France's legislation on oil security

This report is part of Oil Security Toolkit

Introduction

The French oil emergency response regime is governed primarily by the provisions of the French 2017 Energy Code (ECO). More detailed guidance is contained in various subsidiary decrees and orders including the Defence code, the 2015 Order on the Stocking of Petroleum Products (OSPP) and the 2016 Order relating to the Constitution of Strategic Oil Stocks (CSOS) in mainland France, Martinique, Guadeloupe, Guyana, Reunion Island and Mayotte (25 March 2016).

Relevant domestic legislation
Relevant European Union legislation
Other related links

Circumstances triggering the operation of the national emergency response system

The provisions of the French oil emergency regime are triggered by a major supply disruption, an effective international decision, an urgent supply shortage or a local supply crisis (article 2 OSPP).

According to article 1(2) OSPP, a ‘major and sudden drop in supply’ exists when there is a sharp and sudden reduction of supply with crude oil or petroleum products with respect to the European Union or to a European Union Member State irrespective of whether or not such a supply drop is accompanied by an IEA decision to release stocks or to take other measures.

According to article 1(1) OSPP, an ‘effective international decision to release stocks is a decision issued by the IEA’s Governing Board providing that crude oil or petroleum products should be made available to markets and/or that complementary measures should be taken.

Authority determining whether emergency exists

According to article 2 OSPP, it is the French Director of Energy who determines whether the conditions triggering the French emergency response system have been met and who subsequently decrees to use all or parts of the strategic stocks in order to alleviate the crisis.

Legal stockholding obligations

General

Article L642-2 ECO imposes a general obligation upon actors who carry out within France oil product related operations that attract domestic value added tax or deliver a petroleum product to aircrafts to contribute towards the constitution and conservation of strategic oil stocks. Those actors who qualify as warehouse keepers must delegate a part of their stockholding obligation to the Comité Professionnel des Stocks Stratégiques Pétroliers (CPSSP) (article L642-7 ECO, see also article D1336-49 Defence code). Alongside this delegated share, actors who qualify as warehouse keepers must also maintain their own stocks (these may vary from 44% to 10% of an actor’s total stockholding obligation). All actors who are not warehouse keepers for the purposes of French law, must delegate the entirety of their stockholding obligation to the CPSSP (article L642-8 ECO, see also article D1336-48 Defence code).

Storage Agency

According to article L642-5 ECO, the CPSSP ensures that the required emergency stocks are created and maintained. The CPSSP mandated the Société Anonyme de Gestion de Stocks de Sécurité (SAGESS) to serve as France’s Central Stockholding Entity and to acquire and to maintain France’s emergency stocks on behalf of the CPSSP.

Storage Quantity

Article L642-4 ECO stipulates that actors who carry out petroleum related activities in France mentioned in Article L642-2 ECO should store such quantities of emergency stocks that France maintains at all times emergency stocks of at least one quarter of the net quantities of crude oil and petroleum products imported in the previous year.

According to article 11 of the 2016 Order related to the CSOS in mainland France, Martinique, Guadeloupe, Guyana, Reunion Island and Mayotte (25 March 2016), emergency stocks must be composed of crude oil, feedstock and products mentioned in Annex 2.

Availability of stocks

According to article 12 CSOS, the physical accessibility of facilities storing emergency stocks shall be considered before authorising a given storage facility. According to article 1 CSOS, physical accessibility is ensured when emergency stocks can be distributed to end users and markets within such a time that ensures that the effects of serious supply disruptions can be alleviated.

Storage Locations

French primary legislation does not specify particular storage locations. However, according to article L642-6 ECO, the authority responsible for supervising emergency stocks must authorize the location of emergency stocks. Article D1336-53 Defence code provides for the possibility, under conditions, of storing stocks on the territory of other Member States of the European Union.

Sale of excess stocks

N/A

Mechanisms to address emergency

General

In the event that the provisions of the French oil emergency regime are triggered, the French Director of Energy may order the taking of various stock release measures (article 3 OSPP). Demand restraint measures are considered only in exceptional circumstances.

Stockdraw

Sale/Tender

According to article 3 OSPP, stock draw measures may be taken by ordering SAGESS to sell parts or all of its stocks (article 3(1) OSPP), by ordering SAGESS to transfer (by lendings or swaps) its stocks to designated petroleum operators (article 3(2) OSPP), by lowering the level of required minimum stocks (article 3(3) OSPP), by ordering oil operators to temporarily release some or all of their emergency stocks (articles 3(4), 3(6) OSPP), or by ordering SAGESS or the CPSSP to acquire additional stocks (article 3(5) OSPP).

Production Surge

N/A

Demand restraint

Demand restraint measures are provided by French legislation, but has not yet be implemented.

Fuel Switching

N/A

Relaxations of Road Traffic and Transport Laws

N/A 

Monitoring and enforcement of emergency regime

France’s emergency regime is monitored and enforced on the domestic, regional and international level. Each will be considered in turn.

Domestic

Reporting duties

Article D1336-55 Defence code obliges those actors who are obliged to stock emergency stocks to submit monthly reports to the Minister of Energy detailing how they fulfil their strategic storage obligation and the composition of emergency stocks. In case of an emergency, the obliged parties are to inform the stock to the Minister in real time.

Enforcement

The administrative authority tasked with supervising France’s oil emergency regime may impose fines upon any actor who fails to comply with the relevant provisions of the French ECO (article L642-10 ECO). In such cases, the fine shall correspond to value of the volume of petroleum products which a given actor failed to create or maintain (article L642-10 ECO).

Regional

European Union

As a Member State of the European Union, Council Directive 2009/119/EC obliges France to maintain a minimum volume of emergency oil stocks corresponding to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. The Directive also imposes strict requirements concerning the composition and location of the emergency oil stocks, so as to guarantee their availability and accessibility in case of need, among other provisions.

France’s compliance with the provisions of the directive is monitored and enforced by the European Commission. If a Member State is deemed not to be compliant with the EU Directive, the Commission might decide to initiate an infringement procedure, which might ultimately lead to refer the case to the Court of Justice of the European Union (articles 258-259, Treaty on the Functioning of the European Union).

International

The IEA

As a Member of the IEA, France is obliged, pursuant to article 2 of the International Energy Programme (IEP), to maintain oil reserves equal to 90 days of net imports of the previous year. IEA Members are obliged to submit information concerning their emergency measures to the IEA secretariat (art. 32 IEP) on a continuous basis and the IEA monitors Member countries’ compliance with the IEP.