R.G. Edmonson | Aug 19, 2011 5:10PM EDT
The domestic maritime community is furious with the Maritime Administration for approving waivers to non-Jones Act tankers to transport oil on coastwise routes from the Strategic Petroleum Reserve on the U.S. Gulf Coast.
The issue has been brewing since the Department of Energy announced in June it would release 30 million barrels of oil from the SPR as part of an international effort to stabilize global markets after oil stopped flowing from Libya during its civil war.
Customs and Border Protection said it has issued 46 waivers, which it issues with the assent of Marad. The Jones Act permits waivers if there is no qualified vessel available to transport cargo at the time a shipper makes it available.
An American Waterways Operators spokesman said Marad violated the spirit, if not the letter, of Jones Act by ignoring the availability of Jones Act ships and barges. Marad reported seven carriers offered 19 vessels with a combined capacity of more than 2.2 million barrels.
Several sources alleged DOE deliberately chose to sell SPR oil in lots that exceeded the capacity of any particular Jones Act vessel: 300,000 barrels for ships, 40,000 barrels for barges. The largest Jones Act tankers that operators offered have a capacity of 330,000 barrels; the largest barges, 110,000 barrels.
Although vessel size doesn’t match DOE’s delivery lot size, under established procedures, Marad “may determine as ‘suitable’ a vessel or vessels with single or collective capacity exceeding the requestor’s contract commitment.”
Contracts for SPR oil were awarded on July 11, and the transport should be completed by the end of August. Fourteen oil companies purchased quantities ranging from 200,000 to 2 million barrels
Marad referred questions about the waivers to DOE. A DOE spokesman did not return calls.
-- Contact R.G. Edmonson at bedmonson@joc.com.
