NESO MANAGEMENT PLAN

I.

II.

OBJECTIVES

The DOE has been designated as this country's National
Emergency Sharing Organization (NESO), and as such, under
IEA procedures, has the responsibility for carrying out the
U.S. role in the IEA Emergency Sharing System (ESS). The
overall purpose of this project is to develop and document
a system for carrying out these responsibilities. The
following are the major objectives:

To analyze the responsibilities of DOE, other U.S.
Agencies, and the private sector with regard to the
initiation and operation of the ESS.

To translate these responsibilities into a system of discrete operations, and to identify the component of DOE or other U.S. Agency responsible for each operation. Where appropriate, alternative ways of accomplishing a particular objective will be investigated.

To identify the temporal constraints and requirements
for each operation; to uncover any timing or coordination
problems; and to identify and propose ways in which timing
and coordination problems can be overcome.

o To specify economic analysis, decision analysis or data analysis tools which may be required in connection with NESO duties.

To document the system. This will result in the production of a NESO Management Manual (NMM). The NMM would be in sufficient detail so that it could be used in future IEA controlled tests of the ESS.

NARRATIVE

Background

Under the operating procedures established by the IEA, a
National Emergency Sharing Organization (NESO) is to be
established in each IEA country and is to be responsible

for:

O national oil emergency measures; and

liaison with IEA on matters of international oil allocation during an emergency.

The IEA recognizes that the organization of NESOS will differ from country to country, reflecting different oil supply and political structures. On the other hand there is an expectation that the NESO will be the nexus through which government authority for domestic oil emergency management affects oil companies' domestic operations.

In the U.S., the Department of Energy functions as the NESO,
although not all NESO duties are performed exclusively by
DOE personnel. Other significant actors in the Federal
Government who play an important role in connection with
the initiation and implementation of NESO duties include
the Departments of State and Justice and the Federal Trade

Commission.

Method

This project involves codifying the procedures which would be followed by the Federal Government in connection with the initiation and implementation of the IEA Emergency Sharing System. Attachment A is a list of NESO duties derived from descriptions of NESO responsibilities contained in the IEA Emergency Management Manual (EMM) (the fundamental ESS operations guide). This list will be the point of departure for this work.

As with most systems development efforts, the method is
cyclical: a period of investigation and analysis is followed
by a period of documentation which, in turn, is followed by
a period of investigation, etc. Investigations will encompass
an everwidening circle of actors and activities; analyses
will be pursued at ever increasing depth; and documentation
will become increasingly thorough. Attachment B is a Gantt
chart depicting this process.

Initially, investigations and anlyses will be limited to the
literature, manuals, etc. on this topic and to discussions
with persons in EP who participated in past tests of the
ESS. Preliminary narratives and/or flow diagrams will be
prepared. This will be followed by interviews/discussions
with other DOE personnel in particular, IA and GC staff.

If this investigation reveals that certain activities require economic, decision or data analyses either as input or as "tools" in the performance of the activity, meetings will be held with the Scenario Development and Response Strategy Analysis Division and other analysis offices to specify these requirements. These offices would then assume the responsibility for developing the necessary analytical processes and products.

Meetings will also be held with staff members of other U.S.
Agencies (i.e., outside of DOE) to further flesh out our
understanding of the processes. This will primarily involve
selected persons at State and Justice.

Meetings with industry representatives will take place after
preliminary in-house work has been accomplished. This will
enable DOE personnel to deal with industry-related questions
in a focused manner.

Issues regarding the operation of the NESO (e.g., the role
of DOE in general; the roles of specific DOE offices; the roles
of other Agencies; the necessity for, or lack of certain data or
analysis; etc.) will be resolved, to the maximum extent possible,
through discussions and meetings. As necessary, workshops will
be held to develop management procedures which are not routine
and/or which are peculiar to NESO operations (e.g., "fair sharing").
These workshops may involve only DOE personnel or invitations could
be sent to other selected U.S. Agencies. For problems which remain
unresolved, issue papers will be prepared and circulated.

The documentation of each identified sub-system will be in the form of a narrative supported by descriptions of inputs and outputs and, where appropriate, flow charts. This documentation will be termed the NESO Management Manual (NMM) and will be developed in stages. It is planned that a preliminary version of the NMM will be put out in draft at the end of April.

The NMM will be expanded and revised, as appropriate, in light
of discussions, meetings, workshops, etc. It is planned that
a revised version of the NMM will be prepared by the beginning
of July and that a draft final version will be sent forward
to senior DOE management for review and comment in September.

III. MAJOR MILESTONES

IV.

1. Draft of NESO activites outline completed

2.

3.

4.

3/30

Initial version NESO Management Manual draft completed 4/30
Second draft of NMM completed
Draft final version of NMM completed

RESOURCES

7/2 Sept.

All members of International Group should be available to this
project: (1) for literature review; (2) for interviews of DOE
personnel; and (3) to contribute to narrative descriptions and
flow charts.

Time requirements for analytical personnel are not yet determined. Travel funds may be required in connection with industry interviews.

ATTACHMENT A

DUTIES OF THE NESO

(Derived from the IEA Emergency Management Manual--3d Edition)

To have the capability to assess accurately, and in a timely fashion, the national product supply and demand situation.

To collect national data regarding petroleum stocks and flows, and to submit this data to the IEA Secretariat in the IEA-specified format.

To assist in reconciling inconsistencies in the data provided to the Secretariat by both Reporting Companies and member nations.

To identify and inform the IEA Allocation Coordinator of any large-scale oil counterflows, and to consider appropriate action.

To assist in transmitting appropriate information, messages, etc., from the IEA Emergency Management Organization in Paris to local companies, both Reporting and Non-reporting. O To provide, as necessary, information to the IEA's Standing Group on Emergency Questions (SEQ) representatives.

To coordinate, in cooperation with industry, the implementation of national stock policy, refinery yield policy, and demand restraint measures.

To coordinate the development of voluntary offers from
Non-reporting Companies and to transmit such offers to the

IEA.

To examine voluntary offers and assess the implications of such offers on the domestic supply picture.

If requested by IEA, to provide advice and comment on
Reporting Company voluntary offers.

To maintain a national data base and monitoring system which could be used to ensure that the effects of voluntary or mandatory offers made to the IEA are borne fairly among companies.

Issue direct instructions to companies in connection with imposing mandatory international allocation.

Within the framework of Government policy in this connection, to implement domestic reallocation procedures.