Act XXIII of 2013
on Minimum Stocks of Imported Crude Oil and Petroleum Products
With a view to safeguarding the continuous and secure supply of energy for Hungary, and to improving the efficiency of taxation as regards the distribution of petroleum products through laying down regulations on the obligation to maintain minimum stocks of imported crude oil and petroleum products in an objective and non-discriminatory manner, through monitoring inland consumption so as to provide solid grounds for the calculation of membership contributions, through the marking and control of petroleum products released for free circulation, imported and used, and through the ensuring the availability of emergency stocks in cases of particular urgency or crises in the supply of crude oil, Parliament has adopted the following Act in compliance with the relevant legislation of the European Union:
1. Interpretative provisions
Article 1
For the purposes of this Act:
1. ‘emergency oil stocks’ means the minimum stocks of crude oil and petroleum products defined in the first paragraph of Section 3.1 of Annex C to Regulation (EC) No. 1099/2008 of the European Parliament and of the Council of 22 October 2008 on energy statistics that must be maintained in accordance with this Act;
2. ‘effective international decision to release emergency oil stocks’ means any decision taken by the Governing Board of the International Energy Agency to make crude oil or petroleum products available to the market by a release of its members’ stocks and/or additional measures;
3. ‘major supply disruption’ means a substantial and sudden drop in the supply of crude oil or petroleum products to the European Union or to a Member State, irrespective of whether or not it has led to an effective international decision to release stocks;
4. ‘physical accessibility’ means arrangements for locating and transporting crude oil stocks to ensure their release or effective delivery to end users and markets within time frames and conditions conducive to alleviating the supply problems which may have arisen, and for making arrangements for maintaining and managing stocks;
5. ‘local crisis in the supply of crude oil and petroleum product’ means a situation where import supplies for inland consumption drop by up to 7%, and demand for inland consumption can only be satisfied from the emergency oil stocks, as well as a situation when the European Union or the International Energy Agency introduces emergency measures, such as taking an international decision to release emergency oil stocks; situations caused by price developments of crude oil or petroleum products shall not be construed as local crisis in the supply of crude oil and petroleum product.
2. Calculating the level of emergency oil stocks, calculating specific oil stocks, storage and use of emergency oil stocks
Article 2
(1) Emergency oil stocks shall be maintained by way of the means and in the quantity defined by this Act, based on the average daily net imports of refinery feedstocks and petroleum products defined in Annex 1, in the period specified in Paragraph (2).
(2) The average daily net imports shall be determined:
a) as regards the period from 1 January to 31 March of each calendar year, on the basis of the last year but one before the calendar year in question,
b) as regards the period from 1 April to 31 December of each calendar year, on the basis of the year before the calendar year in question (hereinafter referred to as “reference year”).
(3) The level of average daily net imports shall be calculated by the Hungarian Association for the Stockpiling of Hydrocarbons (hereinafter referred to as “Association”) by 31 March of each year, based on the calculation method defined in Annex 1.
Article 3
(1) The Association shall calculate the levels of emergency oil stocks based on the crude oils and petroleum products referred to in Annex 2, using the methods defined therein, also in accordance with Paragraphs (2) and (3).
(2) The composition of the emergency oil stocks held shall be determined in due consideration of the security of energy supply for Hungary, its dependency in oil imports, on indigenous production and processing of oil, and in accordance with product consumption indices.
(3) At least one-third of emergency oil stocks shall be held in the form of petroleum products composed in accordance with subparagraphs b)–f) of section 1 of Annex 2, except if the Governing Body of the Association (hereinafter referred to as “Governing Body”) imposed the obligation to maintain specific oil stocks.
(4) The level of emergency oil stocks maintained between 1 August of each year until 31 March of the following year shall correspond to 90 days of average daily net imports calculated according to Article 2(2) and (3).
(5) The stocks held in excess of the 90 days of average daily net imports may be sold during the given year – by decision of the Governing Body – taking into account the foreseeable level of stockholding obligation. Such sale shall not be permitted to disturb the functioning of the market. If the Governing Body decides to allow such sales, the Association shall publish a sales notice on its website.
(6) Emergency oil stocks shall be the property of the Association.
(7) Emergency oil stocks may be released only upon prior written authorisation by the Association.
Article 4
(1) The Association shall be entitled to maintain specific oil stocks if the Governing Body so decides. Specific oil stocks shall maintained by way of the means and in the level specified in Annex 3, comprised of the petroleum products defined therein.
(2) Any oil stocks may be included simultaneously in both the emergency oil stocks and specific oil stocks, provided that those oil stocks satisfy all the conditions laid down in this Act for both types of stocks.
Article 5
(1) The Association shall keep separate and up-to-date records on emergency oil stocks and specific oil stocks both, and shall safeguard the data of those records for a period of 5 years from the time of entry.
(2) The records shall contain:
a) the name of the site of the storage facility;
b) the quantities of stocks held;
c) description of the crude oil and petroleum products included in the stocks.
