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GOVERNMENT OF THE REPUBLIC OF LITHUANIA

GOVERNMENT OF THE REPUBLIC OF LITHUANIA Official translation GOVERNMENT OF THE REPUBLIC OF LITHUANIA RESOLUTION No. 1901 ON THE PROCEDURE OF BUILDING, MAINTENANCE, ACCUMULATION AND CONTROL OF STATE STOCKS OF PETROLEUM PRODUCTS AND CRUDE OIL, AND APPROVAL OF MINIMUM AMOUNTS OF PETROLEUM PRODUCTS 5 December 2002 Vilnius Pursuant to paragraphs 1 and 3 of Article 3, paragraph 5 of Article 4, paragraph 2 of Article 10, paragraph 2 of Article 13 of the Law of the Republic of Lithuania on State Stocks of Petroleum Products and Crude Oil (Official gazette, 2002, No.72-3008), the Government of the Republic of Lithuania has resolved:

  1. To approve the Procedure of Building, Maintenance, Accumulation and Control of State Stocks of Petroleum Products and Crude Oil (attached).
  2. To establish that enterprises which annually produce, import, sell or use less than 500 tons of petroleum products of category 1, category 2 or category 3 each shall be exempt from the obligation to accumulate and maintain state stocks of petroleum products and crude oil. Prime Minister Algirdas Brazauskas Minister of Economy Petras Čėsna APPROVED by Resolution No. 1901 of the Government of the Republic of Lithuania of 5 December 2002 PROCEDURE OF BUILDING, MAINTENANCE, ACCUMULATION AND CONTROL OF STATE STOCKS OF PETROLEUM PRODUCTS AND CRUDE OIL I. GENERAL PROVISIONS
  3. This procedure shall regulate the building, maintenance, accumulation and control of state stocks of petroleum products and crude oil (hereinafter referred to as stocks) as well as consumption of the stocks in excess of the level of stocks established in Article 6

(1)of the Law of the Republic of Lithuania on State Stocks of Petroleum Products and Crude Oil and transfer to other economic entities of stocks of enterprises accumulating, maintaining stocks, which intend to terminate their activities in the period of an emergency in the energy sector.
  1. This Resolution shall be applicable to the enterprises producing, importing petroleum products and producing energy as well as to state enterprises assigned by the Ministry of Economy, which accumulate and maintain state-owned stocks of petroleum products, holding the stocks in trust (hereafter referred to as the assigned state enterprises).
  2. As used in this Procedure, “Enterprise producing petroleum products” means an enterprise which by refining the raw materials owned by it or in any other manner produces and sells in the country petroleum products of category 1, category 2 or category
  3. Enterprises which make use of the service of petroleum products manufacture and sell in the country petroleum products of category 1, category 2 or category 3 shall also be attributed to the above enterprises “Enterprise importing petroleum products” means an enterprise which imports and releases into free circulation petroleum products of category 1, category 2 or category
  4. “Enterprise producing energy” means an enterprise producing heat or electricity, which possesses heat producing or electricity generating facilities with a capacity of 50MW or more and uses petroleum products of category 3 for energy production. “Enterprise under the obligation “ means an enterprise producing, importing petroleum products or an energy producing enterprise which is obligated under the legal acts in force in Republic of Lithuania and under this Procedure to accumulate and maintain the share of stocks assigned to it as well as an assigned state enterprise which accumulates and maintains state-owned share of stocks, holding it in trust. Other concepts shall be used in this Procedure within the meaning defined in the Law of the Republic of Lithuania on State Stocks of Petroleum Products and Crude Oil. II. NOMENCLATURE OF STOCKS
  5. Stocks of the following products shall be accumulated: 4.
  6. motor petrol, aviation fuel and jet fuel of gasoline type (category 1 of petroleum products); 4.
  7. diesel fuel, gas oil, kerosene, jet fuel of kerosene type (category 2 of petroleum products); 4.
  8. heating oil (fuel oil) (category 3 of petroleum products).
  9. Part of the stocks may be accumulated in the form of crude oil or intermediate products, as prescribed in paragraphs 18 and 19 of this Procedure.
  10. The specific nomenclature to be accumulated by the enterprises under the obligation shall be established by the Ministry of Economy. III. FUNDS
  11. The Ministry of Finance shall calculate the amount of funds necessary in order to accumulate and maintain the state-owned stocks and shall submit recommendations to the Ministry of Finance regarding the inclusion of the funds under a separate special programme.
  12. The assigned state enterprises shall accumulate and maintain the stocks: 8.
  13. with the funds of the State Budget of the Republic of Lithuania; 8.
