Strategic Petroleum Reserve Crude Oil Sales: Buyers and Exports

Strategic Petroleum Reserve Crude Oil Sales: Buyers and Exports

INSIGHTi

Strategic Petroleum Reserve Crude Oil Sales:
Buyers and Exports
February 16, 2023
In January 2023, the U.S. Department of Energy (DOE) concluded the largest emergency drawdown of
crude oil from the Strategic Petroleum Reserve (SPR): approximately 180 million barrels directed by the
President under authorities provided by Section 161 of the Energy Policy and Conversation Act of 1975
(P.L. 94-163, as amended at 42 U.S.C. §6241). Entities controlled by U.S. and non-U.S. parent
organizations purchased crude oil sold under SPR emergency drawdown authority. Additionally, media
reports indicated that buyers delivered SPR crude oil to foreign destinations. Purchases by China-
affiliated entities, along with reported deliveries to refineries located in China, raised concerns among
some Members of Congress about SPR crude oil buyers and destinations. Subsequently, the House of
Representatives passed H.R. 22 on January 12, 2023, that would prohibit the sale of SPR petroleum
products (e.g., crude oil) to China-affiliated entities and the export of SPR crude oil to China.
CRS analysis of successful award reports for SPR crude oil sales during the period of fiscal year (FY)
2017 to present indicates that entities linked to U.S. oil refining operations are generally the largest, by
award volume, SPR crude oil buyers. Other entities, many with parent organizations located in foreign
countries, also purchase SPR crude oil. SPR crude oil export volumes and destinations are uncertain.
Background
As required by 42 U.S.C. §6241(e), SPR petroleum products must be sold “to the highest qualified
bidder” following a public notice of sale (NoS) approved by the Secretary of Energy. Oil sales adhere to
regulations set forth at 10 C.F.R. Part 625, including SPR Standard Sales Provisions (SSPs), as
supplemented and amended in each price-competitive NoS. Bidder qualification criteria typically include
(1) registering with the SPR’s online Crude Oil Sales Offer system, (2) certifying that the entity does not
engage in activities prohibited by export control laws, sanctions, and related regulations, and (3)
providing an offer guarantee and a bank-certified Letter of Credit that ensures payment and performance
should a contract be awarded.
Since FY2017, and as of the date of this Insight, DOE completed 18 SPR crude oil sales resulting in
contract awards of approximately 296 million barrels. Generally, these sales fall into one of three
categories: mandatory sales, SPR modernization sales, and emergency sales. For additional SPR
Congressional Research Service
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background, including information about sale categories, see CRS Insight IN11916, Strategic Petroleum
Reserve Oil Releases: October 2021 Through October 2022, by Phillip Brown.
SPR Crude Oil Buyers
From FY2017 to present, DOE awarded SPR sale contracts to 19 entities (see Figure 1). By number,
most entities are subsidiaries of parent organizations located in foreign countries, including Saudi Arabia,
the United Kingdom, France, China, Australia, and Switzerland. Entities linked—through either direct or
indirect ownership—to U.S. refining operations secured contracts for the largest volume of SPR crude oil
(see blue bars in Figure 1). U.S. companies secured approximately 63% of sale award volumes.
Figure 1. SPR Sale Awards by Entity, Including Parent Organization and Host Country
FY2017 to Present

Source: CRS analysis of SPR Successful Award reports, available at https://www.spr.doe.gov/doeec/ArchiveDocs.htm?
type=oil%20sale. Refining operations reflect data as of January 1, 2022. For additional information about U.S. refineries, see
U.S. Energy Information Administration, “Refinery Capacity Report,” June 21, 2022, at https://www.eia.gov/petroleum/
refinerycapacity/.
Notes: ISER = Industry Science Energy Resources. Some entity names are truncated for brevity. Complete entity names
are included in SPR Successful Award reports. Award volumes may not sum due to rounding. Actual sale volumes,
computed once deliveries occur, can vary from contract award volumes. The U.S. Department of Energy (DOE) does not
report delivered volumes by entity. CRS has compiled a tabulated summary of all 18 SPR crude oil sales, by entity, fiscal
year, award volume and sale type. This tabulated summary is available to congressional clients upon request to Phil ip
Brown.

Congressional Research Service
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SPR Crude Oil Exports
The federal government does not track and report export destinations for SPR crude oil following sale
awards. Generally, DOE delivers SPR crude oil to one of seven sale points within the SPR distribution
system. At the sale point, ownership title transfers from the federal government to the buyer, at which
time the delivery becomes U.S.-origin crude oil. Subject to federal transportation (i.e., the Jones Act) and
any applicable trade restrictions, the buyer can then further transport SPR crude oil by either pipeline or
marine vessel. Buyers can deliver SPR crude oil to domestic refineries, storage facilities, or export
terminals. With opportunities for blending SPR crude oil with other crude oils in storage facilities and
marine vessels throughout the supply chain, accurately quantifying SPR crude oil export volumes could
be a challenging endeavor.
Generally, SPR crude oil was subject to broader U.S. crude oil export restrictions in effect until December
2015. Enactment of P.L. 114-113 (Div. O, Title I, available at 42 U.S.C. §6212a) effectively repealed the
export restrictions. Since then, U.S. crude oil exports have reached record levels. During calendar year
2021, China was the fifth-largest export destination for U.S. crude oil.
Given the SPR’s proximity to oil export infrastructure in the U.S. Gulf Coast region, it is possible that
buyers exported some SPR crude oil. However, the Gulf Coast also has the highest concentration of
domestic oil refining capacity. An accurate and comprehensive accounting of SPR oil export volumes and
destinations is not publicly available.

Author Information

Phillip Brown
Claire Mills
Specialist in Energy Policy
Research Assistant

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
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