Procedures for the Ensuring and Providing of Emergency Stock Services by Merchants for the Establishment of State Petroleum Product Stocks in a Specified Amount

[17 December 2013]

Issued pursuant to
Section 72, Paragraph one of the Energy Law

1. This Regulation prescribes the procedures by which merchants shall ensure and provide emergency stock services for the establishment of state petroleum product emergency stocks in a specified amount (hereinafter - emergency stock service) in order to ensure the supply of petroleum products during periods of energy crisis.

[12 February 2013; 17 December 2013]

1.¹ In carrying out the activities provided for in this Regulation with petroleum products, the laws and regulations regarding activities involving excisable goods must be conformed to.

[12 February 2013; 17 December 2013]

2. The emergency stocks of petroleum products (hereinafter - emergency stocks) may be established from crude oil, petroleum intermediate products which may be transformed into petroleum products and from petroleum products, the categories of which conform to the following codes of the Combined Nomenclature:

2.1. crude oil - codes 2707 99 11, 2707 99 19, 2707 99 50 and codes from 2710 19 29 to 2710 19 35;

2.2. petroleum intermediate products (components) which are petroleum products of Category I, II or III - codes 2710 12 11, 2710 12 15, 2710 19 11, 2710 19 15, 2710 19 31 and 2710 19 35;

2.3. motor gasoline and aviation gasoline- Category I, codes from 2710 12 25 to 2710 12 70;

2.4. kerosene, diesel oil and kerosene-type jet fuel - Category II, codes from 2710 19 15 to 2710 19 25, from 2710 19 43 to 2710 19 47 and from 2710 20 11 to 2710 20 17;

2.5. fuel oil and petroleum bitumen - Category III, codes from 2710 19 51 to 2710 19 64, codes from 2710 20 31 to 2710 20 35 and code 2713 20 00;

2.6. liquefied petroleum gas - Category I, codes from 2711 12 11 to 2711 12 97, from 2711 13 10 to 2711 13 97, codes 2711 14 00, 2711 19 00 and 2711 29 00 and codes from 2901 10 00 to 2901 29 00.

[28 February 2012; 17 December 2013; 7 July 2015]

2.¹ Not less than 25% of the total amount of emergency stocks to be stored shall be stored in the territory of the Republic of Latvia.

[12 February 2013; 17 December 2013]

2.² If tenders of merchants in a competition for the storage of emergency stocks of petroleum products in the territory of the Republic of Latvia exceed 25% from the total amount of emergency stocks to be stored, the Ministry of Economics after evaluation of the results of the competition may decide that the relevant amounts are entered as the first, if the price for storage in the territory of the Republic of Latvia does not exceed the price tendered by merchants for the amount of emergency stocks to be stored in other European Union Member States.

[17 December 2013]

2.³ Not more than 75% of the total amount of emergency stocks to be stored may be stored in other European Union Member States, if fulfilment of the following conditions is ensured concurrently:

2.³ 1. stocks formed by crude oil and petroleum intermediate products (components) may be stored in such European Union Member State, in the territory of which a petroleum refinery is located which may ensure production of petroleum products during periods of energy crisis;

2.³ 2. during a period of energy crisis emergency stocks of petroleum products are supplied in petroleum products according to the categories of petroleum products referred to in Sub-paragraph 2.3, 2.4, 2.5 or 2.6 of this Regulation.

[17 December 2013]

2.⁴ The amount laid down in Paragraph 2.³ of this Regulation may exceed 75% from the total amount of emergency stocks to be stored in the case laid down in Paragraph 2.⁵ of this Regulation.

[12 February 2013; 17 December 2013]

2.⁵ If merchants which have been selected in an open competition do not ensure the storage of emergency stocks of petroleum products in the territory of the Republic of Latvia in the amount of at least 25% from the total amount of emergency stocks to be stored, the Ministry of Economics may decide on ensuring of the necessary amount of emergency stocks of petroleum products by selecting tenders of such merchants which ensure the storage of stocks in another European Union Member State.

[12 February 2013; 17 December 2013]

2.⁶ In evaluating the necessary amount of emergency stocks of petroleum products referred to in Paragraphs 2.¹, 2.², 2.³, 2.⁴ and 2.⁵ of this Regulation, the Ministry of Economics need not evaluate a tender of a merchant for the emergency stock service, if the price for the service provision for one month in the amount of one tonne exceeds the average weighted price of the necessary amount of petroleum products laid down by the competition by more than 50% (excluding value added tax).

