The IEA Emergency Response System
(Paris) — 29 November 2007
“Despite growing global concerns about energy security, the IEA emergency response system remains robust and effective. IEA member countries currently hold stocks equivalent to about 122 days of net imports and constantly review and fine-tune their emergency response mechanisms. Complacency is not an option,” said Nobuo Tanaka, Executive Director of the International Energy Agency (IEA) today in Paris at the launch of the new IEA publication Oil Supply Security: Emergency Response of IEA Countries 2007.
While the emergency response system of the IEA has proven to be flexible, the risk of oil supply disruptions has grown in recent years and will continue to grow in the near future. Demand growth, increased concentration of oil reserves in a smaller number of countries, the concentration of oil use in the transport sector, and insufficient investment in capacity additions to keep pace with demand growth exacerbate the potential of an oil supply disruption in a tight oil market. “Having strategic oil reserves in place to cope with disruptions is an important insurance policy against such exposure,” emphasised Mr. Tanaka.
This new IEA study reveals significant changes since the previous edition of this publication, in 2000. In the last seven years, not only has the IEA expanded, soon to include 28 countries (the Slovak Republic’s membership is imminent and Poland is in the final stages of accession procedures), but moreover IEA capabilities to respond quickly and effectively to a short-term oil supply disruption were tested. In early September 2005 when devastation to oil production and refining infrastructure in the Gulf of Mexico by Hurricane Katrina became known, the IEA reached a unanimous agreement within 24 hours to make 60 million barrels of emergency oil available to the market. “The emergency system worked, the markets calmed down,” Mr. Tanaka said and added: “This reaction demonstrated our members’ full solidarity in tackling supply disruptions.”
This unexpected event highlighted the ways in which the oil market has changed and has become more susceptible to a variety of factors that can suddenly disturb the balance of supply and demand. The findings contained in this new publication illustrate the growing robustness and flexibility of the IEA emergency response system. The effectiveness of the system is maintained thanks to such periodic reviews, and to the continuous simulations and tests carried out by the IEA as a means of adjusting specific response mechanisms in order to mitigate the effects of an oil supply shortfall.
In addition to a cross-IEA analysis of the Agency’s emergency response potential assessing the principal measures at its disposal, this publication contains detailed country-by-country analyses of the 26 member countries as well as Poland and the Slovak Republic.
Furthermore, in response to the rapid increase of oil consumption and net imports in some non-member countries, the IEA has pursued dialogue and information sharing with key transition and emerging economies on topics such as oil security policies and the creation of national strategic oil stocks. Accordingly, this publication features overviews of how China, India and countries of the Association of Southeast Asian Nations (ASEAN) are progressing with domestic policies to improve oil supply security, based on emergency stocks.
To conclude, Mr. Tanaka stressed that “IEA member countries currently hold 4.1 billion barrels of oil stocks. Our continuous reviews and tests prove that our emergency response system is robust and IEA member countries are ready to use it."