(BRUSSELS) - The European Commission launched a public consultation exercise Tuesday on revising its emergency oil stocks system, amid soaring oil prices and growing concerns over the security and reliability of supplies.

The EU's executive arm believes the existing obligation for member states to retain 90 days worth of emergency energy reserves has worked well but that the 40-year-old rules need updating and streamlining to take account of an expanding EU with shrinking oil reserves.

One of the goals is to incorporate the three existing EU directives on the subject into a single piece of legislation.

Many of the newer EU members, including former communist states of eastern Europe, are not members of the International Energy Agency (IEA) and the Commission also foresees harmonising national systems and moving closer towards the IEA regime.

The EU member states last year highlighted the need to review the oil stocks mechanisms.

"The changing global energy situation and new challenges in the oil market require... the strengthening and streamlining of this emergency response system," an EU consultation document asserted.

"It needs to be better aligned to the European Union's needs concerning its readiness to react to oil supply disruptions, should they occur, with desirable efficiency and in a fully coordinated manner," the document continued.

One problem noted in the current set-up is that while some countries have 90 days worth of oil centrally held, others have part only as "tickets" redeemable by a government from a private oil company.

The announcement of the review also came as the price of New York crude rocketed to a record high point of 118.05 dollars per barrel on Tuesday.

While the European Commission stressed that the emergency supply system was not designed to regulate the market, unforeseen supply problems are a serious concern.

The commission report cites the problems encountered in January 2007 when the Druzhba pipeline carrying oil from Russia to Europe was halted due to a conflict between Russia and Belarus, cutting oil supplies to some refineries in the EU.

"The risk of supply disruptions is increasing. Supply is more and more concentrated in a handful of countries, many of which are exposed to high geopolitical risks," the report said.

"Furthermore, forecasts indicate that in the medium term, oil supply may not keep pace with the ongoing increase in global demand."

As a result any future supply disruption "may have a bigger impact than in the past," it continued.

The commission noted that elsewhere -- including the United States and Japan -- revisions to the emergency stock legislation have been made.

"These trends, coupled with intensifying globalisation of the oil market (due to the arrival of new important players from developing economies), increasing competition and decreasing indigenous production in Europe are all factors calling for updating of the existing EU stock legislation," the commission said.

The consultation exercise of interested parties will last 6-8 weeks.

A spokesman for Energy Commissioner Andris Piebalgs said the commission hoped to include the revised directive in the next energy package, to be adopted around November.

Text and Picture Copyright 2008 AFP. All other Copyright 2008 EUbusiness Ltd. All rights reserved. This material is intended solely for personal use. Any other reproduction, publication or redistribution of this material without the written agreement of the copyright owner is strictly forbidden and any breach of copyright will be considered actionable.