[17 December 2013]

2.⁷ At least one-third of necessary emergency stocks are held in the form of petroleum products according to the categories of petroleum products referred to in Sub-paragraph 2.3, 2.4, 2.5 or 2.6 of this Regulation.

[7 July 2015]

3. It shall be allowed to store petroleum products of Categories I and II of emergency stocks throughout the term of operation of a procurement contract without adding bioethanol in the amount of 4.5-5 per cent by volume from the total amount of motor gasoline and biodiesel oil in the amount of 4.5-5 per cent by volume from the total amount of diesel oil, as well as it shall be allowed to store petroleum products of Categories I and II without additives - substances, which are non-hydrocarbon compounds added to or blended with the petroleum product to modify its properties - if a special permit authorisation (licence) for the activity of an approved tax warehousekeeper, a permit to keep a customs warehouse or a permit for the activities in the free zone has been received.

[7 July 2015]

4. If a national energy crisis is proclaimed, merchants which provide the emergency stock service, on the basis of a contract entered into regarding provision of the emergency stock service for the establishment of state (Republic of Latvia) stocks of petroleum products, shall supply the petroleum products of Categories I and II stored in emergency stocks without the added bioethanol in the amount of 4.5-5 per cent by volume from the total amount of motor gasoline and without the added biodiesel oil in the amount of 4.5-5 per cent by volume from the total amount of diesel oil in accordance with the laws and regulations regarding activities with excisable goods, and shall ensure the conformity of the supplied emergency stocks with the quality requirements laid down in the laws and regulations regarding conformity assessment.

[12 February 2013; 17 December 2013]

5. Every year by 1 June the Ministry of Economics shall announce an open competition for the provision of the emergency stock service, ensuring that the tendered amount of the emergency stocks to be stored corresponds, at the very least, to 90 days of average daily net imports or 61 days of average daily inland consumption, whichever of the two quantities is greater. In determining the amount of emergency stocks to be stored:

5.1. the average daily net imports shall be calculated in accordance with the method referred to in Annex 1 to this Regulation on the basis of the quantity of the crude oil equivalent of imports in the previous calendar year;

5.2. the average daily inland consumption shall be calculated in accordance with the method referred to in Annex 2 to this Regulation on the basis of the crude oil equivalent of inland consumption in the previous calendar year;

5.3. each year the average daily net imports and inland consumption for the time period from 1 January until 31 March shall be calculated on the basis of the quantity imported and consumed in the preceding year prior to the relevant calendar year, if it is not possible to determine the quantity referred to in Sub-paragraph 5.1 or 5.2 of this Regulation.

[12 February 2013]

6. [12 February 2013]

7. The emergency stock service may be provided by merchants, the amount tendered of petroleum products to be stored by which for the petroleum products referred to in Paragraph 2 of this Regulation upon submitting an application for participation in the open competition referred to in Paragraph 5 of this Regulation is not less than 1000 tonnes and which have met at least one of the conditions referred to in Paragraph 8 of this Regulation.

[12 February 2013]

8. The merchants referred to in Paragraph 7 of this Regulation may provide the emergency stock service in the Republic of Latvia or another European Union Member State, if the emergency stock service is storage of petroleum products:

8.1. which is provided by a merchant registered in the Republic of Latvia, which conducts commercial activity with excisable goods (petroleum products) in accordance with the laws and regulations regarding activities with excisable goods, which possesses or owns fixed tanks for the storage of petroleum products conforming to the requirements of laws and regulations in the territory of the Republic of Latvia, which are located at the location indicated by the provider of the emergency stock service, and which owns a sufficient amount of petroleum products for the provision of the emergency stock service or which has contractual rights to purchase petroleum products (except merchants which provide the emergency stock service of petroleum products for fuel oil, the colorimetric index of which is equal to 2.0 or more or kinematic viscosity at 50°C is equal to 25 mm²/s or more);

8.2. which is provided by a merchant registered in another European Union Member State, which possesses or owns fixed tanks for the storage of petroleum products conforming to the requirements of the laws and regulations of the relevant state, which are located at the location indicated by the provider of the emergency stock service, and which owns a sufficient amount of petroleum products for the provision of the emergency stock service or which has contractual rights to purchase petroleum products;

8.3. which is provided by a merchant registered in the Republic of Latvia or another Member State of the European Union or European Economic Area, or another state, using fixed tanks for the storage of petroleum products conforming to the requirements of the laws and regulations of the relevant state in the possession or ownership of another merchant, and which owns a sufficient amount of petroleum products for the provision of the emergency stock service or which has contractual rights to purchase petroleum products. The tanks for the storage of petroleum products and the petroleum products shall conform to the requirements of the laws and regulations of the relevant European Union Member State;

8.4. [7 July 2015]

[12 February 2013; 17 December 2013]

9. If the procurement committee, established by the Ministry of Economics, determines after expiration of the deadline for the submission of tenders, that the information submitted by the tenderer:

9.1. regarding the amount of the anticipated emergency stocks or the actual storage location in Latvia is misleading or false, the persons authorised by the State Secretary of the Ministry of Economics, in accordance with Sub-paragraph 13.1 of this Regulation, shall perform an inventory of the petroleum products to be stored;

9.2. regarding the amount of the anticipated emergency stocks or the actual storage location in another European Union Member State is misleading or false, the Ministry of Economics shall inform the competent authority of the relevant European Union Member State thereof, requesting an examination and verification whether the tenderer has provided truthful information in the submitted documentation regarding the actual anticipated storage location of petroleum products, the amount of petroleum products and the conformity thereof with the quality requirements.

10. Merchants, which have submitted a tender for the participation in the open competition referred to in Paragraph 5 of this Regulation, shall be responsible for the presence of petroleum products at the locations (specific addresses) and in the amounts indicated in the documentation submitted by the merchant.

11. Merchants, which have submitted a tender for the participation in the open competition referred to in Paragraph 5 of this Regulation and offer to provide the emergency stock service for a larger amount of petroleum products than they actually have in their ownership, shall be responsible for the purchase of the amount of petroleum products indicated in the tender and presence thereof at the locations (specific addresses) and in the amounts indicated in the documentation submitted by the merchant until the day of entering into a procurement contract within the scope of a framework agreement entered into if the tenderer has been recognised as the winner of the competition. In such case the merchant shall additionally submit a bank guarantee letter or other documents which attest to the financial ability of the tenderer to purchase the amount of petroleum products indicated in the documentation submitted for the competition and the capacity of the petroleum products storage tanks for the anticipated amount of petroleum products.

12. Merchants, which have submitted a tender for the participation in the open competition referred to in Paragraph 5 of this Regulation, shall ensure until taking of a decision on the results of the competition and signing of a procurement contract within the scope of a framework agreement, as well as afterwards:

12.1. access of the persons authorised by the State Secretary of the Ministry of Economics to petroleum products in order to perform an inventory - to examine the conformity of the amount of the anticipated or existing emergency stocks with the submitted documentation and the conformity of the product with the categories indicated in Paragraph 2 of this Regulation;

12.2. that the means for measuring of the amount of fuel are present in the planned or existing storage locations of petroleum product emergency stocks in accordance with the requirements of the laws and regulations governing the field of metrology;

12.3. the performance of the necessary measurements during inventory.

13. Persons authorised by the State Secretary of the Ministry of Economics shall perform inventories:

13.1. during evaluation of the tenders submitted to the competition - at the anticipated storage locations of emergency stocks. Inventory deeds shall be drawn up in two copies, and they shall be signed at the location of inventory by all the persons authorised by the State Secretary of the Ministry of Economics and an authorised representative of the merchant. One copy of the inventory deed shall remain with the merchant, the other - with the authorised persons;

13.2. at least once every three months - at the existing storage locations of emergency stocks with the providers of the emergency stock service with whom procurement contracts have been entered into within the scope of a framework agreement. Inventory deeds shall be drawn up in two copies, and they shall be signed at the location of inventory by all the persons authorised by the State Secretary of the Ministry of Economics and an authorised representative of the merchant. One copy of the inventory deed shall remain with the merchant, the other - with the authorised persons.

[17 December 2013]

14. [12 February 2013]

15. Merchants which have registered their activity in another European Union Member State or Member State of the European Economic Area, as well as merchants from other states shall submit a document attesting to registration of the merchant in the relevant state in accordance with the requirements of the laws and regulations of such state.

[12 February 2013]

16. A merchant, upon providing the emergency stock service of petroleum products at the indicated location, shall be allowed to store petroleum products owned by several merchants in one tank, which are stored by the merchants for the establishment of emergency stocks.

[12 February 2013]

17. On the basis of the procurement contracts entered into within the scope of a framework agreement, the Ministry of Economics shall include the following in the amount of the emergency stocks:

17.1. petroleum products (except fuel oil, the colorimetric index of which is equal to 2.0 or more, or the kinematic viscosity at 50°C is equal to 25 mm²/s or more), which are stored by a merchant at the indicated location, except the amount which is stored in tanks connected to an electronic cash-register system of retail trade;

17.2. fuel oil, the colorimetric index of which is equal to 2.0 or more, or the kinematic viscosity at 50°C is equal to 25 mm²/s or more and which is stored by a merchant in fixed tanks conforming to the requirements of laws and regulations for the storage of petroleum products in the Republic of Latvia or another European Union Member State;

17.3. petroleum products, which are stored by a merchant in another European Union Member State in conformity with Sub-paragraphs 8.2, 8.3 and 8.4 of this Regulation, in such an amount, which together with the emergency stocks to be stored in the territory of the Republic of Latvia, does not exceed the amount determined according to the calculation method referred to in Paragraph 5 of this Regulation.

[12 February 2013]

18. The Ministry of Economics as the recipient of the service is entitled to recognise the tendered or provided emergency stock service as invalid during the evaluation of the submitted tenders or after entering into a procurement contract, by not entering into or by terminating a procurement contract, if:

18.1. a non-conformity with the actual situation has been determined in the information submitted by the provider of emergency stocks in the tender, when performing the activities referred to in Paragraph 13 of this Regulation;

18.2. during the course of provision of the emergency stock service (after entering into the procurement contract) it is determined that the provider of the emergency stock service (merchant) has not informed the recipient of the emergency stock service (the Ministry of Economics) in writing within three days regarding changes, which delay or prevent the provision of the emergency stock service according to the conditions of the procurement contract entered into in relation to changes in the amount, quality or actual storage location (specific address) of the emergency stocks to be stored.

19. If the Ministry of Economics exercises the rights referred to in Paragraph 18 of this Regulation, it shall, within 11 working days after determining the non-conformity, enter into a procurement contract with one or more of the subsequent winners of the open competition referred to in Paragraph 5 of this Regulation for the missing amount of the petroleum products to be stored in order to ensure the conformity with the amount of the emergency stocks.

20. Merchants, which have been recognised as winners of the open competition referred to in Paragraph 5 of this Regulation, shall, within 10 working days after signing the procurement contract and thereafter every month by the fifteenth date, submit to the Ministry of Economics a report on the provision of the emergency stock service (Annex 3). The Ministry of Economics shall make the payment to the merchant for the provided emergency stock service after receipt of the report and an invoice regarding the emergency stock service provided in the preceding calendar month.

[12 February 2013]

20.¹ Merchants with which the Ministry of Economics has entered into the procurement contract referred to in Paragraph 20 of this Regulation regarding provision of the emergency stock service for the establishment of state (Republic of Latvia) stocks of petroleum products must ensure the amount of petroleum products determined in the procurement contract throughout the period of operation of the procurement contract and, in carrying out activities with stocks of petroleum products, must conform to the laws and regulations regarding activities with excisable goods.

[12 February 2013; 17 December 2013]

20.² Merchants with which the Ministry of Economics has entered into the procurement contract referred to in Paragraph 20 of this Regulation regarding provision of the emergency stock service for the establishment of state (Republic of Latvia) stocks of petroleum products must ensure physical accessibility to emergency stocks - take arrangements for locating and transporting stocks to ensure their release or delivery to final consumers and markets within time frames and conditions conductive to alleviating the supply problems which may have arisen.

[7 July 2015]

20.³ Merchants with which the Ministry of Economics has entered into the procurement contract referred to in Paragraph 20 of this Regulation regarding provision of the emergency stock service for the establishment of state (Republic of Latvia) stocks of petroleum products are imposed liability according to the conditions of the contract, to be applied in cases of violating the national legal acts.

[7 July 2015]

21. If the Ministry of Economics, in performing control in co-operation with the relevant competent authority of the European Union Member State outside the territory of the Republic of Latvia, determines a non-conformity of the amount or storage locations of emergency stocks with the information indicated in the tender, a merchant, which provides the emergency stock service in accordance with the entered into procurement contract, shall, within five working days after receipt of the invoice from the Ministry of Economics, cover all the expenditure for the performance of control in the relevant European Union Member State.

[12 February 2013]

22. The supervision of the implementation of this Regulation shall be ensured by the Ministry of Economics.

22.¹ The Ministry of Economics shall maintain a detailed register of emergency stocks in the information system of petroleum products (NAPRO) regarding all emergency stocks referred to in Paragraph 2 of this Regulation. That register shall contain information allowing to identify each provider of emergency stock service, location of its warehouses, crude-oil refineries or storage facilities, quantity and type of emergency stocks according to the categories of petroleum products.

[7 July 2015]

23. Cabinet Regulation No. 650 of 20 July 2010, Procedures for the Acquisition of the Right to Provide the Emergency Stock Service by Merchants for the Establishment of State Oil (Fuel) Stocks in the Prescribed Amount (Latvijas Vēstnesis, 2010, No. 116; 2011, No. 13), is repealed.

Informative Reference to the European Union Directive

This Regulation contains legal norms arising from:

1) [12 February 2013];

2) Council Directive 2009/119/EC of 14 September 2009 imposing an obligation on Member States to maintain minimum stocks of crude oil and/or petroleum products.

Prime Minister V. Dombrovskis

Minister for Economics A. Kampars

Annex 1
Cabinet Regulation No. 286
12 April 2011

Method for Calculating the Crude Oil Equivalent of Imports of Petroleum Products

[12 February 2013]

The crude oil equivalent of imports of petroleum products, as referred to in Paragraph 5 of this Regulation, for the preceding calendar year must be calculated using the following method*:

1) the crude oil equivalent of imports of petroleum products is obtained by calculating the sum of the net imports of the following products: crude oil, liquefied natural gas, refinery feedstocks and other hydrocarbons as defined in Section 4 of Annex B to Regulation (EC) No 1099/2008 of the European Parliament and of the Council of 22 October 2008 on energy statistics (hereinafter - Regulation No 1099/2008), adjusting the result to take account of any stock changes, deducting 4 % for naphtha yield (or, if the average naphtha yield within the national territory is greater than 7 %, deducting the net actual consumption of naphtha or the average naphtha yield) and adding this to the net imports of all other petroleum products excluding naphtha, also adjusted to take account of stock changes and multiplied by a factor of 1,065;

2) international marine bunkers are not included in the calculation;

3) the net quantity of imports is the total amount of imports of petroleum products, from which the total amount of exports of petroleum products in the preceding calendar year is deducted**.

Notes.
1. * Except the case referred to in Sub-paragraph 5.3 of this Regulation.
2. ** Data of the Central Statistical Bureau.

Annex 2
Cabinet Regulation No. 286
12 April 2011

Method for Calculating the Crude Oil Equivalent of Inland Consumption

[12 February 2013]

The crude oil equivalent of inland consumption, as referred to in Paragraph 5 of this Regulation, for the preceding calendar year must be calculated using the following method*:

1) inland consumption is the sum of the aggregate observed gross inland deliveries, as defined in Section 3.2.1 of Annex C to Regulation (EC) No 1099/2008, of the following products only: motor gasoline, aviation gasoline, gasoline-type jet fuel (naphtha-type jet fuel or JP4), kerosene-type jet fuel, other kerosene, gas/diesel oil (distillate fuel oil) and fuel oil (high sulphur content and low sulphur content) as defined in Section 4 of Annex B to Regulation (EC) No 1099/2008;

2) international marine bunkers are not included in the calculation;

3) the crude oil equivalent of inland consumption is calculated by multiplying by a factor of 1,2**.

Notes.
1. * Except the case referred to in Sub-paragraph 5.3 of this Regulation.
2. ** Data of the Central Statistical Bureau.

Annex 3
Cabinet Regulation No. 286
12 April 2011

[28 February 2012; 17 December 2013]

Report On the Services of Emergency Stocks Provided as on ____ __________________ 20____ for the Establishment of State Emergency Stocks of Petroleum Products

Notes.
1. * Both the quantity of crude oil and the quantity of petroleum product of the corresponding category to be produced in tonnes shall be indicated in the report.
2. * Both the quantity of intermediate products (components) and the quantity of petroleum product of the corresponding category to be produced in tonnes shall be indicated in the report.

Note. The details of the document "signature", "place for a seal" and "date" shall not be completed if the electronic document has been prepared in accordance with the laws and regulations regarding the drawing up of electronic documents.

Translation © 2016 Valsts valodas centrs (State Language Centre)