Oil and petrol reserves opened

TWENTY-SIX countries in an international energy consortium will release 60 million barrels of crude oil and petrol to relieve the energy crunch caused by Hurricane Katrina.

As part of that effort, the Bush administration will release 30 million barrels of crude oil from US reserves.

Energy Secretary Samuel Bodman called this an initial response, part of what he called an aggressive federal response to the disaster. The fuel being released by the International Energy Agency will be released over the coming month. The reserves will amount to about two million barrels a day coming into US markets.

"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," Mr Bodman said at a news conference.

Technically, even the release of supplies from the US-based SPR is a matter of joint decision-making by the US and its European partners. Until now, the administration has loaned oil from the SPR to several refineries, but has not had a general release of crude to counter supply problems. This must be co-ordinated with other IEA members.

Fears of escalating fuel prices spread as damaged Gulf Coast refineries and fuel lines shut down. Petrol prices on jumped 35 to 50 cents a gallon overnight in many places.

Latest figures from American Petroleum Institute (API) show Katrina has damaged or displaced 58 Gulf of Mexico oil platforms and drilling rigs, said spokesman Tim Sampson.

Among those, 30 rigs and platforms have been reported lost. No company breakdown is available.

One of the more significant reported losses came from Houston's Apache Corp on Thursday. It said it lost eight platforms that produce 7,158 barrels of oil and 12.1 million cubic feet of natural gas per day.

That's about 10% of the lost oil production and 2% of the drop in gas reported earlier this week, said company spokesman Bill Mintz.

Earlier in the week, Diamond Offshore Drilling Inc's Ocean Warwick was found about 60 miles from its original position near Dauphin Island off the coast of Alabama. A photo of the displaced rig found its way onto websites and newspapers worldwide, creating one of many indelible images of Katrina's strength.

Diamond had another rig, Ocean Voyager, break from its moorings, but tug boats were bringing it to shipyards for further assessment, said company chief financial officer Gary Krenek.

"We've boarded the rest of the rigs. There is some minor damage, but nothing near the extent as the Voyager or the Warwick," he said.

Earlier this week Shell reported heavy topside flooding to its Mars platform.

Mr Sampson said even with these reports, it's still too early to gauge damage in the Gulf.

"It could still be the end of next week before we get pipeline damage. You still have to do things like pressure-test the lines," he said.

US President George W Bush has urged Americans to be prudent in energy consumption, but called the hurricane a "temporary disruption" to petrol supplies.

The IEA, an oil market watchdog, is in consultations with its members on the release of some of their oil products inventories, after Katrina shut down some 90% of production facilities on the US coast of the Gulf of Mexico.