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Ministers approve temporary solution for emergency oil reserves

The Slovak cabinet on Wednesday, October 17, temporarily resolved Slovakia’s obligation to hold emergency stocks of oil. Ministers approved a draft amendment to the law on emergency stocks of crude oil and petroleum products, the SITA newswire reported.

The Slovak cabinet on Wednesday, October 17, temporarily resolved Slovakia’s obligation to hold emergency stocks of oil. Ministers approved a draft amendment to the law on emergency stocks of crude oil and petroleum products, the SITA newswire reported.

Based on the amendment, the Transpetrol oil distribution company will temporarily help cover the state’s emergency oil stocks as required under European Union law. The State Material Reserves Administration and Transpetrol have agreed on the temporary use of crude oil owned by the latter, by which in 2012 and 2013 the obligation will be fulfilled to supplement emergency stocks by an additional 68,000 tons of crude oil according to a European Union directive. However, this is only a temporary solution and next year it will be necessary to finally resolve the question of financing the emergency oil stocks.

The Economy Ministry has suggested that a newly created agency could take over responsibility for emergency oil stocks in Slovakia. Apart from the state, companies operating on the oil market would also be part of it. The agency would be the owner of the emergency stocks, which it would buy using a commercial loan. It would take professional care of the oil stocks, and it would be managed by its owners. The state would have basic powers of veto, approval, and supervision over the agency. In the case of transformation from a purely state model, the current liquidity "frozen" in oil stocks would be released, which in the case of Slovakia, represents value of about €450 million, the ministry stated. The Economy Ministry said that oil companies operating in Slovakia would welcome the creation of the agency.

Currently, the government alone is financially and administratively responsible for the entire operation and financing of the system. Slovakia maintains emergency stocks of oil and petroleum products that cover 93 days of average daily consumption based on last year’s figures, when daily consumption was about 6,300 tons. Based on the European directive, current emergency oil stocks do not reach the required level of 90 days consumption, however, as consumption has since increased.

Source: SITA

Compiled by Zuzana Vilikovská from press reports
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