Strategic Energy Bank
The Alternative Strategic Oil Reserve
A new approach to energy strategy
In a constantly changing and uncertain world, access to predictable and affordable energy supplies is important to governments managing their national economies.
Oil in particular is a key component in this global equation; any serious interruption to oil supplies, whether caused by human intervention or natural disaster, can have significant economic impact, both short and long term.
Against this background, many countries, particularly those who are net importers, have created significant stockpiles of oil reserves to provide a buffer against any possible interruption of supply. The scale of these stockpiles vary, but it’s generally agreed that the International Energy Agency’s guideline of maintaining an amount equivalent to three months’ supply is desirable, with some nations for example Japan and the United States electing to store considerably more.
Cost Effective Energy Security
The global picture is more complex, with many smaller and emerging nations having a limited ability to pursue the same policy as the more established, wealthy countries despite their economies and socio-political environments typically being more sensitive to serious interruption in supply. It is arguable that this disparity does nothing to contribute to a stable world energy environment.
Past events (like hurricane Katrina in the US) have necessitated draw-downs from national stockpiles, none of these to date has required more than a small percentage of available stocks that could have in any event been supplied by the global market. Considering the negotiable nature of oil as an asset – maintaining these individual strategic reserves, at a considerable and perpetual cost, is akin to keeping a large amount of money on deposit in a current account which pays no interest yet incurs bank charges. Is there a better way to manage and exploit this increasingly precious global resource, and is the practice of increasing global stockpiles (often beyond the 90day IEA guideline), necessarily the most prudent way to enhance energy security.
It is against this background that Strategic Energy Bank (“SEB”) has been established. Founded by Masefield, a specialist global energy trading company, SEB has developed a cost-effective solution which offers significant cost savings to all parties.