IEA Nations to Free 2M Oil Barrels a Day

PARIS – The governments of 26 countries agreed Friday to release the equivalent of 2 million barrels of oil per day from strategic reserves to 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.

“This coordinated response will free up extra supplies to help the market deal more effectively with the disruption caused by Katrina,” said British Energy Minister Malcolm Wicks. “This is a global oil market and so a multilateral response is the right way forward.”

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.

The German Economy Ministry said the country would contribute about 6 percent of the total. That would be about 120,000 barrels a day. Britain said it plans to release 73,000 barrels of oil a day for the next 30 days. Portugal 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, shutting down 1.5 million barrels per day of oil production and 2 million barrels a day of refining capacity, according to the IEA.

Under the terms of the international agreements underpinning the IEA, almost half of the emergency stocks released will come from the U.S. Strategic Petroleum Reserve. That – unlike many European states’ stockpiles – is almost entirely made up of crude oil rather than refined products including gasoline.

The IEA’s American deputy head, William Ramsay, said Washington might have to review its stocks policy as a result of Katrina.

Until now, said Ramsay, a former U.S. ambassador to Congo, “it’s always made more sense economically to have the crude on hand and then refineries can turn it into products depending on the requirements of the market at that time.”

“But this particular incident is probably going to raise questions that maybe some product stocks would be in order,” he said.

The IEA urged members Friday to prioritize gasoline, and France indicated its contribution would be in refined products, mainly gasoline.

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.

But U.S. Energy Secretary Samuel Bodman acknowledged that plugging the shortfall of gasoline was the main priority. “We have made it known that we are facing shortfalls in available supplies of refined products in our country as a consequence of this storm,” Bodman said.

The additional supply should help relieve high gasoline prices, he said.

Some analysts disagreed. “Don’t think that this is going to mean your pump prices are going to go down,” said Tom Kloza of the U.S.-based Oil Price Information Service.

“What we’re dealing with is not a crude-oil crisis – it’s a gasoline crisis,” Kloza said.

It’s too soon to tell how helpful these crude shipments will be, he said, as questions remain about how many refineries will remain down due to damage and for how long.

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. Two major pipelines carrying gas to the Midwest and East also have been partially disrupted by the Hurricane.

IEA member countries hold some 4.1 billion barrels of public and industry oil stocks, of which roughly 1.4 billion barrels are government-controlled for emergency purposes.

German Chancellor Gerhard Schroeder said Germany not only has a “historical duty” to help the United States in a time of crisis because of the support it received rebuilding after World War II, but also because of the scope of the damage.

“Everything that we can mobilize will be mobilized,” he said.

Portugal, one of the 16 EU members of the IEA, said it was ready to provide any help it could from its oil reserves. “We’re totally ready to collaborate,” Economy Ministry spokesman Jose Pedro Santos said.

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 said its commitment represents less than 2 percent of its strategic reserve. Spain consumes an average of 1.6 million barrels a day, with its reserve amounting to about 144 million barrels, the ministry added. The measure will be approved at next week’s cabinet minister meeting, it said.

Separate from the IEA discussions, the European Commission said oil sector experts from all EU nations will meet in special session Sept. 9 to discuss the oil supply situation. They comprise an EU panel that meets twice a year and was founded during the oil crisis in 1973.

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Associated Press Writers Josef Hebert in Washington, Madlen Read in New York, David Rising in Berlin, Mar Roman in Madrid, Spain; and Barry Hatton in Lisbon, Portugal and contributed to this report.