France's fuel distributors will not have to rebuild the strategic diesel stocks being released

Fuel distributors in France are about to benefit from a release of strategic diesel stocks intended to bring prices down. They will not, however, have to reconstitute those stocks afterwards, POLITICO has learned from two distributors and from Ufip-EM, the federation representing the French oil industry.

Prime Minister Sébastien Lecornu decided on 7 October to release the stocks in order to bring prices down.

Lecornu announced that, from 1 November, ten million barrels of diesel from the strategic stocks would be released.

The release will let distributors buy diesel at the average price at which the stock was built up, around 28 euro cents per litre. With a price far below current market prices, the sale should allow relief of 12 to 18 cents per litre at the pump. The first legal basis for the decision was laid by a decree published on Saturday.

Lecornu had announced that 'operators will have up to a year to reconstitute these stocks'. However, after numerous exchanges with the companies concerned, it was decided in the end not to reconstitute the reserves.

The obligation posed several challenges. If the geopolitical situation remained durably tense and market prices stayed high, distributors would have had to buy back and return the stocks at a high price. That would have translated into a catch-up effect at the pump.

Diesel consumption is also falling year by year, as the French restrict their spending and turn increasingly towards electric or petrol cars. The movement has accelerated this year, making reconstitution of the reserves less necessary in the eyes of the government and the sector.

'We are anticipating what would have happened in two or three years,' commented Philippe Casbas, president of Ufip-EM.

According to government figures, the ten million barrels represent one-fifth of the strategic diesel stocks. The stocks as a whole are supposed to cover three months of the country's consumption.

The decision not to reconstitute the stocks is expected to result in a decree modifying fuel sellers' stocking obligations. 'It's in the pipeline,' said another distributor, who preferred the conditional tense as long as the decree has not been published. In his words, it is 'perhaps the best solution', because reconstituting reserves at 28 cents a litre would have been very difficult.

That distributor added: 'It doesn't seem too dangerous for our energy independence.' Asked for comment, Matignon and the Energy Ministry made no comment.