US renews contract to run emergency oil stockpile

www.forbes.com Reuters, 01.15.03, 5:56 PM ET

WASHINGTON, Jan 15 (Reuters) - The Energy Department said late on Wednesday it renewed for another five years the contract it has with DynMcDermott Petroleum Operations Co. to run the U.S. government's Strategic Petroleum Reserve.

Under the contract, the company will be paid $120 million a year to maintain the readiness of the emergency oil stockpile's four storage facilities located in Louisiana and Texas.

The contract could also be extended for another five years. The stockpile has been the subject of much debate recently as some lawmakers have urged the Bush Administration to release oil from the reserve to offset lost supply due to the long strike in Venezuela.

The reserve, which currently holds 599 million barrels of crude, was created by Congress in the mid 1970s after the Arab oil embargo. The oil is held at the four sites in large underground salt caverns.

DynMcDermott was formed solely to operate the reserve. It is jointly owned by non-public DynCorp, McDermott InternationalInc. (nyse: MDR - news - people), Jacobs Engineering Group (nyse: MDR - news - people) and privately-held Internationl-Matex Tank Terminals.