Increased Demand for Crude Oil Post-COVID-19 to Benefit Market
Supply and demand play a major role in determining the price of benchmarked crude such as Brent crude, and West Texas Intermediate (WTI) crude oil. The average price of Brent crude oil stood at $44.59 per barrel in August 2020 as compared to $64.28 per barrel in 2019. The current oil market is running out of storage space as a majority of storage facilities are already occupied. Declining crude oil prices have further driven demand for oil storage facilities across the globe. This scenario is expected to shape up global oil storage market. While oil storage market is poised for notable progress in the foreseeable future, escalating investments in the renewable energy sector, especially solar and wind, are likely to play out as an impediment to rapid market growth.
Amid the COVID-19 pandemic, in April 2020, the price of crude oil went below $0. This pushed sellers to pay buyers to take immediate deliveries in a bid to avoid the cost incurred on storage of crude oil. Demand shortage of crude oil-based products such as gasoline, diesel, and jet fuel along with oversupply of crude oil thus forced oil and gas E&P companies to opt for storage facilities. The COVID-19 outbreak has thus posed a positive impact on oil storage companies and service providers across the globe, thereby favouring the expansion of global oil storage market.
This phenomenon has led to increased storage costs of crude oil per barrel. Thus, a majority of crude oil suppliers are paying buyers for immediate delivery while some are storing crude oil for future trading opportunities in oil storage market space, mostly when the prices stabilise. Between April and May 2020, the total volume of stored crude oil was 3.2 billion barrels. The COVID-19 recovery of industry is expected to enhance oil demand, eventually resulting in draining-up of products stored in existing facilities.
Fixed Roof Oil Storage Facilities to Dominate Global Market
A storage tank contains organic liquids, non-organic liquids, and vapours that are found in many industries. Most storage tanks are built and designed as per the specification of the American Petroleum Institute API-650. Fixed roof tanks are simple storage solutions that can store large volumes of liquid or petrochemicals. High demand for fixed roof tanks is driven by its low CAPEX, coupled with the minimum acceptable equipment for storing liquids. These tanks consist of a cylindrical steel shell with a cone or dome-shaped roof that is permanently affixed to the tank shell. This helps in minimising the evaporative losses, and corrosion, which compel a majority of end users to opt for fixed roof oil storage facilities as compared to other options available on oil storage market landscape.
Middle Eastern Countries to Prefer Strategic Storage Options
The Middle East & Africa’s oil storage market is expected to witness substantial growth on account of rising energy requirement, and ascending investments toward improving emergency supply stocks. Oman has announced its plans for building the largest oil storage facility, marking a crucial development in global oil storage market. The facility will offer tanks to oil producers, and traders. The final plan, according to the company leading the project, Oman Tank Terminal Co., is to have storage capacity of 200 million barrels of crude.
In Asia Pacific, countries such as India are beginning to fill strategic petroleum reserve (SPR). In July 2020, India has signed a preliminary MoU with the US for cooperating on emergency crude oil reserves, including the possibility of India storing oil in the US emergency stockpile. The Government of India (GOI) will have to pay a rental for hiring the oil storage in the US. China is also set to expand its commercial crude storage capacity by at least 15 million cubic meters, or 95 million barrels, by the end of 2020. This is anticipated to supplement demand for oil storage facilities in Asia Pacific.
In North America, the US oil stocks rose by 2.8 million barrels month-on-month in 2020. The US crude storage facilities are filling rapidly, albeit from a low starting level, making tank space a problem if the global oil market remains heavily oversupplied. In Europe, NWE Oil Storage is a combination of storage locations in the Northwest European countries such as the Benelux, Denmark, France, Germany, Ireland, Norway, Switzerland, and the UK. In the NWE oil storage region are more than 200 commercial terminals with a total capacity of around 58M cubic meters are operational.
Global Oil Storage Market: Competitive Landscape
The top three players in the oil storage market include China Petrochemical Corporation, Sinopec, Royal Vopak NV, and CNPC. Some other key players involved in oil storage market are Vitol Tank Terminals, Oiltanking Gmbh, Kinder Morgan, PetroChina, Buckeye, Marathon, Enterprise Products Partners L.P., and Magellan Midstream Partners, L.P.
Recent Notable Developments
The oil storage market has been segmented as below:
Key Elements Included In The Study: Global Oil Storage Market
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