Stock Management
Our stock management involves the storage locations, purchase and sale of stocks and product quality.
Operations
Stock management consists of selecting suitable storage facilities, purchasing or selling stocks and monitoring product quality.
COVA rents the storage facilities. Location, maintenance and cost are key criteria in this context. The product quality of the oil stocks is checked regularly, and stocks are refreshed where necessary.
Core objectives of storage policy
Our storage policy has three core objectives: ready availability of stocks for the market, with minimum storage risks and at the lowest possible costs. Diesel and gasoline are stored in the Netherlands, while parts of the jet fuel and crude oil stocks are stored in Belgium and Germany.
Approximate distribution of the storage facilities in the Netherlands, Germany and Belgium.
Storage terminals
We store oil products and crude oil 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.
Partners
COVA does not own any storage facilities. We work closely with a range of partners in renting storage capacity. We normally conclude long-term contracts with oil storage companies at the lowest possible costs. We also lay down arrangements on the timely delivery of products held in storage.
Physical stocks and CSO tickets
The Wva provides that COVA and the business sector can meet their stockholding obligation in two ways:
- By physically holding (a part of) the stock;
- 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 CSO tickets, and to restrict this use to resolving temporary shortages or surpluses.
Monitoring product quality
Long-term storage of oil and oil products is a highly specialist area within the oil market. The strategic diesel and gasoline stocks may be kept in storage for as much as ten years, and crude oil stocks even for more than 30 years. It remains necessary to analyse the product quality on a regular basis. Storage in caverns offers a higher degree of certainty that the quality of crude oil or oil products is 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), ESTG (Energy Security Technical Group) and ELABCO (Experts Laboratory Coordination). COVA participates in and contributes to this knowledge exchange with European, Asian and American organisations and agencies.
We monitor the product quality of our stocks in partnership with various inspection companies and laboratories. We assess whether the product can still be kept in stock or whether it needs to be refreshed.