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US firm sues Enron over botched petroleum deal

US firm Euell Energy sued Enron Corp for $24.5 million in US Bankruptcy Court in the Southern District of New York on Thursday for allegedly breaching an agreement to team up to take oil out of the Strategic Petroleum Reserve two years ago.

The Clinton administration released 30 million barrels of crude from the government's stockpile in October 2000 to help ease tight winter fuel supplies and high crude prices.

In the lawsuit, Aurora, Colorado-based Euell claims that Enron breached its agreement to become equal partners in the SPR deal and to back Euell in its attempt to obtain the letter of credit it needed to complete the transaction.

The company says it has tapes that prove that Enron promised to secure the letter of credit.

"We had recorded conversations between myself, the SPR contracting officer and Enron," said Renard Euell, chief executive of Euell Energy.

Euell is asking for damages of $24.5 million, half of the profit it says it could have made together with Enron in the transaction.

"I think that there's something criminal involved in this," Euell said. "Hopefully we'll find that out through investigations whether of not there was criminal activity. The stockholders of Enron were damaged just as well as Euell was damaged."

Enron representatives were not immediately available for comment.

Enron, a major contributor to President George W Bush's election campaign, made the largest bankruptcy filing in US history on December 2 amid a steady stream of revelations about questionable accounting methods and extensive off-the-books partnerships.

Most of the SPR oil was allocated to well-known market players such as BP and Valero Energy, but the Department of Energy came under criticism for swapping one third of the crude to a trio of companies, including Euell, with little or no experience in the oil market.

Euell was one of two firms that failed to supply letters of credit to take crude out of the SPR after being awarded 3 million barrels and eventually lost the contracts.

At the time, the company claimed that several oil companies conspired to stop it from completing the deal and called for an antitrust investigation.

Euell said it waited until this week to file the lawsuit because it wanted to calculate exactly how much money it would have made by returning the oil to the SPR at today's prices, lower than those of the fall of 2000.

"I wanted to have the exact numbers," he said. "I didn't want anybody to say if we filed the lawsuit early that we didn't know what the numbers would have been."

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