US resolicits to purchase 4 million barrels SPR crude

Washington (Platts)--18Apr2007

The US Department of Energy was seeking to purchase crude oil for the
nation's emergency stockpile Wednesday little more than a week after it
rejected all offers it received as too high and not of reasonable value for
taxpayers.

The DOE Wednesday re-issued the solicitation for 4 million barrels of
crude oil for the Strategic Petroleum Reserve, asking for bids by May 1, with
awards to be made one week later.

Deliveries would be made during June.

The new solicitation is one of several the DOE intends to hold in coming
months to replace the 11 million barrels of oil sold from the SPR after
Hurricane Katrina, the powerful hurricane that disrupted offshore Gulf of
Mexico production and onshore refineries in late-August 2005.

The most recent solicitation requests offers for up 2 million barrels of
sweet crude to be delivered to the West Hackberry, Louisiana SPR site, and/or
2 million barrels of sour crude to the delivered to the Bryan Mound, Texas
site.

The DOE said it would write contracts to ensure that the reserve is
filled at a "moderate" rate of approximately 100,000 b/d during June. The SPR,
which was developed in the wake of the 1970s Arab oil embargoes, has a
capacity of 727 million barrels and currently holds 689 million barrels in
inventory.

When bids for the first solicitation were due in early April, West Texas
Intermediate crude oil prices were at six-month highs, mostly on geopolitical
tensions such as Iran taking British sailors hostage. Crude prices have since
fallen.

--Cathy Landry, cathy_landry@platts.com