Oil Security

Oil security

Oil security is an integral part of the Czech Republic’s energy security. Its importance is reinforced by the fact that virtually all the oil needed for Czech transport, industry and services is imported from abroad. Despite the fact that the importance of oil will gradually decrease due to the transformation of the energy sector towards net-zero carbon emissions, it will remain one of the key energy sources in the coming years.

The main elements of oil security are its legislative framework, the Administration of State Material Reserves (ASMR), oil emergency stocks, the National Emergency Sharing Organization (NESO) and the oil emergency response mechanism.

Legislative framework

Oil security is regulated by Act No. 189/1999 Coll. on Emergency Oil Stocks. In addition, Decree No. 165/2013 Coll. regulates the technical aspects of oil emergency stocks. Within the EU, this area is mainly regulated by Council Directive 2009/119/EC on imposing an obligation on EU member states to maintain minimum stocks of crude oil and/or petroleum products.

Administration of State Material Reserves

ASMR is the central stockholding entity in the Czech Republic. It ensures, besides other things, creation, maintenance and use of emergency stocks. It is a central administrative authority whose activities are financed from the state budget.

ASMR is also the administrator of the Standard Plan for major oil supply disruptions, where it is specifically responsible for the elaboration of the fuel rationing system. Its important task is to supervise the central administrative authorities (ministries), regional authorities and municipalities in the entire scope of preparation and implementation of measures related to the imposition of the fuel rationing system.

Oil emergency stocks

ASMR shall establish and maintain, in accordance with Czech and EU legislation, oil emergency stocks of at least 90 days of the average daily net imports of the reference year. For the long time, there are more than 2 million tonnes of crude oil and petroleum products in oil emergency stocks. Approximately half of this is crude oil, the other half is petroleum products – diesel, gasoline and aviation kerosene.

The release of oil emergency stocks can be made in three ways – release by sale, loan or transfer of management responsibility.

The proposal to release oil emergency stocks is submitted to the Government by the Chairman of the ASMR. In a state of oil emergency, stocks may be used only with the approval of the Government, which at the same time sets a deadline for the refill of the released stocks. In the absence of a declared oil emergency and when oil emergency stocks are above the required minimum level, the Chairman of ASMR may decide on the release.

NESO

NESO is an advisory body to the Chairman of ASMR. It monitors the situation in the crude oil and petroleum products supply and, in the event of serious disruption, it assesses and proposes the necessary measures. In particular in the field of oil demand restraint measures and oil emergency stocks release. It collaborates closely with the domestic oil industry, the International Energy Agency (IEA) and the European Commission (EC). An important task of the NESO is also to coordinate with the IEA and the EC in implementing collective actions.

The NESO includes representatives of the relevant central administrative authorities (in addition to the ASMR, e.g. Ministry of Industry and Trade, Ministry of Foreign Affairs, Ministry of Transport, Ministry of Defence, Ministry of Finance) and representatives of the Czech Association of Petroleum Industry and Trade (CAPPO). It covers mainly company Čepro, Mero ČR, MOL ČR, ORLEN Unipetrol RPA and Total ČR. The activities of the NESO are supported by a secretariat made up of the oil emergency department of ASMR and representatives of the Ministry of Industry and Trade and Czech Statistical Office. The NESO is chaired by the Director, Crude oil and Petroleum products, ASMR.

Oil emergency response mechanism

In the event of a shortage of crude oil and petroleum products resulting in a disruption of domestic supply, a state of oil emergency may be declared. It is declared by the Government by decree. The proposal to declare a state of oil emergency shall be submitted to the Government by the Chairman of the ASMR. The Government is authorized to impose oil demand restraint measures, such as limiting the maximum speed of motor vehicles on roads, restricting the opening hours of service stations, imposing regulatory measures on the drawdown of crude oil and petroleum products stocks from critical suppliers or imposing a fuel rationing system.

The oil emergency response mechanism is elaborated in detail in the Standard Plan for major oil supply disruptions. It is verified in the framework of regular IEA Emergency Response Exercises and the Visegrad Group (V4) exercises. Some aspects of this mechanism are also verified in national exercises of crisis management authorities.