FDO was established in 1964 with the aim of providing oil supply security in case of war or supply crises. The background was society’s almost total dependence on oil and the then-current oil crises, e.g. the Suez crisis in 1956. It was also a period that focused on building a civil emergency preparedness in all sectors of society, and where oil supplies were key in the energy sector.
In 1974 the International Energy Agency was established in order to ensure reliable, affordable and clean energy. Denmark is a member of the IEA and is thus obligated to hold oil stocks equating to 90 days’ net import. Since Denmark is currently a net exporter of oil, Denmark has no stockholding obligation to the IEA.
Denmark is also obligated under Council Directive 2009/119/EC of 14 September 2009. The objective of this Directive is to maintain a high degree of oil supply security. In that connection the Danish Minister for Energy, Utilities and Climate has appointed FDO as the Danish central oil stockholding entity. Denmark is a member of the European Union and thus obligated to hold oil stocks equating to 90 days’ consumption, less 25% because Denmark is an oil-producing country.
In implementing the Danish legislation, it was decided that Denmark should hold oil stocks equating to 81 days’ consumption. This is because a declining Danish oil production will, in the long term, increase Denmark’s stockholding obligations to the IEA and the European Union. The 81 days’ consumption is split between FDO with 57 days and the oil enterprises 24 days.
FDO is a non-profit organisation and thus not owned by its members. FDO’s stockholdings were established in the following manner: In the period 1965 to 1989, Danish motorists and oil consumers paid DDK 0.01 per litre of petrol, diesel and fuel oil to establish and expand the Danish emergency oil stockholdings. FDO owns sufficient tank capacity and stocks to meet the Danish stockholding obligation. Some products are held in particularly protected underground bunkers. In future, FDO's expenses will be financed by all obligated enterprises paying a fee in DKK/m3 based on the volume covered by FDO for the relevant enterprise.
It is up to the oil enterprises whether or not they want to be members of FDO. Any obligated enterprise is eligible for membership of FDO.
Any amendments to FDO’s Articles of Association must be approved by the Danish Minister for Energy, Utilities and Climate. The Danish Ministry of Energy, Utilities and Climate is also represented (by the Danish Energy Agency) on FDO’s board of directors to facilitate co-ordination between FDO and the authorities.