  14. with own resources of the enterprises; 8.
  15. other lawfully acquired funds.
  16. Funds appropriated for accumulating stocks owned by the state as well as funds received from the sale of state-owned stocks may only be used for accumulating state-owned stocks.
  17. Other enterprises which are under the obligation, except for the assigned state enterprises, shall cover with their own resources all costs related to the accumulation and maintenance of the stocks entrusted to them.
  18. The enterprises under the obligation shall every year, by the 1st day of March, file a statement of costs of holding and maintenance of stocks of petroleum products with the Ministry of Economy. The form of the statement of costs of holding and maintenance of petroleum product stocks shall be set by the Ministry of Economy. Expenses relating to holding and maintenance of one ton of stocks may be made public. IV. AMOUNT OF STOCKS
  19. Calculating on the basis of average daily internal consumption in the preceding calendar year of petroleum products of category 1, category 2 and category 3, stocks to be accumulated and maintained, by the specified time limit, at a level corresponding, for each of the categories of petroleum products, to: 12.
  20. at least 49 days’ average daily consumption to be accumulated by December 31, 2003; 12.
  21. at least 56 days’ average daily consumption to be accumulated by December 31, 2004; 12.
  22. at least 63 days’ average daily consumption to be accumulated by December 31, 2005; 12.
  23. at least 69 days’ average daily consumption to be accumulated by December 31, 2006; 12.
  24. at least 76 days’ average daily consumption to be accumulated by December 31, 2007; 12.
  25. at least 83 days’ average daily consumption to be accumulated by December 31, 2008; 12.
  26. at least 90 days’ average daily consumption to be accumulated by December 31,
  28. Every year by the 1st day of March the Ministry of Economy shall: 13.
  29. calculate the (average) daily consumption of petroleum products of category 1, category 2 and category 3 during the preceding calendar year; 13.
  30. calculate the amount of stocks which has to be accumulated (in tons). When assessing the need for stocks of petroleum products of each category, the amount of stocks may be reduced by deducting from the amount of the petroleum products consumed during preceding calendar year of the amount of petroleum products produced indigenously by the state, recalculated into petroleum products up to a maximum of 25% of the internal consumption of petroleum products of each category; 13.
  31. determine for the enterprises under the obligation the composition, amounts of stocks to be accumulated and the annual accumulation obligations. The composition, amounts of stocks to be accumulated and the annual accumulation obligations laid down for the enterprises under the obligation shall be valid until the composition, amounts of petroleum products and annul accumulation obligations are determined for the next year.
  32. In the period from 2003 to 2008, the assigned state enterprises and enterprises producing petroleum products must fulfil the imposed new annual petroleum products accumulation obligations within the period from 31st March until 31st December each year, whereas starting from 2009, the period set for fulfillment shall be from 31st March until 31st July. The enterprises importing petroleum products and producing energy must accumulate the amounts of stocks specified in the annual accumulation obligations within 15 days after the importation. V. ACCUMULATION OF STOCKS
  33. Stocks shall be accumulated in accordance with the accumulation obligations imposed by the Ministry of Economy by: 15.
  34. the assigned state enterprises. The said enterprises shall accumulate 50(of petroleum products of each category to be accumulated in the state; 15.
  35. enterprises producing petroleum products. Stock accumulation obligations shall be determined on the basis of the ratio between the total quantity of category 1, category 2 and category 3 petroleum products produced and sold in the country by the above enterprises and the total internal consumption of the petroleum products of above-listed categories, taking account of the quantity of stocks accumulated during the previous years; 15.
  36. enterprises importing petroleum products. Stock accumulation obligations shall be determined on the basis of the ratio between the total quantity of category 1, category 2 and category 3 petroleum products which the said enterprises imported and released for free circulation and the total internal consumption of petroleum products of the above-listed categories, taking account of the quantity of stocks accumulated during the previous years; 15.
  37. energy producing enterprises. The enterprises shall be obligated to accumulate petroleum products of category
  38. Stock accumulation obligations shall be determined on the basis of the ratio between the total quantity of category 3 petroleum products which the said enterprises imported and released for free circulation and the total internal consumption of petroleum products of the above-specified category, taking account of the amount of stocks accumulated during the previous years.
  39. Enterprises shall be exempt from the obligation to accumulate and maintain stocks in respect of an amount not exceeding the quantity of produced, imported, sold, consumed category 1, category 2 and category 3 petroleum products, prescribed by the Government of the Republic of Lithuania. Enterprises shall be obligated to start accumulating stocks when they no longer qualify for exemption. The level of stocks to be accumulated shall be calculated on the basis of the total quantity of petroleum products manufactured and sold in the country or imported and released into free circulation.
