Tag excess crude account

A very specific topic!

A Tag Excess Crude Account (TECA) is a type of account used by oil-producing countries to manage their excess crude oil production. Here's a brief overview:

What is a Tag Excess Crude Account (TECA)?

A TECA is a special account established by oil-producing countries to manage their excess crude oil production. The account is used to store excess oil production that is not needed to meet domestic demand or to fulfill contractual obligations.

How does it work?

When an oil-producing country produces more oil than it needs to meet domestic demand or fulfill contractual obligations, the excess oil is tagged and stored in a TECA. The oil is typically stored in a designated storage facility, such as a tank farm or a floating storage unit.

The TECA is managed by the oil-producing country's national oil company or a designated entity. The account is used to track the quantity and quality of the excess oil, as well as to manage the storage and transportation of the oil.

Why is a TECA used?

A TECA is used for several reasons:

  1. Risk management: A TECA helps oil-producing countries manage the risk of price volatility by storing excess oil production, which can be sold when prices are high.
  2. Inventory management: A TECA allows oil-producing countries to manage their inventory of crude oil, ensuring that they have sufficient stockpiles to meet demand or fulfill contractual obligations.
  3. Price stabilization: A TECA can help stabilize prices by releasing excess oil onto the market when prices are high, which can help to reduce prices.
  4. Strategic reserve: A TECA can serve as a strategic reserve, providing a buffer against supply disruptions or unexpected changes in demand.

Examples of countries with TECA

Several oil-producing countries have established TECA, including:

  1. Saudi Arabia
  2. Kuwait
  3. United Arab Emirates (UAE)
  4. Qatar
  5. Nigeria

In summary, a Tag Excess Crude Account (TECA) is a special account used by oil-producing countries to manage their excess crude oil production, store excess oil, and manage inventory, risk, and price stabilization.