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 July 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

DryShips Reaches Agreement with Ocean Rig

DryShips Inc. (NASDAQ: DRYS), a global provider of marine transportation services for drybulk and petroleum cargoes, and through its subsidiary, Ocean Rig UDW Inc.

Cruise Industry Wins Key Norovirus Judgment

In what is being seen as a landmark decision, Hill Dickinson is the first law firm to have successfully defended a UK class action case involving a Norovirus outbreak onboard a cruise liner.

MHI: Notice of Absorption-Type Split Agreements

MHI gives Notice Regarding Conclusion of Absorption-type Split Agreements Relating to Transfer of Ship Construction and Hull Block Manufacture Businesses to Two

Contracts

DryShips Reaches Agreement with Ocean Rig

DryShips Inc. (NASDAQ: DRYS), a global provider of marine transportation services for drybulk and petroleum cargoes, and through its subsidiary, Ocean Rig UDW Inc.

MHI: Notice of Absorption-Type Split Agreements

MHI gives Notice Regarding Conclusion of Absorption-type Split Agreements Relating to Transfer of Ship Construction and Hull Block Manufacture Businesses to Two

Hapag-Lloyd Adds Halmstad to Rotation

As one of the top global carriers Hapag-Lloyd offers a comprehensive service network and will add port of Halmstad, Sweden to the Nordic Short Sea Network. As

Tanker Trends

US Senate Energy Panel Votes to Lift Oil Export Ban

The U.S. Senate Energy Committee on Thursday passed a bill that would lift a decades-old ban on the export of crude oil.   The 22-member panel passed the bill

ClassNK Releases Guidelines for CNG Carriers

Classification society ClassNK has released its Guidelines for Compressed Natural Gas (CNG) Carriers.   Global economic and population growth is bringing about

Eni Mulls Mozambique LNG Supply Deal

Italian oil and gas group Eni is holding discussions with a potential buyer of liquefied natural gas (LNG) supply from its floating export project in Mozambique, an executive said on Thursday.

Fuels & Lubes

ClassNK Releases Guidelines for CNG Carriers

Classification society ClassNK has released its Guidelines for Compressed Natural Gas (CNG) Carriers.   Global economic and population growth is bringing about

Côte D’Ivoire Invests in O&G Safety Training

Thegrowth in oil and gas activity in Côte D’Ivoire has seen investment in standardized safety training in the region far outstrip that of other hydrocarbon-rich West African countries,

Diesel Spill in Houston Ship Channel

A small section of the Upper Houston Ship Channel was closed Tuesday morning after a report of 1,000 gallons of diesel entered Greens Bayou from a cement facility, the U.

Logistics

South China Sea Hotline in the Works

China and Southeast Asian nations have agreed to set up a foreign ministers' hotline to tackle emergencies in the disputed South China Sea, a senior official of

Calais Port Blocked Again by Protesters

Protesting ferry-workers blocked road access to the northern French port of Calais with burning tyres on Friday, police said. The workers have in recent weeks

Hapag-Lloyd Adds Halmstad to Rotation

As one of the top global carriers Hapag-Lloyd offers a comprehensive service network and will add port of Halmstad, Sweden to the Nordic Short Sea Network. As

Consulting

Rolls-Royce Takes Davies on Board

Rolls-Royce appointed Alan Davies as a Non-Executive Director. He will join the Board with effect from November 1, 2015 and will become a member of the Nominations and Governance Committee,

MARAD Support for Hydrogen Fuel Cell R&D

The U.S. Department of Transportation’s Maritime Administration (MARAD) today announced that it is providing $500,000 to support a feasibility study for the design,

NewLead Holdings Announces Commercial Competency of MT Sofia

NewLead Holdings Ltd.announced today a review of the commercial competency of one of its bitumen tanker vessels, the MT Sofia since the vessel was delivered to NewLead's fleet.

 
 
Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Salvage Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | 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: 0.1642 sec (6 req/sec)