Netherlands Buying Diesel Before Winter
The Netherlands is purchasing millions of barrels of diesel in preparation for what is set to be a winter like no other.
The country’s petroleum stockpiling agency, COVA, has issued tenders seeking more than three million barrels of diesel for delivery before the end of the year, with potentially more to come. That comes as the European Union prepares to cut-off seaborne supplies from Russia, amid a broader energy crunch.
Earlier this year, the Netherlands was part of a globally coordinated release of crude and oil products in response to Russia’s invasion of Ukraine and sold about 180,000 tons of diesel from its strategic inventories. Now, the Dutch government wants to rebuild its diesel stockpiles, requiring the replacement of barrels previously sold, along with millions more.
The decision to boost stockpiles is in preparation for both winter and the forthcoming EU sanctions, according to a person familiar with the matter. COVA was asked by the Dutch government to restore the volumes that were distributed in April-May and boost inventories, if possible, to do so without disturbing markets, the person said. The Dutch government declined to comment.
From early February, almost all seaborne cargoes into the bloc from Russia — still the continent’s biggest external supplier — will be banned. That will clash with Europe’s consumption of diesel-type heating fuel surging in the coldest months of the year. This year, there’s also the added pressure of so-called gas-to-oil switching, whereby businesses burn diesel and other fuels instead of costly natural gas.
COVA has been instructed by the government to return its stocks to the original levels, according to a statement on its website. The agency also has been told to expand temporarily its diesel holdings by 500,000 tons — enough to supply the whole of Germany, Europe’s biggest economy, for almost four days.
Bloomberg by Jack Wittels, September 20, 2022