Posted on 07/31/2002 7:41:54 PM PDT by kattracks
WASHINGTON, July 31 (Reuters) - The U.S. Energy Department said on Wednesday it will seek to boost the U.S. emergency crude stockpile, but a spokesman said the move should not be interpreted as a precursor to a possible attack on Iraq.
The department said it will accept bids next Tuesday from energy companies to supply 40,000 barrels per day (bpd) of oil to the stockpile in exchange for crude drilled in the Gulf of Mexico.
A department spokesman said the additional oil is part of the administration's plan announced last year to fill the emergency reserve to its 700 million-barrel capacity by 2005, and should not be interpreted as being part of a plan to attack Iraq.
"This is the second phase," said the spokesman, referring to the latest oil solicitation. Asked if that meant the move was disconnected from any plans to attack Iraq, he said, "That's correct."
The department first announced the solicitation last Friday in a notice published with little fanfare on its Web site.
As the Bush administration weighs its options on how to remove Iraqi leader Saddam Hussein from power, any attack on the country would likely cut off oil exports from Iraq, the fifth-largest foreign crude supplier to the United States.
However, the United States would be able to use its emergency Strategic Petroleum Reserve to counter a disruption in oil supplies.
Under the White House's publicly stated policy, President George W. Bush would order a release of reserve oil only if there was a disruption in supplies and not just to keep crude prices low.
The emergency stockpile, created by Congress in the mid-1970s after the Arab oil embargo, holds 578 million barrels in deep salt caverns along the Texas and Louisiana coast.
Since May, about 60,000 barrels of oil produced daily from offshore tracks in the Gulf of Mexico has been exchanged for oil going into the the reserve under a previous solicitation that will ultimately boost the stockpile's holdings by 18.6 million barrels.
Under the administration's latest request, companies are being asked to exchange up to 8 million barrels of oil from October 2002 through April 2003.
"More oil in the reserve is more energy insurance for American consumers," said Energy Secretary Spencer Abraham of the latest solicitation. "And the faster we can add oil to the reserve, the more energy security we can provide for all Americans."
At the current rate of U.S. oil imports, which during the first half of this year averaged 9.4 million bpd, the reserve holds enough crude to replace a total cutoff of American oil imports for 61 days. The stockpile could replace the average 700,000 bpd of oil the U.S. buys from Iraq for just over two years.
Companies awarded contracts from the Energy Department make arrangements to receive the oil at the specified market centers and exchange it for delivery to the Strategic Petroleum Reserve.
Typically, the volume of oil that arrives at emergency reserve is somewhat less than the amount of oil produced from offshore leases due to adjustments made for quality differences and transportation costs. ((Tom Doggett, Washington Energy Desk, 202-898-8320))
© Reuters Limited.
ANKARA, Turkey, Jul 31, 2002 (United Press International via COMTEX) -- Turkey is preparing its military and political defense in view of the U.S.'s apparent determination for military action against Iraq, Prime Minister Bulent Ecevit said Tuesday night. His spoke after a news leak that visiting U.S. military offered to set up defenses against Iraqi missiles.
Copyright 2002 by United Press International.
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