The available reserve capacity, located in natural earth cavities on the Texas and Louisiana coasts, is 77 million barrels. The Ministry of Energy said that the first purchase of 30 million barrels will be for oil from low and high sulfur crude, and will focus on the purchase of small and medium producers.
Analysts at Clearview Energy Partners said in a note to clients that the ministry “appears to be paving several paths to implement President Trump’s directive to fill the strategic oil reserve … We see today’s action as a necessary step towards filling the oil reserve, but it is not sufficient in itself.”
Treasury Secretary Stephen Mnuchin told Fox Business Channel that he would urge Trump to take advantage of the drop in oil prices and ask Congress between 10 billion and 20 billion dollars to fill strategic oil reserves in the long run. “We must fill the reserve over the next ten years,” Mnuchin said.
The Ministry will purchase up to 11.3 million barrels of low-sulfur crude and up to 18.7 million barrels of high-sulfur crude. She said that the delivery date would be between May 1 and June 30, with bidding continuing until March 26.
The Ministry of Energy said that the reserve can receive 685 thousand barrels per day of crude.