The U.S. Department of Energy (DOE) announced late on October 24th that it had awarded 7 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) to three energy firms.
The 7 million barrels were re-offered on October 16th, after two small firms - Euell Energy and Lance Stroud Enterprises - were unable to secure the letters of credit necessary to borrow the oil from the SPR.
The winning bidders were BP Amoco, with 3 million barrels, Vitol, with 2.5 million and Marathon Ashland, with 1.5 million barrels.
The DOE was criticized for its handling of the initial bidding round, including its decision to award one-third of the 30 million barrels to three energy firms with no refining capacity or experience in the industry.
The third firm, Burhany Energy, was able to transfer the title of its 3 million barrels to Hess for an undisclosed sum. The firms chosen to take the 7 million barrels in the second round were also awarded contracts in the first round totaling 11.45 million barrels.
The DOE said on October 24th that 1.6 million barrels of the reserve oil had been delivered, with another 3 million barrels to be shipped by the end of the month.
The oil offered in the second round of bidding is not expected to reach the winning firms until the end of December or early January, near the end of the peak heating oil supply season.
The second round bidders are to return the borrowed oil, plus an 8 percent premium between August and November of 2001, bringing the total amount of oil to be returned to the reserve to 31.35 million barrels.
