This was reported yesterday, but I just saw it, don't think it's been posted here yet - LOL!
U.S. firm forfeits 3 mln barrels of SPR oil
(UPDATE: adds congressional hearing on oil release in last paragraph)
By Tom Doggett
WASHINGTON, Oct 12 (Reuters) - Euell Energy has forfeited three million barrels of oil it was awarded from the Strategic Petroleum Reserve after the pipeline company failed to obtain letters of credit needed to take the emergency crude, an Energy Department spokesman said Thursday.
Two other companies, Lance Stroud Enterprises and Burhany Energy Enterprises, which were awarded a combined seven million barrels of SPR oil, were given through midnight on Friday to obtain letters of credit for their crude, spokesman Drew Malcomb said.
If all three firms end up forfeiting their combined 10 million barrels of oil from the government stockpile, it could be a major set back for the Clinton administration's effort to boost heating oil supplies and ease high energy prices this winter.
``He did not come up with his letter of credit,'' Malcomb said, referring to Euell chief executive Renard Euell. ``He's no longer in the running.'' The department will now likely ask for new bids on Euell's reserve oil on Monday, he said.
Malcomb said the other two firms are in serious negotiations for financing. ``They have to be in serious negotiations with financial institutions in order to get an extension.''
If Lance Stroud and Burhany Energy fail to obtain financing, their SPR allotments will also likely be up for grabs by other companies on Monday, the spokesman said.
``We will wait and finish this process and then on Monday likely we will rebid,'' he said.
The Energy Department awarded a total of 30 million barrels of emergency oil to 11 firms two weeks ago to increase heating fuel supplies for the winter.
Under the so-called ``swaps'' plan, the firms will borrow oil from the reserve and then refine the crude into heating oil and other petroleum products. The companies will replace the loaned oil next year.
Most of the oil was awarded to major energy companies like BP Amoco (quote from Yahoo! UK & Ireland: BP.L) and Valero Energy Corp (NYSE:VLO - news).
U.S. lawmakers have criticised the Energy Department for awarding a third of the 30-million-barrel release to Euell and the other two small companies, because they have no refineries to process the crude.
Instead, the companies speculated they could sell the crude to major oil firms.
Euell Energy's chief executive claimed collusion among the big oil companies stopped his firm from getting the reserve oil.
He said oil companies had backed away from preliminary deals to take Euell's three million barrels of SPR crude, which meant his firm could not secure the financial letters of credit needed for the oil.
The House Energy and Power Subcommittee has scheduled a Oct. 19 hearing to take a close look at the administration's release of emergency oil. |