  40. Petroleum products imported as stocks by the assigned enterprises shall be included in the share of stocks accumulated with state funds. In such case the assigned state enterprises shall be exempt from additional stock accumulation obligations in respect of imports.
  41. Part of the stocks may be held in the form of crude oil or intermediate products. If this is the case, crude oil and intermediate products shall be recalculated into petroleum products of category 1, category 2 and category 3 according to the quantities obtained during the preceding calendar year from the refineries operating that year in the Republic of Lithuania. The foregoing shall apply to not more than 40% of the petroleum products of category 1 and category 2, and to not more than 50% of the petroleum products of category
  43. Every enterprise under the obligation, intending to hold part of the stocks in the form of crude oil or intermediate products, must file a written application with the Ministry of Economy requesting authorisation and seeking to reach an agreement as regards the quantities of stocks.
  44. Having regard to the fluctuating market conditions and seeking to maintain their petroleum product stocks at a level not below that which is set in paragraph 12 of this Procedure, the Ministry of Economy may revise, during the current year, the stock accumulation obligations imposed on the enterprises under the obligation.
  45. Upon written consent of the Ministry of Economy, in case of a contingency, when carrying out urgent repairs or other works, enterprises under the obligation may reduce the level of stock accumulation and maintenance obligation by an amount corresponding up to one month’s average internal daily consumption. VI. STORAGE OF STOCKS
  46. Stocks must be stored in oil/petroleum products storage facilities/terminals (hereinafter referred to as terminals) within the territory of the Republic of Lithuania. In cases provided for by international agreements to which the Republic of Lithuania is a party stocks may also be held in other states. Decision on the holding of part of stocks in other states shall be taken by the Government of the Republic of Lithuania.
  47. Terminals must be fitted out and used in compliance with the requirements of this Procedure and legal acts in force in the Republic of Lithuania.
  48. Terminals must be fitted out in such a way as to make it possible to draw from them and transport petroleum products to the site of their consumption by road, rail or pipeline. For this purpose access roads must be made suitable for use, continuous supply of electricity must be ensured.
  49. Stocks may be held in tax warehouses.
  50. Stocks must be held in metrologically verified (calibrated) stationary storage tanks.
  51. Stocks may be held together with production/commercial stocks of enterprises.
  52. The Ministry of Economy must be informed of the stock holding sites.
  53. The following may not be attributed to stocks: 29.
  54. indigenous crude oil not yet extracted; 29.
  55. supplies intended for the bunkers of sea-going vessels or held in bunkers of sea-going vessels; 29.
  56. supplies intended for direct transit; 29.
  57. supplies in pipelines, in road tankers or rail tank-wagons; 29.
  58. supplies held by the armed forces or those intended for them; 29.
  59. supplies stored in retail outlets; 29.
  60. irretrievable remainder in reservoirs.
  61. Petroleum products attributed to stocks must meet the obligatory quality indicators and standard requirements and technical conditions prescribed under laws for the petroleum products consumed in the country. The stocks held in the form of intermediary products must be of the quality which would make them capable of being processed into final products.
  62. Responsibility for the quality of stocks shall rest with the enterprises which are under the obligation to accumulate stocks.
  63. The accumulated stocks shall be held for an indefinite period or until a special direction by the Ministry of Economy, except when an enterprise under the obligation goes bankrupt or terminates its activities.
  64. Enterprises importing petroleum products, which terminate their activities in the import of petroleum products by July 31st of the current year, shall be obligated to hold and maintain the accumulated stocks at least until July 31st of the next year, whereas in case of termination of the import activities at a later time, stocks must be held and maintained for at least a year’s period after the termination of import activities. ]
  65. During an emergency in the energy sector, the enterprises under the obligation may terminate their activities only after they transfer the accumulated stocks to the assigned state enterprises or other enterprises under the obligation. Stocks shall be transferred under an agreement. The agreement must provide for the conditions of stock transfer and for settlement for the transferred stocks.
  66. If enterprises which are under the obligation go bankrupt or terminate their activities, the stocks accumulated by them shall be transferred as prescribed by paragraph 34 of this Procedure or disposed of upon the authorisation of the Ministry of Economy, provided that an emergency in the energy sector has not been declared. VII. PURCHASING, RENEWAL AND REPLACEMENT OF STOCKS
  67. State-owned stocks shall be purchased, renewed or replaced by the assigned enterprises. State-owned socks must be purchased, renewed or replaced in compliance with the requirements of legal acts. The Ministry of Economy shall have the right to lay down for the assigned state enterprises a detailed procedure for the purchasing, sale and renewal of stocks.
