Our commitment
Together with our international partners we serve public interests during disruptions in regular oil supply. The quantity and composition of the reserves the Netherlands is required to maintain are legally defined based on national and international agreements.
Why a strategic stock?
COVA and companies in the oil sector maintain strategic oil stocks for the Netherlands. The Netherlands can use these stocks at times of international or national oil shortages, for example due to geopolitical tensions, natural disasters, trade restrictions or war.
- International: As a member of the European Union (EU) and the International Energy Agency (IEA), the Netherlands may be asked to release strategic stocks together with other IAE/OECD countries to make up worldwide shortages. The purpose of this is to limit the damage to society and the economy in the event of a supply disruption.
- National: Stocks may be made available in the Netherlands during a domestic crisis. Under specific conditions, stocks may be offered to fuel traders who handle distribution to end users, such as the transport sector or industry.
How is the level of strategic stock to be held by the Netherlands determined?
As a global market, the oil market does not stop at the Dutch border but has a strong international character. For this reason, the Netherlands has made arrangements about the strategic stocks at international level. These arrangements have been laid down in the IEA’s IEP Treaty and the EU’s Directive 2009/119/EC. In the Netherlands, these arrangements have been translated into the Petroleum Products Stockpiling Act (Wva). This act provides the rules for COVA and the business sector on maintaining strategic stocks.
The IEA and the EU each have their own method for calculating how much stock the Netherlands as a member state should maintain. According to the IEA, the Netherlands should hold a total stock that corresponds to the net quantity of crude oil and oil products imported by our country over 90 days. The EU obliges the Netherlands to maintain a strategic stock corresponding to 90 days of net imports or our country’s inland consumption over 61 days. Because the Netherlands must fulfil both obligations, our country maintains at least the larger of the two values: 90 days of net imports or 61 days of inland consumption.
In addition, the EU has adopted extra rules that have also been incorporated into our national legislation. For example, at least one third of the stock must comprise refined products such as gasoline, diesel and jet fuel. These rules also provide that the market may not use this stock in normal circumstances. Holding strategic stocks involves maintaining extra stocks for emergency situations which, moreover, must be stored within the EU.
The rules of the IEA and the EU set the minimum threshold that the Dutch stockpile must meet. The Netherlands may decide to maintain a larger stock than this minimum requirement.
Learn more about how much strategic stock COVA currently holds for the Netherlands under Stock Management.
How are COVA’s obligation and that of the business sector calculated?
In order to meet the national stockholding obligation, the Netherlands applies a stockholding obligation for the business sector and a stockholding obligation for COVA. These are known as the industry stockholding obligation and the COVA stockholding obligation.
The obligation for the business sector is calculated on the basis of the quantity of fuel companies supply to the market each year. The industry stockholding obligation is deducted from the national stockholding obligation in order to determine the minimum COVA stockholding obligation. This method means that the business sector has a relatively stable stockholding obligation, while COVA maintains the largest part of the strategic stock and absorbs the changes in the national stockholding obligation.
On top of the minimum stock to be maintained, the government may decide to impose additional obligations on COVA. This has happened since 2017, firstly because the figure based on the IEA net imports method is too low for the Netherlands (see next question), but also because of the Russian invasion of Ukraine and the subsequent oil sanctions. As a result, the COVA stockholding obligation was increased by an extra 500 kt of diesel.
The strategic oil stock is expressed in kilotons of crude oil equivalent (kt COE). Based on the standard calculation of the regular stockholding obligation plus the extra measures, COVA has a total obligation to maintain at least 4,100 kt COE in strategic stock for the Netherlands. As part of the total stock, COVA must maintain at least 779 kt of diesel/gas oil, 186 kt of gasoline and 21 kt of jet fuel (Jet A1) in the stockholding year 2024. Of the diesel stock, 20 kt has been earmarked as emergency diesel that can also be used in specific emergency situations.
The business sector maintains at least 670 kt COE in strategic stock.
*) In April and May 2022, COVA released over 180 kilotons of diesel from the strategic stock as part of the Dutch participation in the IEA-led collective action. By now, the Minister of KGG has instructed COVA to repurchase this quantity of diesel. The Minister has also requested COVA to temporarily increase its diesel stock by 500 kilotons to a desired volume of, if possible, 4,100 kt COE.
Learn more about how much strategic diesel and gasoil stocks COVA and the business sector currently hold on the Oil Dashboard Netherland:
Does the calculation of the Dutch stockholding obligation have the desired effect?
The Minister of Climate Policy and Green Growth and COVA believe that the internationally agreed calculation of the stockholding obligation for the Netherlands does not adequately account for the Dutch context. The net imports method prescribed by the IEA and the EU produces a figure that is too low for the current situation in the Netherlands.
The deviation is of a technical nature and is due to the fact that the Netherlands has a large oil sector for blending fuels, such as naphtha with gasoline. In recent years, the Netherlands has seen an increase in the addition of naphtha to gasoline that is produced primarily for export. In determining the net imports, however, the naphtha is left out of the import figures whereas exports of blended fuels are included in the export figures. This increases the export figures and (therefore) reduces net imports, which results in a lower stockholding obligation based on the net imports method.
Will there be a change in the statutory basis?
The Dutch national government concluded in 2022 that the stockholding obligation calculated for the Netherlands was too low. There are plans to adjust the statutory obligation to 90 days of inland consumption.
COVA is in contact with the Ministry and informs stakeholders about the possible consequences of proposed decisions. It is up to the legislator to decide if and when the statutory rules on maintaining strategic stocks of oil and (renewable) liquid fuels will change. COVA will adjust the strategic stock if there is a change in the statutory basis.