DOE says five firms delaying SPR crude repayment

The US Department of Energy Thursday said it has renegotiated contracts allowing five firms to delay their return of 23.8 million bbl of crude taken from the US Strategic Petroleum Reserve last year. In return for the delay, the DOE will receive an additional premium of 2.4 million bbl.

March 29, 2001

2 min read

Paula Dittrick
OGJ Online

HOUSTON, Mar. 29�The US Department of Energy Thursday said it has renegotiated contracts allowing for a delayed return of 23.8 million bbl out of the 30 million bbl drawn from the US Strategic Petroleum Reserve last year.

�Five of the nine companies that received the original contracts have requested later return dates. We have approved their requests,� DOE spokesman Drew Malcomb told OGJ Online. He declined to name the five companies, saying that information was confidential.

In return for the delay, the DOE will receive an additional premium of 2.4 million bbl, Malcomb said. The new return dates negotiated are between December 2001 and January 2003. The original winning bidders had pledged to return the crude by Nov. 1 (OGJ, Oct. 23, 2000, p. 26).

In September 2000, President Bill Clinton announced the SPR exchange program (OGJ, Oct. 16, 2000, Newsletter). The release was intended to ease tight heating oil supplies primarily in the Northeast.

Marathon Ashland Petroleum LLC, Finlay, Ohio, confirmed to OGJ Online Thursday that it was among the companies receiving a delay.

Troy Reynolds, Marathon Ashland spokesman, said the delay was requested �for business reasons� and that he could not elaborate. He also could not say whether Marathon wanted to delay the return of the entire 5.4 million bbl that it received from the SPR.

In addition to Marathon Ashland, the companies that received the SPR oil were Morgan Stanley Dean Witter, New York; Equiva Trading Co., Houston; BP Oil Supply Co., Warrenville, Ill.; Hess Oil Co., New York; Vitol SA Inc., Houston; Elf Trading Inc., Houston; and Valero Marketing & Supply Co, San Antonio.

A ninth company, Burhany Energy Enterprise Inc., Tallahassee, Fla., transferred title to its 3 million bbl to Hess. Most of the SPR crude that was released came from the West Hackberry, La., site.