Czech Republic: Goverment fails to comply with the Directive on Emergency Stocks


In spite of the urgent demands of the Administration of State Material Reserves (the “ASMR”) supported by the Ministry of Industry and Trade, the Czech Government did not accept on its regular June meeting the replenishment of national reserves of crude oil and oil products worth almost one billion CZK. As a consequence, the Czech Republic no longer meets the requirements set out in the Directive 2009/119/ES on emergency stocks of petroleum products. Although the stocks do not meet the required limit since April, the decrease is now at an even more pronounced level. The Ministry of Finance, standing against the demand of the ASMR, alleged that the decrease in the level of oil reserves is caused by the current limited operation of both local refineries and that the restoration to normal state is expected by the end of the year, therefore it is a transitional situation.

Under the above mentioned Directive the member states which do not produce oil are obliged to undertake suitable measures to maintain minimum stocks of crude oil products available. The quantity of such compulsory stocks was set at 90 days of average daily consumption. With regard to the amount of oil needed in the thriving automotive industry and the strong addiction of member states on external supplies, such reserves are vital in case a crisis situation such as a war conflict or flood arises. The Czech reserves nowadays reach 87 days. On that basis the ASMR proposed the purchase of other 80.000 tons of sweet crude oil or 50.000 cubic metres of diesel oil and 26.000 cubic metres of petrol. By proceeding so, the stocks of crude oil would increase of four days, filling the lack in reserves caused by the incident in the refinery of Kralupy nad Vltavou and the increasing consumption of fuel due to boosting economy growth.

The European Commission has recently been informed by the ASMR of the failure to fulfil the limits. By non-adhering to the agreed rules the Czech Republic breached the Directive as well as the relevant transposing Act and exposed itself to the risk of penalties. The Commission may file an action with the Court of Justice of the European Union and initiate infringement proceedings. Moreover, the country must pay 50 million CZK per year for the reservoir anyway, despite not using it.

The ASMR stated in its report for the Government that it manages currently the emergency stocks of oil and oil products representing the quantity of circa two million tons, consisting mostly of oil (almost a million tons), diesel (about 700 000 tons) and petrol (more than 300 000 tons). However, the 100.000 tons of crude oil needed are still missing.