The Government has warned that the European Commission's efforts to gain greater control over the European Union's energy security policy could cost consumers hundreds of millions of euro.
In September the Commission recommended that each member-state increase the minimum oil stocks it holds to cope with an oil crisis from 90 days' supply to 120.
More significantly in the Republic's case, the Commission recommended that member-states should be required to store 60 days' worth of gas supplies for major customers.
In a briefing paper for the Oireachtas Committee on Foreign Affairs, the Department of Communications, Marine and Natural Resources warned that some part of the Commission's plan could have serious implications.
The State-owned National Oil Reserves Agency (NORA) would face considerable difficulties since there was a scarcity of suitable tankage in Ireland and throughout the Community in general, the Department said.
Under current rules the oil reserves are to be used only in times of actual shortage, but the Commission wants to be able to use them as a tool to regulate the price of international crude supplies.
"The proposed central role for the Commission would mean that that ultimate control of Irish oil reserves, which are funded by Irish consumers, would pass to the Commission," the Department warned.
The gas reserve proposals could be extremely costly for the Republic if implemented, since the Government currently does not hold such stocks. Instead, two gas pipelines are available to import supplies.
"The requirement to guarantee 60 days' supply to certain customers in the event of the single most important supply source being interrupted could be very expensive," the Department told the European Affairs Committee.
"It is not possible to quantify it at this stage but if, for example, storage of liquefied natural gas (LNG) facilities were needed over and above market requirements it could run into hundreds of millions of euro, the cost of which would be borne ultimately by consumers."
The Commission had not demonstrated that its proposals were likely to prove more effective than each member-state adopting its own approach to its specific national circumstances, it declared.
Instead of hoarding reserves, the Government argues that the best way to guarantee supplies is by encouraging investment, "robust licensing" and a "healthy dialogue" between producers and consumers.
Defending its proposals, the Commission argues that the EU is vulnerable to outside political, economic and social shocks, since two-thirds of its fossil fuel now has to be imported.
Increased energy consumption had brought benefits for consumers, but it had also meant that there would no longer necessarily be a single player which would assume overall responsibility for security of supply.
The rapid increase in the use of gas in recent years meant that, in some places, the EU was simply exchanging a dependency on oil for gas, the Commission said in a detailed position paper.
The future of the Commission's directive will be decided by a qualified majority vote among EU energy ministers, including Mr Ahern for Ireland, along with a parallel vote of the European Parliament.
The Commission hopes that elements of the plan will come into force in January 2004, although the extra reserves would not have to be in place until January 2007.
