U.S. Weighs Plan to Lease Surplus Saudi Crude Oil to Fill Reserve

Saudi Arabia, looking for extra cash, and the United States, looking for cut-rate oil to fill the Strategic Petroleum Reserve, are discussing a novel Saudi proposal to lease crude oil to this country, government officials said Monday.

A long-term lease would enable the Saudis to earn revenue for surplus oil that they cannot sell because of production quotas adopted by the Organization of Petroleum Exporting Countries. It would enable the United States to acquire oil for the strategic reserve without having to pay market prices for it, according to Energy Department officials and independent oil industry analysts.

The Saudis are actively promoting the arrangement, informed sources said, but the U.S. reaction has been cautious. An agreement to put oil nominally owned by Saudi Arabia under U.S. control for use in an energy emergency has political, strategic and economic implications that have not been thought through, officials said.

Saudi Oil Minister Hisham Nazer discussed the leasing idea last week at a meeting with Energy Secretary James D. Watkins and Deputy Secretary W. Henson Moore.

“The Saudis brought it up,” Moore said Sunday. “We informed Nazer that his interest is of interest to us, and if he wants to forward a detailed proposal, we’ll look at it.”