(3) The minister in charge for energy policies (hereinafter referred to as “Minister”) shall have access to such records at any time.
Article 6
Emergency oil stocks and specific oil stocks may not be pledged as collateral.
Article 7
Emergency oil stocks shall be held and maintained in authorised and technologically tested storage facilities, which are in conformity with the relevant safety and environmental regulations, and which are suitable:
a) to preserve the quality of crude oil stocks,
b) to guarantee the availability and control of crude oil stocks at any given time,
c) to ensure physical accessibility to crude oil stocks, and their discharge and storage, in the interest of stockholding and enabling the release of stocks.
Article 8
(1) The Association shall be able to maintain emergency oil stocks and specific oil stocks in the territory of other Member States of the European Union on the basis of intergovernmental agreement. Operators from other Member States of the European Union shall be able to discharge their stockholding obligation in the territory of Hungary.
(2) If an operator from any Member State of the European Union maintains emergency oil stocks in the territory of Hungary, those stocks shall be controlled at all times by such operator on which the stockholding obligation has been imposed.
(3) Where a resident natural or legal person, or unincorporated business association (hereinafter referred to as “economic operator”) wishes to hold in the territory of Hungary emergency oil stocks or specific oil stocks on behalf of an operator from any Member State of the European Union on which stockholding obligation has been imposed, the relevant contract must be authorised by the Minister.
(4) The Association shall publish information on its website on free storage capacities for each category of petroleum products, including the conditions for the allocation of such capacities.
(5) If stocks are held by way of delegation received from another Member State of the European Union, such delegation may not be subdelegated.
Article 9
(1) In the event of the balance of supply and demand of crude oil and petroleum products being disrupted and if demand of consumption exceeds the potential resources of procurement, the Minister shall be authorised to impose measures by way of a decree for restricting consumption to extent deemed commensurate to restore the balance.
(2) Emergency oil stocks may be released in the event of a major supply disruption, in a local crisis in the supply of crude oil and petroleum product or in the event of any difficulty in the supply of fuels (heating oil, fuel oil, natural gas) in accordance with the Minister’s decree.
(3) The decree referred to in Paragraph (2) shall contain:
a) a description and quantity of the crude oil and petroleum product permitted to be used;
b) the deadline for having the released quantities replaced, and the itemised list of products involved.
(4) In the decree referred to in Paragraph (2) the Minister may:
a) specify the purpose of use;
b) specify the time table for use of the quantities released;
c) authorise priority access for users major suppliers operating at the national level to released emergency stocks;
d) impose restrictions on consumption;
e) prescribe for operators of petroleum refineries the minimum yield and schedule in respect of having the released stocks to be processed on contract basis.
(5) The stocks released under Paragraph (2) shall be sold by the Association in compliance with the method and conditions prescribed in the decree.
(6) Crude oil and petroleum products shall be sold at a price to sufficiently cover the estimated costs of having the stocks replenished.
(7) Upon the release of emergency oil stocks the Minister shall forthwith notify the European Commission (hereinafter referred to as “Commission”) and the International Energy Agency in accordance with Act XXXIX of 1999 on the Promulgation of the Agreement on an International Energy Program signed at Paris on 18 November 1974, and its Protocols, and on the Promulgation of Organisation for Economic Co-operation and Development (OECD) Council Decision on the Establishment of the Agency C(74)203 (Final) (hereinafter referred to as “Act XXXIX of 1999):
a) on the time when the emergency oil stocks drop below the compulsory minimum level,
b) on the reasons for the release of stocks,
c) on the measures implemented for having the released stocks replenished,
d) on the expected levels of stocks until stocks are effectively replenished.
Article 10
(1) In the Coordination Group for oil and petroleum products set up by the Commission Hungary will be represented by the Minister.
(2) If the Commission carries out a procedure to review the emergency preparedness and stockholding of Hungary, the Minister shall delegate an officer to participate in the review from among the government officials of the ministry directed by the Minister.
(3) In the reviews referred to in Paragraph (2) the Association and the authorities affected by the reviews shall cooperate with the Commission, and shall provide – for the purposes of the review – access to documents relating to the stocks as well as right of access to all sites on which stocks are held.
(4) The government official partaking in the review referred to in Paragraph (2), the authority affected as under Paragraph (3), and the Association may not disclose any information which has been gathered during the review and which is covered by professional secrecy.
Article 11
(1) The Minister shall prepare – having regard to the provisions of Article 5, point 1 of Chapter II of the international treaty referred to in Section 2 of Act XXXIX of 1999 – a contingency plan to be implemented in the event of a major supply disruption, and shall have it regularly updated.
(2) At the Commission’s request the Minister shall send a copy of the approved contingency plan to the Commission.
3. Hungarian Association for the Stockpiling of Hydrocarbons
Article 12
(1) The Association – in its capacity as the central organisation for stockholding – is responsible for the purchasing, storage and sale of emergency oil stocks, for setting up the requisite storage sites and for operating and maintaining these sites, and for discharging the functions delegated under Act XXVI of 2006 on the Minimum Stocks of Natural Gas (hereinafter referred to as “Fbkt.”).
