9. OIL

the United Kingdom imposes a stockholding obligation on refiners and oil importers who supply more than 50 000 tonnes of oil products to the UK market in a year. The stockholding obligation for the United Kingdom that stems from the Directive (61 days of oil demand) is larger than the IEA obligation (90 days of net-imports). The IEA notes that the United Kingdom’s oil stockholding obligation in terms of volume is expected to increase significantly due to the declining North Sea production, which will require an increased obligation towards the IEA.

The government has a well-developed resilience strategy for the oil sector. Unlike other IEA countries, the government has access to a dedicated tanker fleet of 80 vehicles and to trained military personnel. The government also established an informal agreement with oil and LPG suppliers to identify customers most at risk of the loss of heating fuels during cold weather and supply them as a priority. The government is also one of the few IEA countries that calculated the potential economic impacts of a range of potential supply disruptions to support further policy development.

Recommendations

The UK government should:

Continue to encourage upstream investments by benchmarking the UK commercial regime for exploration and production and exchanging best practice with other countries.

Review, together with industry and the OGA, progress made in identifying the potential of CCUS for EOR and the potential for carbon dioxide storage in old and depleted oil/gas fields, notably in the context of hydrogen deployment.

Continue to engage with the oil industry, notably refining, on the implications of the announced end of the sales of conventional new petrol and diesel cars and vans.

Set out actions to implement the phase out of high-carbon fossil fuel heating in buildings not connected to the gas grid.

Create favourable investment conditions for liquefied natural gas bunkering services to facilitate access to cleaner supply sources for the shipping industry, while at the same time increasing security of supply for domestic customers.

Monitor and assess the storage capacity adequacy given the increased import dependency to compensate for the eventual North Sea production decline.

References

IEA (International Energy Agency) (2019a), World Energy Balances 2019 First edition (database), Paris, www.iea.org/statistics/.

IEA (2019b), Energy Prices and Taxes 2019, Paris, www.iea.org/statistics/. IEA (2018a), Oil Information 2018, Paris, www.iea.org/statistics/.

IEA (2018b), Oil Market Report 2018, www.iea.org/statistics/.

UK Government (2016), The Maximising Economic Recovery Strategy for the UK, Oil & Gas Authority (OGA), https://www.ogauthority.co.uk/media/3229/mer-uk-strategy.pdf

Wood, I. (2014), UKCS Maximising Recovery Review https://www.woodreview.co.uk/

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