Many IEA member countries give oil companies or stockholding agencies the choice of meeting their stockholding obligations in two ways: either by owning physical stocks themselves or, for certain amounts, arranging stock cover through leasing agreements, referred to as “tickets”.
Tickets are stockholding arrangements under which the seller agrees to hold (or reserve) an amount of oil on behalf of the buyer, in return for an agreed fee. The buyer of the ticket (or reservation) effectively owns the option to take delivery of physical stocks in times of crisis, according to conditions specified in the contract.
Tickets can be for either crude or refined products; the agreement specifies the quantity, quality and location of the oil for a specified period (typically a calendar quarter). Tickets can be either domestic contracts or contracts between entities in separate countries (the latter must be within the framework of a bilateral government agreement).
The rationale behind oil stock tickets is that a company holding stocks in excess of its obligation can offer such stocks to cover the obligation of another company or agency, either domestically or abroad. Tickets are sold mainly by refiners with excess inventory as a way to offer compulsory stock obligation cover to third-party buyers. In some cases, a company in one country may provide tickets to one of its own affiliates that operates in another country. In all cases, the ticket seller is prohibited from counting the oil in question towards its own stockholding obligation.
Ticketing is a flexible and, generally, cost-effective way for companies or agencies with insufficient stocks to avoid being in breach of stockholding obligations. It essentially provides an alternative to acquiring oil stocks directly and building and/or renting necessary storage capacity.
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