Luxembourg's legislation on oil security
Part of Oil Security Toolkit
Introduction
Luxembourg’s response to oil supply shortages is governed by the provisions of the 2015 Act on the Organization of the Market for Petroleum Products (of 10 February 2015) (OMP).
Relevant European Union legislation
Circumstances triggering operation of the emergency response system
The provisions of the Luxembourgian OMP are triggered by a major supply disruption, an effective international decision, an urgent supply shortage or a local supply crisis (article 40 OMP). According to article 1(n) OMP, a ‘major supply disruption’ exists when there is a sharp and sudden reduction of supply with crude oil or petroleum products with respect to European Union (EU) or to a European Union Member State irrespective of whether or not such a supply drop is accompanied by an International Energy Agency (IEA) decision to release stocks. According to article 1(f) OMP, an ‘effective international decision to release stocks’ is a decision issued by the IEA’s Governing Board providing that crude oil or petroleum products should be made available to markets.
Authority determining whether emergency exists
According to article 40(1) OMP, the Grand-Duke of Luxembourg may, in the event that the country’s supply of petroleum products is disrupted, enact measures regulating the import, export, distribution, possession, storage, purchase and sale, transport and consumption of some or of all categories of petroleum products. In urgent cases, such measures may be enacted pursuant to ministerial regulations issued by the minister in charge of energy policies (article 3 SOPP, article 1(j) OMP).
Legal stockholding obligations
General
Article 5(1) OMP provides that all oil importers are obliged to establish and to permanently maintain emergency stocks. According to article 1(h) OMP, oil importers are natural or legal persons established in a Member State of the EU who are registered as oil importers by the minister responsible for energy policies (article 1(j) OMP)
Petroleum operators are oil importers or persons responsible for an oil storage infrastructure, owners of emergency stocks, specific stocks or commercial stocks (article 1(k) OMP).
Storage Agency
While oil importers are the primary addressees of Luxembourg’s stockholding obligation, article 6 OMP (see also article 13 OMP) provides that a regulation can foresee that oil importers must delegate a certain share of their emergency stockholding obligation to the Luxembourgian ‘Agence nationale de stockage de produits pétroliers’ which, in accordance with article 47(5) OMP, acts as Luxembourg’s Central Stockholding Entity (CSE). Luxembourg’s CSE is tasked with acquiring, maintaining, building, managing, selling and marketing commercial and security stocks (article 48(1) OMP). The CSE ensures the availability and continued accessibility of stocks held by itself (article 49(1) OMP) and reports to the minister in charge of energy policies (article 49(4) OMP). For a maximum of 20 years the Luxembourgian CSE may delegate its stockholding obligations to other another Member State of the European Union, its CSE, or to petroleum operators (article 50(1) OMP).
Storage Quantity
The quantity of emergency stocks that each oil importer needs to establish and maintain must correspond at least to 93 days of net average daily imports in the previous year (article 5(1) OMP). If the 61 days of average daily domestic consumption of the country exceed 93 days of average daily domestic imports then the minister fixes an additional storage obligation for each importer (article 5(2) OMP).
Availability of stocks
Oil importers, owners of security stocks and actors in charge of oil infrastructure storage units must ensure the continued availability and physical accessibility of their emergency stocks (article 19 OMP). According to article 1(a) OMP, physical accessibility is guaranteed when emergency stocks are stored in such a manner that they can be put into circulation and can be delivered to markets and end-users within reasonable time to mitigate any supply problems that may have arisen.
Storage Locations
According to the OMP, emergency oil reserves should be stored within a particular ‘oil storage infrastructure’ which the OMP defines as a repository, refinery, or storage facility with a total storage capacity of at least 1 000 cubic meters (article 1(i) OMP). If stocks are to be established or maintained outside of Luxembourg, a prior authorization from the minister in charge of energy policies is required (article 14(1) OMP).
Sale of excess stocks
N/A
Mechanisms to address emergency
General
In the event of a major supply disruption, an effective international decision, an urgent supply shortage or a local supply crisis article 40(1) or 40(2) OMP are triggered and provide various measures aiming to address an oil supply emergency.
Stockdraw
Sale/Tender
According to article 40(1)(a) OMP, the Luxembourgian government is entitled to enact measures releasing emergency stocks in case of a major supply disruption, an effective international decision, an urgent supply shortage or a local supply crisis. These measures might either apply generally to all the importers, or individually to one or several specific importers.
Production Surge
N/A
Demand restraint
According to article 40(1)(b) OMP, the Luxembourgian government is entitled to enact measures that restrict the consumption of specific types of oil or oil products.
Measures that prioritise certain consumers (article 40(2)(a) OMP), restrict the import, export and transport of some or of all petroleum products (article 40(2)(b) OMP) or regulate the holding and storage of some or all petroleum products (article 40(2)(c) OMP) may also be implemented, if deemed necessary.
Fuel Switching
N/A
Relaxations of Road Traffic and Transport Laws
N/A
Monitoring and enforcement of emergency regime
Luxembourg’s emergency regime is monitored and enforced on the domestic, regional and international level. Each will be considered in turn.
Domestic
Reporting duties
All importers of crude oil or petroleum products must prior to commencing their activity issue a declaration by letter to the minister in charge of energy policies (article 2(1) OMP) specifying information about their business activities and expected volumes of imported crude oil or petroleum products (articles 2(2)(a-l) OMP).
Once activities have commenced, all oil importers must communicate to the minister in charge of energy policies monthly reports detailing the levels of commercial (article 4(1) OMP) and emergency stocks (article 16 OMP) maintained . Additionally a report detailing the levels of imports, exports and inland consumption has also to be established by the importer (article 32 OMP). Alongside, the minister in charge of energy policies establishes and maintains an inventory detailing the levels, locations and composition of emergency stocks (articles 15-18 OMP). In any case, oil importers must duly notify the minister in charge of oil policies if an oil importer notices that they are violating their stockholding obligation (article 5(5) OMP).
The minister communicates the relevant statistical data concerning Luxembourg to the European Commission.
Enforcement
The responsibility for ensuring compliance with its stockholding obligation resides with each individual importer. The minister in charge of energy policies reviews and verifies the information submitted. The minister can carry out site-visits to verify emergency preparedness and storage measures (article 39(1) OMP).
If the minister determines that obligations imposed by the OMP have been violated, the minister may impose penalties ranging from warnings to fines between 1 000 EUR and 2 000 000 EUR (article 41(1)(a-c) OMP).
Prison sentences, for periods ranging from one to three years, and fines may be imposed for failure to comply with regulations governing the stock release and/or failure to guarantee the availability of emergency stocks
Regional
European Union
As a Member State of the European Union, Council Directive 2009/119/EC obliges Luxembourg to maintain a minimum volume of emergency oil stocks corresponding to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. The Directive also imposes strict requirements concerning the composition and location of the emergency oil stocks, so as to guarantee their availability and accessibility in case of need, among other provisions.
Luxembourg’s compliance with the provisions of the directive is monitored and enforced by the European Commission. If a Member State is deemed not to be compliant with the EU Directive, the Commission might decide to initiate an infringement procedure, which might ultimately lead to refer the case to the Court of Justice of the European Union (articles 258-259, Treaty on the Functioning of the European Union).
International
The IEA
As a Member of the IEA, Luxembourg is obliged, pursuant to article 2 of the International Energy Programme (IEP), to maintain oil reserves equal to 90 days of net imports of the previous year. IEA Members are obliged to submit information concerning their emergency measures to the IEA secretariat (article 32 IEP) on a continuous basis and the IEA monitors Member countries’ compliance with the IEP.