(2) Furthermore, the Association is tasked to set up a system for marking and control with facilities for the observation of petroleum products referred to in Paragraph (3), released for free circulation, imported and used, with a view to determining the levels of emergency oil stocks according to Article 3(1) and to providing on a regular basis solid grounds for the calculation of membership contributions, and to improving the efficiency of taxation as regards the distribution of petroleum products.
(3) In the interest of carrying out the function specified in Paragraph (2), the Association shall use markers for the products under headings 2710 11 41, 2710 11 45, 2710 11 49, 2710 19 41, 2710 19 45, 2710 19 49 – separately for each type of products – for the purpose of control and for distinguishing them.
(4) In carrying out the activities specified in Paragraphs (2) and (3) hereof, the distributors and importers of the petroleum products referred to in Paragraph (3) shall cooperate with the Association for the purposes of marking and control.
Article 13
(1) The Association has legal personality and shall cover its operating expenses from its own revenues, and may use its revenues for covering the costs of stockholding, for acquiring sites for the storage of oils and petroleum products, or for setting up and for the maintenance of such sites, for acquiring ownership shares in storage companies and for loan payments, for covering the costs of marking and control and the Association overhead, and for covering the costs of carrying out the responsibilities delegated under the Fbkt. The Association shall not be subject to pay corporate taxes.
(2) The Association’s organisation is comprised of an oil and petroleum product stockholding section (hereinafter referred to as “oil section”) and a natural gas stockholding section (hereinafter referred to as “natural gas section”).
Article 14
(1) The activity defined in Article 40(2) may be pursued only by an economic operator who is a member of the Association.
(2) Association membership shall commence at the time of taking up the activity defined in Article 40(2). Membership in the Association is terminated if the member fails to pursue the activity subject to stockholding obligation for a period of one year or more.
Article 15
In addition to the stocks released for supplying the users designated by the Minister for specific purposes under Article 9(4)c), members of the oil section shall be granted right of first refusal in respect of the released stocks, as commensurate according to their net membership contributions paid up as due based on the turnover of the calendar year preceding the year when such stocks were released. Net membership contribution means the amount of contribution paid, less any refund and/or deduction.
Article 16
In addition to the activities of stockholding of natural gas prescribed in this Act and in the Fbkt., the Association is entitled to pursue only activities connected therewith, as defined in its Statutes.
Article 17
(1) The Association shall operate on the basis of its Statutes approved by the Minister.
(2) The following shall be defined in the Statutes of the Association:
a) the seat of the Association;
b) the organisational structure and operation of the Association;
c) the detailed rules on the institution and termination of membership in the Association;
d) rights and obligations of members of the Association that are not regulated in this Act, and the legal effects for any failure to meet such obligations;
e) the detailed rules relating to the Association’s financial management;
f) procedures for the sale of released oil and natural gas stocks;
g) the detailed rules concerning the contributions to be paid by members of the Association to the Association;
h) detailed regulations concerning the system of stockholding of oil and petroleum products, such as:
ha) arrangements for the identification, accounting and control of those stocks so as to allow them to be verified,
hb) the procedure for determining the composition of stocks held and the method for setting quantitative and qualitative specifications and requirements,
hc) the method of marking for the purpose of being able to determine the right of ownership of stocks, or any part thereof, and for ensuring their exemption from enforcement proceedings;
i) the frequency, method and system of the replacement of stocks of crude oil and petroleum products for the purpose of the preservation of the quality of those stocks, including the provisions regarding normative losses and replacement thereof, and quality control procedure relating to natural gas stocks;
j) the rules of electronic communication between members and the Association, including provisions on downtime;
k) the detailed rules concerning the natural gas stockholding system;
l) the Association’s obligation of disclosure of information;
m) the amount of interest and security payable if deferred payment is authorised pursuant to Article 38(3), and the criteria for the assessment of requests for deferred payment;
n) the detailed rules relating to the financial security requirement under Article 40(6);
o) all matters prescribed by this Act and by the Fbkt. as mandatory.
(3) The Association’s Statute shall be published in the Official Bulletin of the Hungarian Gazette, and also on the Association’s website.
(4) The Association’s Statute, and any amendment thereto, shall enter into effect at the time of publication in the Official Bulletin of the Hungarian Gazette.
Article 18
The organs of the Association are the General Meeting, the Governing Body, the Supervisory Board and the Executive Board.
4. General Meeting
Article 19
The supreme body of the Association is the General Meeting, which consists of all the members of the oil and natural gas sections.
Article 20
(1) The General Meeting shall convene twice annually (ordinary general meeting).
(2) An extraordinary general meeting shall be called if so requested in writing by the members holding at least 15% of the total of votes, specifying the reason and purpose thereof.
(3) The Director shall inform the members on the calling of the General Meeting at least 4 weeks prior its scheduled date, along with the proposed agenda.