Will Australia have a strategic oil reserve before it is too late? (part 2)
In part 1 we talked about what action the government is taking to bring Australia back to the IEA 90 days oil stock requirement.
What was done so far
This website contains the relevant reports:
IEA International Energy Program Treaty
https://www.energy.gov.au/iea-international-energy-program-treaty
In July 2012 (under the Rudd government), just months after Australia permanently dropped below the 90 days mark, a report prepared by Hale & Twomey Limited (from New Zealand) was published titled:
National Energy Security Assessment (NESA) Identified Issues –
Australia’s International Energy Oil Obligation
30/7/2012
https://www.energy.gov.au/sites/g/files/net3411/f/nesa-identifed-issues-aust-energy-oil-obligation-2012.pdf
The report proposed 4 models with varying degrees of responsibilities, funding , stock type, location and split
- Model 1: Government responsible for the IEA stockholdings and uses ticket contracts to secure emergency stock above existing commercial stock levels.
- Model 2: Government responsible for the IEA stockholdings and uses both physical stock and tickets to secure emergency stock above existing commercial stock levels.
- Model 3: Combining government responsibility with an industry obligation and using both physical stock and ticket contracts for emergency stock.
- Model 4: There is an industry obligation which will ensure the target can be met with the option to use both physical stock and tickets to meet the obligation.
Tickets are option contracts in which a country or organization purchases an option to buy stock from a stock owner. The stock can only be released in an emergency (declared by the IEA), with the option holder able to buy the stock at market prices. The purchaser of the ticket is able to count the stock as part of its obligation to hold emergency stock and the seller of the ticket is obliged to subtract these ticket sales from their stocks. This is physically monitored by the IEA. When stock owners and purchasers are in different countries these transactions are called bilateral tickets and require government-to-government agreements between both countries that guarantee the purchaser can exercise its options when needed.
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