Government to offer 30 mln bbls of SPR oil in one sale

Reuters News
Posted: Jun 23, 2011 4:25 PM
Government to offer 30 mln bbls of SPR oil in one sale

WASHINGTON (Reuters) - The U.S. Energy Department does not plan to stagger the sale of 30 million barrels of crude oil from the Strategic Petroleum Reserve and will offer all the crude in one bid sale, a government official familiar with the matter told Reuters on Thursday.

Delivery of the oil to the winning companies would be completed by the end of August if all the crude is actually sold, the official said.

The department said earlier that it would issue a notice on Thursday to sell the reserve oil and begin accepting bids for the crude.

It will take about 13 days to begin delivering the SPR oil into the market after it issues the bid notice, the department said.

Companies would usually have no more than five days to submit their bids for the oil through a special department website.

The department does not establish the minimum acceptable price for the SPR oil, but usually expects offers to be at least 95 percent of the estimated market price for comparable crudes.

"This 'minimum market price' becomes our evaluation threshold for disapproving low price offers," the department said in its guidelines for releasing SPR oil.

Winning companies would pay for the oil during the month after the crude is delivered.

(Reporting by Tom Doggett; Editing by David Gregorio and Lisa Shumaker)