Retaining its premium position at the world’s largest oil trading hub, the ARA has recently welcomed an influx of storage capital as the imports of petroleum products increases
However, with more EU-led environmental regulations emerging along with the potential need to meet the demand for a broader spectrum of product specifications, the region’s storage offering will need to diversify to meet these future challenges.
In an interview with Tank Storage Magazine, Paulo Nery, senior director, EMEA Oil, at Genscape says that while the ARA receives all types of refined products, its supply from the Baltics is slowly diminishing.
‘The largest import flows are fuel oil and diesel, and while Baltic flows – the largest supply region - declined toward the end of 2017, Baltic supply to the ARA region increased sharply in January with increased Russian output. And as ARA seemingly could not support all of that increase we saw Russian diesel and fuel oil diversifying to more and new destinations.
‘Distillate storage levels in ARA increased overall from about 4 million at the start of December to 4.7 million tons in early February, thanks to increased supply from east of Suez as well as Baltic.’
As a result of this demand, significant storage expansion projects are taking place at the Port of Antwerp thanks to a wave of multimillion euro investments.
Europe has already experienced a round of refinery consolidations as a result of shrinking demand and rising competitive pressures. As a result, imports to the region must increase.
Nery says that if there are further refinery consolidations in the future, increased imports are inevitable for Europe.
‘Diesel will continue to be supplied from the Baltics, US, Middle East and India but in increasing quantities as refining in those regions continues to strengthen and upgrade,’ he says.
‘This could also diminish Europe’s position as a key exporter of petrol to West Africa and the Americas.’
Nery identifies two key challenges facing the ARA in the future, namely increasing environmental regulations and growing blending requirements.
‘For both suppliers and producers, a future challenge will be increasing environmental regulations specifically regarding diesel. With the push to clean up emissions in major cities, it will be interesting to see how they handle the shift at storage terminals and refineries.
‘There may well also be increased need for blending operations to meet more diverse and changing specifications. For instance, we see less petrol going to West Africa and the US recently while more goes to the Middle East and Asia.’
Nery will be providing detailed market analysis across the ARA region in the morning of the first day of the StocExpo Europe conference at the Ahoy, Rotterdam from March 20 - 22. For more information visit www.stocexpo.com
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