New Directions in Strategic Petroleum/Energy Reserve Management (SPRM)
• A Government Agency needs to ask itself the following questions:
i) SPR or SER Policy? The concept of Strategic Petroleum Reserves or “SPR” has been expanded to “SER” – Strategic Energy Reserves – to allow for the inclusion of mainly gas, but also power in the overall energy mix.
ii) Will it focus on setting SPR policy and delegate responsibility for implementation to 3rd party private players? or;
iii) Will it set and implement policy as above by building and managing the SPR itself?
iv) In (ii) above Government’s challenge is to set policy and audit/verify Implementation, whereas in (iii) the challenges are wider, adding own governance, resources, organization structure and integration of activity with energy markets and regional energy players into the mix.
v) How does it frame sensible SPR policy based on the country’s unique circumstances? Without clear policy objectives and decision-making frameworks, quite who carries out policy becomes academic. Governments too often reach for the IEA/OECD model as though (a) it alone makes sense and (b) by aiming to get to 90 days (in many cases unaffordable) but maintaining 30 or 60 days of net fuels imports, this in itself constitutes policy.
Developing a unique, fit-for-purpose SPR Policy and Operating Model which:
• Carefully considers country-specific socio-economic and geopolitical realities;
• Recognises the inter-dependent nature of domestic and regional energy infrastructure;
• Accounts for the energy delivery challenges which accompany a country’s economic growth;
• Integrates SPR Assets with the commercial operations of fuel refiners and energy producers/distributors in an unbiased, non-speculative and structured manner thereby spreading capital and operating costs more effectively across commercial and strategic activities;
• Is based on clear SPR Policies which are supported by effective legal and regulatory frameworks, clear operating mandates and strong governance to enable safe and effective management of SPR Assets;
• Results in a transparent, unbiased and well-governed SPRM Entity responsible for effective management of SPR costs and risks for the benefit of all the SPR Asset stakeholders;
• Maintains appropriate and relevant quality and quantity of SPR products whilst continuously optimising the quantity and quality of individual products stored;
• Proactively deploys and manages the SPR Assets in a non-speculative manner to effectively reduce the capital and operating costs of owning and maintaining these Assets;
• Achieves SPR Objectives in a sustainable manner.