The Operations department is responsible for managing COVA’s stock. Its duties comprise selecting suitable storage facilities, purchasing or selling stocks and monitoring product quality.
COVA rents the storage facilities. Location, quality, safety & security, logistic opportunities, and cost are key selection criteria. The product quality of the oil stocks is checked regularly, and stocks are refreshed when necessary. COVA works in accordance with national and international environmental rules.
- The latest version of the General Terms and Conditions for the storage of crude oil and oil products can be found here.
- The latest version of the General Terms and Conditions for the purchase of crude oil and oil products can be found here.
- The latest version of the General Terms and Conditions for the sale of crude oil and oil products can be found here.
COVA’s storage strategy has three core objectives: timely availability of the stocks to the market, minimum storage risks and the lowest possible costs. Diesel and gasoline are stored in the Netherlands, while parts of the kerosene and crude oil stocks are stored in Belgium and Germany [see portfolio].
Storage portfolio: approximate distribution of storage facilities in the Netherlands, Germany and Belgium.
COVA stores its stocks at locations scattered over a wide geographical area. Oil and oil products can be stored in above-ground tanks at various storage terminals and in salt dome caverns more than 1 km underground.
All storage terminals have good (pipeline) connections to open water, which means that products can reach the Netherlands within three days of transport.
COVA does not own any storage facilities. We work closely with a range of partners in renting storage capacity. We normally conclude longer-term contracts with oil storage companies at the lowest possible costs. We also lay down precise agreements on the timely delivery of products held in storage.
Purchase and sale of stocks (physically and via tickets)
There are two ways in which agencies or oil companies can meet their stockholding obligation:
1) by physically owning (a part of) the stock;
2) via Compulsory Storage Obligation (CSO) tickets. These are option rights to third-party stocks.
When trading CSO tickets, the owner of the product reserves a physical quantity of oil on the buyer’s behalf, in exchange for a fee. The buyer of the ticket will have the right to purchase these physical stocks during a crisis, in accordance with the conditions set out in the contract. CSO tickets can be sold for crude oil or oil products, both in the Netherlands and abroad.
The trade in CSO tickets is a flexible and generally cost-effective way of fulfilling stockholding obligations. COVA’s policy is to make limited use of tickets, in particular for the purpose of handling temporary shortages or surpluses.
Long-term storage of oil and oil products is a highly specialist area within the oil market. The strategic crude oil stock can be stored for more than 30 years, and some refined products for as much as ten years. Nevertheless, the product quality needs to be analysed on a regular basis. Storage in caverns offers a higher degree of certainty that the quality of crude oil or oil products will be preserved for a long time. The knowledge of product quality during long-term storage is monitored at international level and shared in technical committees such as those of ACOMES (Annual Coordinating Meeting of Entity Stockholders), ICPG (International Crude Project Group) and ELABCO (Experts Laboratory Coordination). COVA participates in and contributes to these committees, in close collaboration with European, Asian and American organisations and agencies.
The Operations department monitors the product quality of the stocks stored by COVA. We do so in collaboration with various inspection companies and laboratories. We assess whether the product can still be kept in stock or whether it needs to be renewed.