Oil Storage Market
Global Industry Analysis (2017 – 2020) – Growth Trends and Market Forecast (2021 – 2025)
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Global Oil Storage Market: Outlook
Supply and demand play a major role is determining the price of benchmarked crude such as Brent crude and WTI amongst others. 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 majority of storage facilities are already occupied. Declining prices of crude oil has driven the demand for oil storage facilities across the globe, impacting the global market.
Increased Demand for Crude Oil Post COVID-19 to Benefit Market
Post COVID-19 pandemic, in the month of April 2020, the price of crude oil went below $0. This attributed to sellers paying 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, jet fuel and others along with over supply of crude oil has forced oil & gas E&P companies to opt for storage facilities. Thus, the COVID-19 outbreak has resulted in a positive impact for the oil storage companies and service providers across the globe.
This phenomenon has led to increased storage cost of crude oil per barrel. Thus, majority of crude oil suppliers are paying buyers for immediate delivery while some are storing crude oil for future trading opportunities, mostly when the price stabilizes. Between April and May 2020, the total volume of stored crude oil was 3.2 billion barrels.
The key restraint observed in the market includes renewable energy investments, especially in solar and wind power. The COVID-19 recovery is expected to enhance the demand and result 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 amounts of liquid or petrochemicals. High demand for a fixed-roof tank is driven by its low CAPEX coupled with 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 minimizing the evaporative losses and corrosion compared. Given these reasons, end users are expected to opt for fixed roof oil storage facilities as compared to other options
Countries in Middle East to Opt for Strategic Storage Options
The Middle East & Africa oil storage market is expected to witness substantial growth on account of rising energy requirement coupled with increasing investments toward improving emergency supply stocks. Oman announced its plans for building the largest oil storage facility. 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 and the U.S. signed a preliminary MoU for cooperating on emergency crude oil reserves, including the possibility of India storing oil in the U.S. emergency stockpile. The Government of India (GOI) will have to pay a rental for hiring the storages in the U.S. Also, China is 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 drive the demand for oil storage facilities in Asia Pacific.
In North America, the U.S. oil stocks rose by 2.8 million barrels month-on-month in 2020. The U.S. 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
Top 3 players in the oil storage market includes: China Petrochemical Corporation, Sinopec, Royal Vopak NV, and CNPC. Other key players involved in oil storage market includes Vitol Tank Terminals, Oiltanking Gmbh, Kinder Morgan, PetroChina, Buckeye, Marathon, Enterprise Products Partners L.P., Magellan Midstream Partners, L.P., etc. On April 2020, Royal Vopak NV announced that all its storage facilities ran out of space for crude and refined products as a result of the fast-expanding glut that COVID-19 has created.
The company operates three main hubs in Singapore, Rotterdam and Fujairah. Chinese refiner Sinopec is planning to add a total of 2.85 mil cu m storage capacity by 2021. In May 2020, the company completed construction of 800,000 cu m storage facility in central China's Luoyang city. This is expected to be online from second half of 2020. Also, 800,000 cu m of storage capacity will be added to the Luoyang site by June 2021.