  68. Other enterprises under the obligation, except for the assigned state enterprises, shall purchase, sell and renew the stocks in accordance with commercial practice.
  69. During the entire stock renewal period, except in cases specified in paragraph 21 of this Procedure, the enterprises under the obligation must hold their stocks at the level set for them. VIII. WRITE-OFF OF STOCKS
  70. Natural losses of petroleum products sustained in the course of accumulation and maintenance of state-owned stocks by enterprises under the obligation, which do not exceed the approved rates of natural loss of fuel as well as losses sustained through sampling required for quality control laboratory tests may be written off in the manner prescribed by law.
  71. Losses of petroleum products sustained by the assigned enterprises when building and maintaining state-owned stocks, excess losses of petroleum products above the set limit due to force majeure as well the remainder of stocks unsuitable for use may be written of upon the authorisation of the Minister of Economy. The assigned state enterprises shall be held financially liable for excess losses of state-owned stocks in the manner prescribed by law. `
  72. Other enterprises under the obligation shall write off the losses according to the procedure established by law. IX. ACCOUNTING OF STOCKS
  73. Stocks shall be accounted for in accordance with the legal acts regulating accounting of stocks.
  74. Enterprises under the obligation must have documents relating to all stocks, wherever their storage site.
  75. Accounting must ensure the possibility to establish the quantities, composition, storage sites of stocks, their building and maintenance costs. Stocks shall be accounted for separately from production/commercial stocks of enterprises.
  76. Enterprises under the obligation shall submit to the Ministry of Economy accounts on the production, import, export, trade in, consumption, building of stocks, maintenance and holding of crude oil, petroleum products and other fuel; The procedure for submitting the said accounts and their scope shall be established by the Ministry of Economy and the Department of Statistics under the Government of the Republic of Lithuania . X. USE OF STOCKS
  77. If it is discovered upon drawing up the balance that the quantity of stocks accumulated is above the level, corresponding to 90 days’ consumption, the enterprises under the obligation, upon the authorisation of the Ministry of Economy, may reduce the quantity of stocks to the level corresponding to 90 days’ consumption and dispose of surplus stocks at its own choice.
  78. A temporary decrease in the level of stocks (failure to accumulate the stocks) shall be permitted only provided that the stocks were used in the prescribed manner during an emergency in the energy sector or were lost due to force majeure circumstances.
  79. Stocks may be used only in an emergency in the energy sector. When the emergency in the energy sector is over, the enterprises under the obligation must replenish the stocks to the required level. Upon assessing the quantity of stocks used, the Ministry of Economy shall set the time limits for their replenishment. XI. CONTROL OF STOCKS
  80. Building of stocks and maintaining them shall be subject to control by the State Energy Inspectorate under the Ministry of Economy (hereinafter "the State Energy Inspectorate"), irrespective of their ownership, storage location or conditions. Officers of the State Energy Inspectorate shall have a right, within the limits of their competence, to enter at any time the territory and premises of an economic entity and inspect: 49.
  81. the accounting documents, relating to the building and maintenance of stocks, in order to determine the quantity of stocks accumulated; 49.
  82. the keeping of account books and computerised data relating to the stocks that are build and maintained; 49.
  83. stock nomenclature and quantities; 49.
  84. stock renewal; 49.
  85. losses sustained and their write-off; 49.
  86. use of stocks; 49.
  87. replenishment of stocks; 49.
  88. technical condition of stock terminals and their suitability for holding stocks.
  89. The State Energy Inspectorate shall inspect the enterprises under the obligation at least once per year.
  90. Upon completing the inspection, the State Energy Inspectorate shall draw up a report indicating all the shortcomings detected during the inspection and giving mandatory instructions to be carried out. The State Energy Inspectorate shall notify the Ministry of Economy of the inspection results and present it with a copy of the report. The form of the report and the drawing up procedure shall be established by the State Energy Inspectorate.
  91. The quality of stocks at the enterprises under the obligation shall be controlled by the State Non Food Product Inspectorate under the Ministry of Economy. Control shall be exercised concurrently with the inspection of stock building and maintenance carried out at the enterprises under the obligation by the State Energy Inspectorate. XII. FINAL PROVISIONS
  92. The enterprises under the obligations shall be prohibited from transferring the stock accumulation and maintenance obligation to other enterprises.
  93. Sanctions shall be imposed in the manner prescribed by law for failure to accumulate stocks, for stock deficiency, inadequate stock building, failure to furnish information or provision of false information.

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