Increased Oil Storage Plays: Analysis

By George Backwell
Tuesday, August 26, 2014
Reported VLCC & Suezmax Fixtures into South Africa: Image courtesy of Poten & Partners

During the last few days, various articles in the oil and shipping press have hinted at the possibility that renewed contango in the oil markets could lead to increased storage plays after several Suezmaxes were fixed for discharge in Saldanha Bay, South Africa, say Poten & Partners in the latest 'Tanker Opinions'.

While South Africa has several refineries that run on imported crude oil, the origin of the crudes (North Sea and the Caribbean), as well as the reported discharge port, seems to point to storage rather than refining.

The oil companies that have refining operations in South Africa include Chevron, Engen/Petronas, BP, Shell, Total and Sasol. These companies are the most prolific charterers into South Africa and as such typically source their crude from West Africa and the Arabian Gulf.

Cargoes from other load areas, such as Argentina, Colombia and the North Sea are brought in by trading companies and are mostly delivered into storage.

During the last five years, the market share of trading companies in the spot crude trade to South Africa has varied widely. During the years that oil storage was highly profitable – mainly 2009 and 2010 – oil traders controlled some 25% of the reported spot cargoes into South Africa. The market share of traders has declined in recent years, according to reported spot market fixtures. In 2013, Poten’s fixture database showed no reported fixtures by traders.

South Africa has ample onshore storage facilities, notably in Saldanha Bay on the country’s south-western coast, located about 65 miles northwest of Cape Town. Saldanha Bay’s six in- ground concrete tanks can hold a combined 45 million barrels - equivalent to the capacity of 45 Suezmaxes or 22 VLCCs.

Other than the sheer size of the facility and its accessibility by larger tankers, oil traders’ key attraction to Saldanha Bay is its geography. Located at the tip of Africa, it is conveniently nestled in between the Atlantic and Pacific Oceans. Oil stored at this location can be just as easily sold in Eastern as well as Western markets. From a shipping perspective, it is worth noting that the area has been prone to delays in the past.

In recent weeks, Brent spot prices have fallen to 13-month lows. Yesterday’s reported price of $100.67 per barrel is almost $15.00 below the price of Brent only two months ago. As the future prices have not moved as much, the market moved into contango at the front end.

During the period of “Supercontango” in 2008 and 2009, it was estimated that more than 20 million barrels of crude oil were stored in Saldanha Bay. A few Suezmax fixtures from traders to South Africa do “not a trend make” and the oil market contango is not (yet) steep enough to warrant using tankers for floating storage, especially if there still appears to be ample onshore storage capacity available.

While this could certainly change in the near future, the spot prices of crude are under pressure due to ample supply and anemic demand and worldwide geopolitical tensions and other possible crisis could easily flare up to disrupt oil flows and push prices higher in the future

Source: Poten & Partners
http://www.poten.com/

Maritime Reporter November 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

River Bell Awards Acclaim Maritime 'Family'

The Seamen’s Church Institute (SCI) recognized two inland maritime industry leaders at an annual awards luncheon Thursday, December 11, 2014, in Paducah, Ky.   The

NASSCO Cuts Steel on APT "ECO Tanker"

General Dynamics NASSCO started construction of another ship in its commercial shipbuilding backlog, starting construction of a second “ECO” tanker to be built

BP Faces Heavy Hit from Former Prized Asset Rosneft

BP faces a first and heavy loss from its stake in Russia's Rosneft due to plummeting oil prices and a crumbling rouble, potentially forcing it to write down the value of its once-prized asset.

Contracts

NASSCO Cuts Steel on APT "ECO Tanker"

General Dynamics NASSCO started construction of another ship in its commercial shipbuilding backlog, starting construction of a second “ECO” tanker to be built

Multraship Buys Three More Tugboats from Damen

Multraship and Damen Shipyards Group agreed on three new ASD (Azimuth Stern Drive) Tugs, all for delivery to Multraship in 2015. After delivery in Vietnam, scheduled

QGEP to Acquire FPSO from Teekay

Teekay Offshore Partners L.P. has entered into an agreement with a consortium led by Queiroz Galvão Exploração e Produção SA (QGEP) to provide a floating production,

Tanker Trends

NASSCO Cuts Steel on APT "ECO Tanker"

General Dynamics NASSCO started construction of another ship in its commercial shipbuilding backlog, starting construction of a second “ECO” tanker to be built

Oil Prices Retreat from Short-covering Rebound

Global crude prices fell more than $1 a barrel on Thursday, retreating from a short-covering charged rally as traders bet the market had not shaken off a six-month long rout on oversupply concerns.

INTERTANKO Launches ECA Bunker Surcharge Clauses

INTERTANKO’s documentary committee has launched bunker surcharge clauses for Emission Control Areas (ECA).   Rising bunker prices due to rising oil prices and

Fuels & Lubes

Italian Shipbuilder Pleads Guilty to Environmental Crimes

An Italian shipping firm based in Genoa, Italy, pleaded guilty to violating the Act to Prevent Pollution from Ships by falsifying required ships’ documents to hide

K Line to Expand Use of Eco-efficiency Software

Three further K Line vessels to install ClassNK-NAPA GREEN eco-efficiency software after reporting fuel savings during trials on an 8,600 TEU container vessel   NAPA

Bulker Chief Engineer Convicted of Environmental Crimes

A chief engineer from the M/V Trident Navigator was convicted by a federal jury in New Orleans late yesterday after a week-long trial, of knowingly falsifying the

Logistics

Great Lakes Coal Trade Slows in November

Coal shipments on the Great Lakes totaled 2.6 million tons in November, a decrease of 3 percent from a year ago, as shipments were affected by weather-related delays,

Hoists Facilitate Offshore Crane Repairs

When the diesel engine of a deck crane failed, it caused major handling problems for an offshore platform operating in the Dutch sector of the southern North Sea,

Transpacific Container Shippers Plan Price Rise

A container shipping organisation urged companies on Wednesday to raise Asia-U.S. freight rates by at least $600 per 40-foot container (FEU) from Jan. 15, corresponding to an increase of 26.

Consulting

USCG Provides SAR Planning Support to Korea

Coast Guard search and rescue crews were relieved by Republic of Korea assets on Saturday in their search for 26 crewmembers from the fishing vessel 501 Oryong that capsized Nov.

Vistronix Acquires Agency Consulting Group

Vistronix has acquired the Agency Consulting Group (ACG). The McLean Group's Aerospace, Defense & Government Services (ADG) practice served as the exclusive mergers

DONG Energy Appoints CEO for E&P

Søren Gath Hansen will step down as Group Executive Vice President and CEO for E&P. His successor is David B. Cook who comes from a position as Executive Officer

 
 
Maritime Contracts Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Salvage Ship Electronics Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1298 sec (8 req/sec)