicates the possible requirements if the ticket system were to be extended to a country outside the current allowed grouping (e.g. a non-OECD and non-EU member). These requirements could include:

6.A bilateral agreement between the non-IEA, OECD or EU member country and the government which wanted the ability for it or its companies to hold stock in that country.

7.An agreement between the non-IEA, OECD or EU member country and the IEA for that country to report stocks monthly (at minimum the stocks under the contract) so the IEA would have assurance that the stock was being held for the benefit of the country in which entities were purchasing the tickets.

8.Possibly acceptance by IEA members (through adoption at the Governing Board level) that the new country is an acceptable location for IEA member countries to hold stock.

These principles would apply to both holding stock directly and through a ticket contract in another country.

Bilateral Agreement

A bilateral agreement is a critical requirement for the IEA agreeing to count stocks in another country. It would also be essential for the country wanting to hold the stock so it had some assurance the host country would honour the contracts in an emergency.

One of the key requirements for signing such agreements is to ensure they are consistent with a country’s laws. Some countries (e.g. South Korea and the United States) have laws that ban petroleum exports or give the host country first rights to all oil on its territory in an emergency. Such laws impose an impediment to the transfer of stocks held for an emergency by another country so a bilateral agreement can't be signed (at least, not one that would be sensible for the country wanting the stock).

Reporting

H&T cannot precisely define the reporting requirements the IEA may demand from a non-IEA member which wants to hold stock for an IEA member. However, we believe it may require:

All stock to be reported, not just stock held for IEA countries, so that the IEA can see the holding in the context of the country’s overall stock;

Stocks reported monthly as for IEA members; and

In the case of ticket stock, the IEA may want some assurance the stock is additional not just a ticket over stock that is held in the country anyway (it may be that the host country wants this as well so that it is not compromising its own oil security).

It may be the host country, rather than the IEA, which wants assurance that the stock ticketed is additional to normal commercial stocks. A host country would not want to find that its companies have issued tickets over stocks that would put its own security at risk in a supply disruption if the purchase options were all exercised. This could be managed through volume limits set in the bilateral agreement or restrictions on types of stock that could be ticketed.

IEA Acceptance

As noted in 5.1, the IEA has defined instances where stock can be held in countries which are not IEA members. For this to be expanded into a non-IEA country, as well as meeting the IEA’s internal requirements (a bilateral agreement and possible reporting), we assume it would have to be approved at the appropriate level in the IEA by IEA members (likely to be Governing Board as previously mentioned). It is likely this would need to be worked through with members at a technical working group level to address any issues raised before submitting the concept for approval.

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: