De Palacio urges strategic EC role on oil reserves

EU Transport and Energy Commissioner, Ms Loyola de Palacio, yesterday suggested a European Union-wide approach to the use of strategic oil reserves which would give the European Commission a greater role to play.

However, in a global energy report released yesterday, Ms de Palacio did not specify the degree of Commission control she sought over the 90-day strategic oil reserves the EU requires each member-state to maintain.

She spoke of the "communitarisation" of the reserves without explaining what that meant.

"It's not a question of me having more or less power," she told a press conference when asked if she was seeking greater control over the reserves in times of crisis, such as the current spiralling fuel prices.

"I'm not at all interested in having more or less power," she said. "It's a question of the Council of Ministers deciding on a proposal of the Commission on a community level about energy."

"If we were to do that then this obviously would concern the use of strategic stocks," said Ms de Palacio. "What we're talking about is the application of the community methods to the energy sector, a communitarisation approach."

Her report - which reviews the energy situation in the EU in the light of this year's higher oil prices - is to be forwarded to community leaders at their October 13th-14th summit in Biarritz, France.

In order to check speculation on the oil market, Ms de Palacio proposed looking for ways to intervene "to limit price volatility", using techniques already used on foreign exchange markets.

"There are already a number of consultative mechanisms among the member-states in force since the 1970s, because the memberstates are directly responsible for the management of these stocks," she said.

"What we're talking about now is to move from that situation to one where you have greater co-ordination, not just consultation, and possibly, indeed, communitarisation," the definition of which she again dodged.

Ms de Palacio said the Commission's global energy review included the possibility of increasing North Sea production, "which are the ambit of the EU". Meanwhile, world oil prices eased yesterday as fears of a supply shortage waned following a rise in US crude inventories in the world's largest energy market.

Benchmark Brent crude futures were 65 cents lower at $30.40 (€35) a barrel after jumping $1.24 on Monday and easing just three cents on Tuesday. US light crude was down 58 cents at $31.49.