FDO and its extensive stockholdings are central to the Danish oil preparedness, and FDO is the key actor in maintaining supply security for Danish society.
FDO was established in 1964 for the purpose of providing oil supply security in case of war or supply crises. The background to the establishment of FDO was that society had become almost totally dependent on oil as well as the then-existing oil crises, e.g. the Suez crisis in 1956. It was also a period in which importance was given to developing a civil emergency preparedness in all sectors of society and by oil supply being the key issue in the energy sector.
In 1974, the International Energy Agency (IEA) was established in order to ensure reliable, affordable and clean energy. Denmark is a member of the IEA and as such has an obligation to maintain oil stockholdings equating 90 days’ net import volume. Since Denmark is currently a net exporter of oil, Denmark has no stockholding obligation to the IEA.
Denmark also has an obligation under Council Directive 2009/119/EC of 14 September 2009. The purpose of this directive is to maintain a high level of oil supply security. In that connection, the Danish Minister of Climate, Energy and Building has appointed FDO as the Danish central oil stockholding entity. Denmark is a member of the European Union and as such has an obligation to maintain oil stockholdings equating to 90 days’ supply less a 25% reduction because Denmark is an oil-producing country.
However, in the implementation of the Danish legislation, it was decided that Denmark should maintain stockholdings equating to 81 days’ oil consumption. The reason for this was that a decreasing Danish oil production would, in the long term, increase Denmark’s stockholding obligations to the IEA and the European Union. Of the 81 days’ oil consumption, FDO accounts for 57 days, while the oil companies account for the rest.
FDO is a proprietary organisation and thus not owned by its membership. The FDO stockholdings was founded by Danish car-owners and oil consumers paying, in the period from 1965 to 1989, DKK 0.01 per litre of petrol, diesel and fuel oil. FDO owns both sufficient tank capacity and stockholdings to meet the Danish stockholding obligation. Certain products are kept in underground storage under special protection. FDO's expenditure is in future financed by a fee payable by all companies with compulsory storage obligations, based on the volume covered by FDO for each individual company.
It is optional for oil companies to be a member of FDO. Any company with compulsory storage obligation may join FDO.
Any amendment of FDO’s Articles of Association is subject to approval by the Minister of Climate, Energy and Building. The Ministry of Climate, Energy and Building is also represented (by the Danish Energy Agency) on the board of directors of FDO for the purpose of coordination between FDO and the authorities.