The US Energy Department said that it will solicit bids from producer to exchange up to 13 million barrels of royalty-in-kind oil drilled from federal leases in the Gulf of Mexico for other oil that would go into the US Strategic Petroleum Reserve.
Bids are due by 13 May. Actual oil volumes delivered to the reserve will take into account adjustments for transport costs and the quality differences of the crude, the department said. The oil would be delivered to the emergency stockpile at a rate of 76,000 barrels per day beginning in August and continue until December. Many US lawmakers and energy experts have called on the department to suspend deliveries to the stockpile, arguing that taking supplies off the market helps to keep crude and gasoline prices high. Current reserve stockpiles stand at a record 701 million barrels and is in the process of expanding the oil reserve to 1 billion barrels, as mandated by Congress. The reserve was created by Congress in response to the 1973-74 Arab oil embargo. The SPR is stored in underground salt caverns at four sites in Texas and Louisiana.
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