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IEA Nations to Release 2M Oil Barrels a Day

Posted on: Friday, 2 September 2005, 15:00 CDT

PARIS - The governments of 26 countries agreed Friday to release the equivalent of 2 million barrels of oil per day from strategic reserves to help the United States cope with the aftermath of Hurricane Katrina, the International Energy Agency said.

The Paris-based IEA said its member countries "unanimously support" the measures, which will take effect for an initial period of 30 days. The IEA board will meet in two weeks to review the situation, it said.

"The loss of production in the Gulf of Mexico and considerable damage to oil refining and transportation infrastructure constitute a serious disruption of supplies," the group said.

France, Spain and Germany earlier said they had agreed to release emergency fuel stocks.

France said it had agreed to contribute the equivalent of 92,000 barrels of oil per day in refined products - mainly gasoline - and Spain said it will release 70,000 barrels of oil equivalent per day. Germany also said it would support the IEA plan.

"This request is part of the solidarity effort toward the American people, severely affected by this meteorological cataclysm," the French Industry Ministry said.

Katrina ravaged the Gulf of Mexico coast and shut down around 90 percent of its crude production capacity. The region is responsible for around 30 percent of U.S. crude production and quarter of its gas.

IEA members are bound to release strategic stocks in emergencies, under the terms of the international agreements underpinning the organization.

The United States has already begun lending crude from its strategic reserves to refineries, but needed an IEA agreement to approve a general release of emergency stocks. As part of the agreement the Bush administration will release 30 million barrels of crude oil from U.S. reserves.

The IEA statement did not specify the make-up of the stocks to be released.

"Member countries are aware that products and, in particular, gasoline, will be the most useful contribution," it said.

Fears of escalating fuel prices spread across the United States this week as damaged Gulf Coast refineries and fuel lines shut down. Nine Gulf Coast refineries have been shut down by electrical problems, flooding and other damage caused by Katrina.

Germany and France said that the United States had asked for the release of emergency reserves to help deal with the supply shortage.

France's contribution amounts to two days' worth of domestic fuel consumption, the country's Industry Ministry said, which will be taken from the country's strategic stocks and placed on the market.

That will leave France with 88 days of strategic stocks, rather than the 90 days it is committed to maintain under international accords.

Spain's Industry Ministry said that Spain would contribute 70,000 barrels of oil equivalent per day for 30 days - equivalent to 2 percent of its reserves. Spain consumes an average of 1.6 million barrels a day, with its reserve amounting to about 144 million barrels, the ministry added.

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Associated Press Writers Robert Wielaard in Newport, Wales; David Rising in Berlin and Josef Hebert in Washington contributed to this report.

Source: Associated Press/AP Online

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