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Portugal's legislation on oil security

Part of Oil Security Toolkit

The Portuguese oil emergency regime is exceptionally comprehensive and governed primarily by four laws: Decree-law No. 69/2018, Decree-law No. 165/20131 Transposing Directive 2009/119/EC (TD), the Decree-law No. 31/2006, the Decree-law No. 339-D2/2001 on Strategic Reserves (DSR), and the  Decree-law No. 114/2001 on Energy Crises (DEC).


According to article 32(1) DSR (Annex V), Portugal’s oil supply emergency regime is triggered in response to a serious disturbance of energy supply. Article 2(1) DEC further specifies that an energy crisis is characterized by actual or predicted (article 2(3) DEC) difficulties in the supply or distribution of energy which makes it necessary to apply exceptional measures to protect the interest of national defence, the functioning of the State and the basic needs of the population. Such difficulties may be caused by human action or by natural disasters within or outside the country, for example, in Member States of international organisations of which Portugal is a member (article 2(2) DEC).


According to article 22(3) TD (see also article 32(1) DSR, Annex V), it is the Portuguese Minister responsible for energy policies who determines whether or not an oil supply disruption exists and whether Portugal’s emergency provisions shall be activated.

Likewise, article 3(1) DEC stipulates that the declaration of an energy crisis is the responsibility of the Portuguese Government and must occur by means of a resolution of the Council of Ministers.

In a crisis all measures proposed by the minister responsible for energy would have to be submitted to the Council of Ministers for final approval. Government may adopt exceptional security measures, communicating to the European Commission.


General

Article 8(1) TD imposes a stockholding obligation on specific ‘obliged operators’. Obliged operators are entities that introduce petroleum products to the domestic market irrespective of whether these products are intended to be used for consumption or for sale at airports and aerodromes located in Portugal (article 2(h) TD). The national obligations are a stock the equivalent of 90 days average daily net imports of crude oil and petroleum products in the previous calendar year. The obliged operators must stock the equivalent of 60 days average daily net imports of crude oil and petroleum products in the previous calendar year.

The remaining quantity of emergency stocks is created and maintained by Portugal’s Central Stockholding Entity (CSE) (article 11(1)(c) TD).

Storage Agency

The ENSE is Portugal’s CSE and is responsible for the creation, maintenance and management of Portugal’s emergency reserves (article 3(3) TD).

Storage Quantity

According to article 7(1) TD (see also article 9(1) TD), the national obligation of establishing and maintaining emergency stocks corresponds at least to the equivalent of 90 days average daily net imports of crude oil and petroleum products in the previous calendar year.

Availability of stocks

According to articles 11(2) and 18(3) TD, at least one third of emergency stocks must be held in the form of finished products to ensure immediate availability at times of emergency. Furthermore, all emergency stocks must be continuously available (article 21(1) TD).

Storage Locations

According to article 19 TD, emergency stocks shall be located in Portugal. However, pursuant to article 20 TD emergency stocks may be located in other Member States subject to the satisfaction of specific conditions. The emergency stocks may be set up and maintained as crude oil or petroleum products in other Member States, within the

maximum of 34% of the total national obligation. In any case, the stock can not be less than 5000 tonnes per site of storage.

Sale of excess stocks

Article 17(1) TD authorises the ENSE to sell stocks held in excess of Portugal’s stockholding obligation provided such stocks can be sold at no loss (article 17(2) TD) unless the ENSE has been authorised to conduct such a sale beforehand (article 17(3) TD).


General

At times of emergency the ENSE implements the national emergency action plans which it is obliged to develop in collaboration with the DGEG and relevant cabinet members (article 22(1) TD). The overall emergency response framework is provided by the Minister responsible for energy policies (article 5 DEC). 

Stockdraw

Sale/Tender

When there is a major supply disruption, the Portuguese Minister responsible for energy sector may decree the release of emergency stocks either in general or by establishing a priority of consumers (article 22(3) TD, see also 10(2)(B) DEC and article 31 Decree-law 31/2006).

