July 11, 2011 / 6:35 PM / in 7 years

UPDATE 3-US oil reserve bids were double amount offered

 * U.S. sold all 30.6 mln barrels of oil initially awarded
 * Government hopes to deliver 7 mln barrels this month
 * Valero, Vitol, Shell, Conoco get largest contracts
 * Parnon Energy, PetroChina among those losing out  (Releads with companies bid for 62 million barrels of U.S. oil, ships available to transport oil)
 By Tom Doggett and Ayesha Rascoe
 WASHINGTON, July 11 (Reuters) - The U.S. government received bids for more than double the amount of oil it was selling from its emergency reserves last month, and the first 7 million barrels are set to hit the market before August.
 The latest details from the biggest-ever sale from the Strategic Petroleum Reserve showed for the first time just how great demand was, but also highlighted those who lost out, including one company targeted by regulators in a landmark manipulation case and China's top state-run oil firm.
 The Energy Department confirmed it sold a total of 30.6 million barrels of SPR crude oil to 15 firms for an average $107.20 a barrel, details that were little altered from information released almost two weeks ago. But it added that it had offers for almost 62 million barrels of U.S. oil.
 The DOE hopes to begin delivering 7 million barrels this month and the rest in August, a source told Reuters, providing the first indication of how much crude might soon begin showing up in commercial stocks or refinery runs. [ID:nWNA3343]
 The White House last month ordered the oil sale as part of a coordinated release with the International Energy Agency of 60 million barrels of crude from the stockpiles of industrialized nations.
 The distribution of oil is intended to offset the disruption in crude exports and the increase in world oil prices caused by unrest in Libya.
 The IEA said the amount of emergency oil to be released by its other members would be slightly less than the 30 million barrels expected. [ID:nL6E7IB0C2]
 It is unclear if the huge interest in the U.S. oil will prompt the Obama administration to have another oil sale.
 "The U.S. SPR release of 30.6 million barrels fulfilled the U.S. share under the IEA's collective action. The IEA and its members are evaluating the impact of that collective action and will determine next steps," a government source said.
 FACTBOX-Bidders on U.S. oil reserves      [ID:nN1E76A17U]
 LINK-Energy Department's list of all offers:
 FACTBOX-IEA release statistics            [ID:nL6E7I80VV]
 COLUMN-US oil release justified: Kemp     [ID:nLDE75Q0TS]
 GRAPHIC-U.S. reserves         r.reuters.com/cah48r
 DOE data released on Monday also showed offers that were rejected. Parnon Energy, which was recently charged by the Commodity Futures Trading Commission with oil market manipulation, tried to buy 550,000 barrels for $102.83 each.
 The CFTC said Parnon and London-based Arcadia, which didn't bid on the reserve oil, were part of a scheme that allegedly earned $50 million in illegal U.S. oil trading in 2008. [ID:nN25148525]
 PetroChina International (0857.HK) (601857.SS) bid $103.89 a barrel for 500,000 barrels and Morgan Stanley (MS.N) bid $96.18 for 1.65 million barrels and $99.49 for 250,000 barrels. PetroChina is the largest oil and natural gas producer in China.
 The losing bids from PetroChina and Parnon were close to the lowest winning bid, which came from Barclays Bank (BARC.L) at $104.98 for 200,000 barrels.
 Some companies had a mix of successful and unsuccessful offers, but 10 were rejected outright, including commodities giant Glencore (GLEN.L), which bid $99.78 for 2 million barrels.
 In the United States, the largest amounts of oil will go to Valero Energy Corp (VLO.N), Vitol Inc, Royal Dutch Shell (RDSa.L), ConocoPhillips (COP.N), Plains Marketing, Hess Corp (HES.N) and Marathon (MRO.N). The department said it will begin putting some of the U.S. reserve oil in the market this month, earlier than expected.
 "The Department is currently coordinating with the successful contract awardees, the Maritime Administration, and the Department of Homeland Security to facilitate and streamline deliveries, including those for companies that have requested early delivery of the crude oil in July 2011," it said.
 The department previously said deliveries of emergency oil would begin in August and be completed by the end of that month.
 The delivery schedule is not final as companies still need to line up the vessels to transport the crude and get waivers from the federal Jones Act law to allow foreign-based ships to move the oil between U.S. ports, a government official said.
 The Maritime Administration, which compiled a list of U.S. vessels able to transport reserve oil, said there are several ships available for leasing during the second half of this month that can hold from 171,000 to 330,000 barrels of crude.  (Additional reporting by Emily Stephenson and David Sheppard; Editing by Jim Marshall and Marguerita Choy)   

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