'Companies rent 23 mn barrels space in US oil reserve'

Nine companies rent 23 mn barrels worth of space in US emergency oil reserve: Official

Representative image.

Nine companies including Chevron Corp, Exxon Mobil Corp and Alon USA Inc have agreed to rent space to store 23 million barrels of crude in the US emergency oil reserve, a U.S. official said on Wednesday, as the Trump administration tries to help energy firms deal with the crash in oil prices.

The Department of Energy, or DOE, said on April 2 it would offer to oil companies 30 million barrels of space in the Strategic Petroleum Reserve, or SPR. Later in the month, it said that companies were in contract negotiations for only 23 million barrels of space.

President Donald Trump had ordered Energy Secretary Dan Brouillette in March to fill the reserve, which has about 77 million barrels of free space, "to the top." But an initial plan to buy about 30 million barrels fell through after the U.S. Congress declined to fund the purchase.

The Energy Department did not immediately respond to a request for the terms of the lease contracts.

The other companies leasing space in the reserve are Atlantic Trading, Energy Transfer, Equinor Marketing & Trading (US) Inc, Mercuria Energy America, MVP Holdings, LLC and Vitol, Inc. The list of companies was provided by the U.S. official on condition of anonymity.

The DOE has said it is continuing to work with Congress on finding ways to fund a purchase of oil for the reserve and could initiate more plans to lease space in the facility.

Companies storing oil will be allowed to keep it in the SPR through March 2021 and will pay a small amount of oil to cover the SPR’s cost of storage, the department said earlier this month. Most of the deliveries of the oil will be received in May and June, with some shipments in April.

The SPR website says that 1.1 million barrels of sour crude oil had been moved to the facility in April and the reserve currently holds 636.1 million barrels.

Oil prices surged more than 10% on Wednesday after U.S. crude stockpiles grew less than expected feeding optimism that fuel consumption will recover as some European countries and U.S. states ease lockdowns caused by the coronavirus.

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