Singapore — Australia has started an oil stock ticketing system that the government plans to use to return to compliance with the International Energy Agency's 90-day oil stockholding requirement.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register NowIn a tender published on its website, the Department of Environment and Energy said it was running a procurement process to consistently hold up to 400,000 mt of oil tickets for the government from October 1, 2018 to June 30, 2020.
The process involves two steps. The first is a registration process, where applicants submit information about their business and have the opportunity to review the department's contracts and general terms and conditions.
Once successfully registered, they can pre-register to participate in the tender process to submit offers to hold stocks of crude oil, condensate or refined products.
The first round of procurement has been completed and the government is calling for the second round now.
"An oil stock ticket is a contractual right to purchase or release oil, where the seller agrees to reserve a predetermined amount of oil for the period of the contract, in return for an agreed fee," the department said.
During an IEA declared global oil emergency, a ticket would give Australia the option to buy the reserved oil outright or release the oil to market by canceling the ticket, helping to ease any disruption.
The IEA currently has 30 members, including Australia, which became a member in 1979 and is a signatory to the IEA agreement on an international energy program treaty.
Key requirements under the IEP treaty are that member countries hold oil stocks equivalent to at least 90 days of their prior year's daily net oil imports; and in the event of a major oil disruption, contribute to IEA collective actions by way of a stock release, demand constraint, fuel switching, or increased production or fuel sharing.
The country has historically relied on commercial stocks to meet the 90-day requirement. Due to declining domestic production and increased demand for fuels, these stocks were no longer sufficient to meet the 90-day requirement, the department said.
Australia has been non-compliant with the 90-day stockholding obligation since March 2012.
According to information on the department's website, the registration process is open to any entity offering to hold stocks in Australia and to any offering to hold stocks in a country that has a government-to-government arrangement. At present, the US, the UK, Germany, the Netherlands and Denmark have such an arrangement with the Australian government.
According to data from the Department of Environment and Energy, sales of gasoil totaled 500,481 b/d and gasoline 301,230 b/d in July.
As domestic production could not meet total demand, Australia imported 367,835 b/d of gasoil and 103,606 b/d of gasoline during the month.
--Calvin Lee, calvin.lee@spglobal.com
--Edited by E Shailaja Nair, shailaja.nair@spglobal.com