The mobilization mechanism takes the form of sale or loan, and should give proportionate and equitable rights of the operators required option and take into account market prices.

ENSE may then release emergency reserves by selling them at current market prices (article 32(2) DSR, see also 22(6) TD). Similarly, commercial entities are obliged to comply with decisions of the Minister to release emergency stocks (article 22(5) TD).

Production Surge

According to article 12(1)(B) DEC, during times of emergency measures may be taken to reinforcing the production of energy products in deficit and alternative energy sources which are in limited/short supply.

Demand restraint

According to article 10(2)(A) DEC (see also article 8 Decree-law 31/2006), the Portuguese Government may respond to oil supply emergencies by taking measures leading to the restraint of oil demand. Article 11(2) DEC further stipulates that demand restraint measures may initially aim to persuade the population to reduce energy consumption by disseminating information and media campaigns. Compulsory measures, on the other hand, may, according to article 11(3) DEC (see also article 13(2) DEC), inter alia consist of restrictions placed upon the use of motor vehicles (article 11(3)(A) DEC) or restrictions of underused routes of public transportation (article 11(3)(B) DEC).

Safeguard measures should be limited in time, in order to minimize disturbance to the functioning of the oil market.

Fuel Switching

There is no formal mechanism to enforce fuel switching obligation. Article 11(3)(E) stipulates that, at times of emergency, the consumption of a rare product may be replaced, where possible, by consumption of a product of which more quantities are available.

Relaxations of Laws

According to articles 12(3)(A)-(B) DEC the Portuguese Government may, at times of emergency, decree to relax the laws governing certain energy products and allow the derogation or suspension of specific emission standards.  


Portugal’s emergency regime is monitored and enforced on the domestic, regional and international levels. Each will be considered in turn.

Domestic

Reporting duties

According to article 24(1) TD, the addressees of the Portuguese ‘obliged operators’ stockholding are obliged to provide the ENSE with information concerning the volume of their reserves, the location and the composition of their stocks (see also article 16 DEC). The ENSE is in turn obliged to keep a register of the quantity, location and composition of emergency stocks (article 25(1) TD) and send all the information to Directorate General for Energy and Geology (DGEG). A summary of the information held by the DGEG is then forwarded to the European Commission on an annual basis (article 25(2) TD, amended by article 6 of Decree-law No. 130/2014)). DGEG also receive the information from the operators for statistics proposes.

Enforcement

Article 21(1) TD stipulates that all emergency stock storage facilities must be accessible at all times for the purpose of accounting for stored stocks and for the purpose of being inspected by the competent authorities. Article 21(2) TD explicitly allows officials of the European Commission to carry out inspections and to consult all documents and records relating to emergency stocks.

Violations of the provisions of the TD can lead to the imposition of fines of up to 44 891 EUR (article 26 TD). Violations of the terms of the DEC may also in turn lead to the imposition of fines up to 44.891 EUR article 21(1).

Regional

European Union

As a Member State of the European Union, Council Directive 2009/119/EC obliges Portugal to maintain a minimum volume of emergency oil stocks corresponding to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. The Directive also imposes strict requirements concerning the composition and location of the emergency oil stocks, so as to guarantee their availability and accessibility in case of need, among other provisions.

Portugal’s compliance with the provisions of the directive is monitored and enforced by the European Commission. If a Member State is deemed not to be compliant with the EU Directive, the Commission might decide to initiate an infringement procedure, which might ultimately lead to refer the case to the Court of Justice of the European Union (articles 258-259, Treaty on the Functioning of the European Union).

International

The IEA

As a Member of the International Energy Agency (IEA), Portugal is obliged, pursuant to article 2 of the Agreement on an International Energy Programme (IEP), to maintain oil reserves equal to 90 days of net imports of the previous year. IEA Members are obliged to submit information concerning their emergency measures to the IEA Secretariat (article 32 IEP) on a continuous basis and the IEA monitors Member States’ compliance with the IEP.

References
  1. Amended by Decree-law No. 130/2014 and Law No. 7-A/2016.

  2. Amended by Decree-law No. 248/2008, 130/2014 and 165/2013.