* Costs of stockpiling more than offset by the benefits
* Global oil emergency stocks equal 44 days of global demand
By Ron Bousso
LONDON, June 25 The world has saved $3.5
trillion over the last 30 years by maintaining emergency oil
stocks to offset supply shocks and curb price surges, the West's
energy watchdog said on Wednesday.
The International Energy Agency (IEA) said in a report that
emergency oil stocks held by member and non-member states have
acted as an "insurance" against oil supply disruptions.
Spiralling violence in key oil producer Iraq in recent weeks
has pushed global oil prices to nine-month highs, reviving
speculation of a release of strategic stocks in case of severe
"Significant economic benefits are derived primarily from
offsetting oil supply losses and thereby reducing potentially
significant oil price increases. These consist of reduced GDP
losses and reduced import costs," the IEA said.
Using a model to simulate tens of thousands of possible oil
supply disruption scenarios and market outcomes, the report
estimated global net benefits derived from existing emergency
stocks amount to $41 per barrel per year after storage costs.
This equates to some $3.5 trillion over 30 years, it said.
The 29 IEA member states must hold stocks equivalent to at
least 90 days of net imports. At the end of March 2014, member
countries' stores totalled 4.1 billion barrels, equivalent to
about 44 days of total global demand, the report said.
By the end of 2013, 60 percent of oil stocks in IEA member
countries were crude oil and 40 percent refined products such as
gasoline and diesel.
Stockdraw has proven to be the most powerful mechanism
available to IEA member countries during an oil supply
disruption, the Paris-based IEA said.
Limiting oil consumption, particularly within the transport
sector which accounts for more than half of all oil use in IEA
members, was another way to offset supply disruptions, it said.
The IEA was created in 1974 by 16 Western countries in the
wake of the 1973 oil supply shock in an effort to limit the
impact of future crisis.
The IEA estimated the cost of stockpiling at $7-$10 per
barrel per year, depending on the size and type of storage.
Holding reserves in underground caverns is about 30 percent
cheaper than in aboveground storage facilities, it said.
The last major supply disruption occurred in 2011 when
output from OPEC member Libya dropped sharply due to civil war.
Though the IEA does not require members to hold emergency
gas reserves, the rapidly growing use of gas has also led to
With Europe remaining the world's biggest gas importing
region, the IEA said emergency gas stocking capacities needed to
be expanded in order to deal with potential import disruptions.
Russia's state controlled Gazprom, Europe's
biggest gas supplier, halted deliveries to Ukraine this month,
the third disruption over payments in a decade.
The IEA said 14 member countries have storage capacity that
can meet at least 10 percent of annual demand, 8 countries had
storage capacity that surpasses 20 percent of annual demand,
while only three countries have gas storage capacity that
surpasses 50 percent of annual demand.
The IEA said it expected global gas trade to grow by 30
percent between 2012 and 2018, reaching almost 700 billion cubic
"Global LNG (liquefied natural gas) trade is expected to
grow slightly faster than pipeline trade and gain 31 percent,
thanks to rapidly expanding LNG liquefaction and import capacity
built in new markets," the IEA said.
(Additional reporting by Henning Gloystein, editing by David