United Kingdom's legislation on oil security

According to section 3(1)(b) EA the powers of the EA may be made available to their fullest extent when there exists or is imminent in the UK an actual or threatened emergency affecting fuel or electricity supplies which necessitate that the UK government should have at its disposal exceptional powers for controlling the sources and availability of energy. Before the powers can be used, an Order in Council (a further piece of legislation) must be made.

Alternatively, the EA’s provisions may also be utilised if the implementation of UK obligations within the legal framework of the European Union or the International Energy Programme (IEP) of the International Energy Agency (IEA) so require (section 3(1)(a) EA). Using the powers for these purposes would also require an Order in Council.

General

Section 6 EA empowers the Secretary of State to direct persons supplying, producing or using crude liquid petroleum or petroleum products to make such arrangements with respect to such a person’s UK oil stocks that enable those stocks to be brought within a specified time to, and to be maintained at a specified level (section 6(2)(a) EA). Substantial suppliers to the UK market, which are defined as persons who supplied crude liquid petroleum or petrol products exceeding 50,000 tonnes to the UK in the course of carrying on an undertaking during a relevant period (Article 16(1)(a)-(b) OSO), may also be directed to create emergency stocks (section 6(2)(b) EA).

Storage Agency

The United Kingdom does not have a Central Stockholding Entity. Instead the UK fulfils its stockholding obligations by imposing stockholding obligations on commercial entities. 

Storage Quantity

Under EU legislation, the UK is required to hold 67.5 days’ domestic net consumption (61 days plus 10 per cent). The UK government directs substantial suppliers to hold stocks to meet its international stocking obligation. A minimum of 22 days’ of stocks must be held as finished products.

Availability of stocks

Emergency stocks must be held in such a manner that they are available to and physically accessible by the person stocking them at all times (Article 3(1)(d) OSO).

Storage Locations

With respect to the mode of storing oil stocks, Article 5(1) OSO incorporates provisions of Annex III to the 2009 Directive 119/EC by providing that stocks must be held in specified locations including inter alia refinery tanks, bulk terminals or inland ship bunkers (cf. Articles 5(1)(a) to (i) OSO).

Sale of excess stocks

N/A.

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

Domestic

Reporting duties

Persons carrying on an undertaking relating to crude oil or oil products may be ordered to keep books and accounts or to furnish information concerning such stocks (section 18 and paragraph 1, Schedule 2 EA). The EA further bestows upon the Secretary of State (or a person authorised by the Secretary of State) the power to require persons to deliver documents and to share such information as is required in order to ensure compliance with any provision made under the EA (section 18 and paragraph 2, Schedule 2 EA). For the same purpose similar powers exist concerning access to premises in order to make such inspections and enquiries as are necessary (section 18 and paragraph 3, Schedule 2 EA).

Enforcement

Section 18 EA stipulates various criminal offences associated with contraventions of the provisions of the EA. Section 19 specifies the penalties associated with such offences which range up to an unlimited  fine,  imprisonment for a term of up to two years, or both. Moreover, the OSO provides that persons who hinder the transfer or release of emergency or specific stocks in times of emergency without reasonable excuse commit an offence (Article 17 OSO). The maximum penalty for such an offence is an unlimited fine. The UK’s 2015 Audit and Enforcement Policy for Compulsory Oil Stocking Obligations contains further details concerning the monitoring and enforcement of persons obliged to hold emergency stocks.

Regional

European Union

As a Member State of the European Union1, Council Directive 2009/119/EC obliges the UK 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.

The UK’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 International Energy Agency (IEA), the UK is obliged, pursuant to article 2 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 (article 32 IEP) on a continuous basis and the IEA monitors Member countries’ compliance with the IEP.