US Government Agreed Companies’ Request to Rent 23 Million Barrels for Oil Reserve

The Trump administration has agreed to a proposal made by nine American companies to rent space for storing 23 million barrels of crude in the US emergency oil reserve after President Donald Trump earlier announced to help energy firms that affected by the global oil price crash.

On Wednesday, April 29, 2020, a US official disclosed that Chevron Corp. (Chevron), Exxon Mobil Corp. (Exxon), and Alon USA Inc. (Alon) were included among the nine companies as part of filling up empty space in the special oil reservoirs.

Filling up US Oil Reserve

On April 2, the US Department of Energy, or DOE, said that it would offer 30 million barrels of space for oil storage in the Strategic Petroleum Reserve, or SPR to American oil companies but it was reported later in the month that companies were finalized their contracts for only 23 million barrels of space. However, the DOE declined to mention the terms of the lease contracts for the initial oil deal with companies.

In the previous month, Trump had informed Energy Secretary Dan Brouillette to fill up the country’s reserve, which has about 77 million barrels of free space.

Moreover, he had also announced plans to buy about 30 million barrels of oil in an attempt to fill up its SPR by taking advantage of the slumping prices of the global oil due to restrictions of movements and closure of the travel industry prompted by the coronavirus impact. Trump’s plans of accumulating oil reserve shattered after the US Congress declined to fund the purchase.

Meanwhile, some other companies including Atlantic Trading, Energy Transfer, Equinor Marketing & Trading (US) Inc., Mercuria Energy America, MVP Holdings LLC, and Vitol Inc. are currently in contracts for leasing space in the reserve.

Urging Congress to Approve the Purchase

The DOE asserted that it has been working with Congress to find ways and solve the matter to purchase oil for the reserve as well as initiate more plans to lease space in the facility.

The department said earlier this month, companies would be allowed to store their oil in the SPR until March 2021 at a cost by paying a small amount to cover the SPR’s cost of storage. Sources reported that most of the oil orders will be delivered in May and June, with some shipments starting from April.

According to the SPR website, nearly 1.1 million barrels of sour crude oil started moving to the facility in April and the reserve currently holds 636.1 million barrels. Meanwhile, oil prices increased more than 10% on Wednesday after US crude stockpiles grew less than expected with a view that fuel consumption would rebound since some European countries and US states have eased lockdowns.

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