With the completion of the last contract for the supply of Euro diesel, which is expected by the end of March 2021, reserves will be at the level of about 21.7 days of average daily consumption, say the Ministry of Mining and Energy (MRE) answering the question of Balkan Energy: now Serbia in terms of providing mandatory reserves of oil and oil derivatives?
“Oil reserves are formed for 90 days of average daily imports or 61 days of average daily consumption and a higher value is taken as the basis. In Serbia, it is the average daily consumption and the goal is to cover the required reserves for 61 days of the average daily consumption,” they explain from MRE.
Otherwise, the provision of Article 15, paragraph 2 of the Law on Commodity Reserves prescribes the obligation to form required reserves no later than December 31, 2022. The formation of obligatory reserves of oil and oil derivatives is one of the basic and strategic goals in the field of energy and represents an important precondition for raising the level of energy security of the Republic of Serbia.
In addition to the Law on Commodity Reserves and the objectives based on the provisions of the Energy Law in this area, there are requirements arising from Directive EC 119/2009, which are required to meet the Member States of the European Union and countries in the process of accession to the EU relate to the obligation to store required reserves. For that reason, the formation of mandatory reserves in the Republic of Serbia is a precondition for the opening of the Negotiating Chapter 15 – Energy.
Mandatory reserves, in accordance with Article 16 of the Law on Commodity Reserves, are formed and maintained in crude oil, oil derivatives and contractual rights to purchase certain quantities of oil and oil derivatives. At least one third of the obligation to keep reserves should be in finished products, namely those individual oil derivatives whose total representation, expressed in crude oil equivalent, is equal to at least 75% of total domestic consumption from the previous year.
Average daily imports and average daily consumption in the Republic of Serbia, as well as the quantities of required reserves that are kept, are calculated on the basis of crude oil equivalent and the methodology prescribed by EC Directive 119/2009. Pursuant to Article 15, paragraph 4 of the Law on Commodity Reserves, the Government adopted the Decree on the methodology of data collection and processing and calculation of average daily net imports, average daily consumption and quantities of required reserves of oil and oil derivatives (Official Gazette of RS, No. 108/14).
In June 2015, the Long-Term Plan for the gradual formation and maintenance of mandatory reserves of oil and oil derivatives was adopted. This plan envisages the gradual formation of required reserves, so that based on stocks in the amount of 9.5 days of average daily consumption in 2015, over 25 days in 2020, it is expected to reach 61 days in 2022.
The mechanism for keeping and storing required reserves implies certain participants in that mechanism, first of all the Central Storage Body, which the EU member states and the countries with which negotiating chapters have been opened for the purpose of gaining EU membership, are obliged to establish. This body, which is established in the legal system of the Republic of Serbia within the ministry responsible for energy, is responsible for the creation, maintenance and sale of required reserves, in accordance with the Directive, which is of particular importance for achieving the goals of this project.
In addition to the Ministry of Mining and Energy, the Ministry of Finance has a key and, it seems, the most important role. Because, during the preparation of the budget of the Republic of Serbia, the Ministry of Finance sets limits in the funds for the formation of obligatory reserves of oil and oil derivatives. The funds are provided by allocating the amount of 2.6 dinars specially intended for that purpose from each liter of fuel sold.
On the basis of the given limits, the Ministry of Mining and Energy prepares the Annual Program for the formation and maintenance of obligatory reserves of oil and oil derivatives, so that the number of reserve days increases from year to year, in all respects according to the assumed international obligations. The implementation of the Annual Program for the Formation and Maintenance of Mandatory Reserves for Petroleum and Petroleum Products is entrusted to the Directorate for Energy Reserves. For 2020, it is planned to store a total of 25 days of average consumption in the Republic of Serbia.
However, that has not been achieved, and only 21.7 days of stocks in required reserves will be reached next month.
Experts have repeatedly pointed out that the tax on oil reserves is not spent for a specific purpose, because the funds collected in this way do not go to a special budget, but the money collected in this way is at the disposal of the Ministry of Finance, which often spends them for other purposes.
“For years, there has been a request for that tax to be used for its intended purpose, and that request still exists. At the same time, other possibilities are being considered within the existing laws to speed up the replenishment of reserves to the target level and in cases of scenarios with a reduced budget, as has been the case so far,” said the Ministry of Mining and Energy.
This issue needs to be resolved as soon as possible if Serbia really plans to open Chapter 15 Energy soon.
Because, on September 21, 2015, the Republic of Serbia was informed by a letter from the Chairman of the Committee of Permanent Representatives of the Council about the result of the screening for Chapter 15 Energy.
And one of the conditions for this chapter to be open is when Serbia presents an action plan for harmonization with the acquis communautaire concerning minimum reserves of oil and oil derivatives. This Action Plan should set out a timeframe for legislative alignment, for identifying measures to be taken in emergencies, for acquiring storage capacity and for gradually increasing stock levels to the minimum level set by the acquis.
We have, for the most part, incorporated all this into state legislation. But we didn’t.
However, mandatory reserves of oil and oil derivatives are not necessary only for the opening of the chapter or for fulfilling the conditions for joining the EU. They are crucial for the normal functioning of the state, for the normal life of citizens and the economy, without them there is no secure supply or energy security.
In Serbia, it has already happened that due to weather conditions, consumers, not only citizens but also insults, will be faced with a potential shortage of oil derivatives. Something like that is happening now in the USA, in Texas, where refineries have been closed due to the cold and people are facing a lack of energy, Energija Balkana reports.
