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Niche growth in a competitive market

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Despite static demand for refined products, demand for biofuels has increased and is driving business forward for InterTank

InterTank continues to flourish within the competitive Scandinavian market and remains a central hub for oil traders as well as transhipment business.
Despite the large amount of independent storage capacity in Sweden with a population of only 10 million – Scandinavia itself is not a growth market, with consumption of refined oil products and chemicals at static levels.
However, due to InterTank’s strategic location and proximity to the main export outlets in the Baltic Sea, the trading and transhipment business is a significant growth driver and is directly linked to prevailing market and trading conditions. The recent contango market has therefore resulted in greater demand for tankage – particularly for distillate products and HVO (hydrogenated vegetable oil).
But, in an interview with Tank Storage Magazine, MD Fredrik Lilja believes that demand for biofuels and certain specialty products will grow considerably in the future due to a greater focus on reducing fuel emissions.
‘This is primarily due to the market striving to reduce fuel emissions and there is a greater focus on emission reductions from certain buyer segments.
Biofuels are also seen to be more ‘user friendly’ than they used to be.
‘HVO for instance does not require any modifications on the vehicles as such and can easily be blended with normal diesel or serve as a standalone
In fact, Lilja has seen the range of biofuels increase in recent years, however volumes are still modest compared to refined oil products. ‘Local distribution of heating oil and HFO in the Nordics is sloping as more fossil fuels are being replaced by alternative sources of energy,’ he adds.

Overall demand for petrol and diesel remains stable, albeit petrol consumption has declined slightly while diesel has seen a marginal increase.
The large amount of independent capacity in Sweden can be traced back to the 1970s where domestic oil consumption stood at around 30 million
tonnes per year. The infrastructure to distribute oil products was intended for more than and in addition, the state had its own strategic
Consumption has since declined quite drastically and now stands at approximately 11 million tonnes. Thanks to its strategic location, many of these facilities that served as inland distribution terminals have now been converted into transhipment and contango terminals used by oil major and traders as prices are competitive compared to neighbouring countries.
HFO and VGO products remain the largest products being shipped by volume in Scandinavia – but this is solely due for trading and transhipment as local demand for these products remains limited.

Competition for storage in the region has increased following a prosperous period for the industry during the ‘super contango’ years.
Lilja explains: ‘The market has become much more competitive. During the ‘super contango’ years more or less everyone prospered.
‘But with plenty of new tankage having been built in Europe during this time, combined with a few years of challenging market conditions shortly after, the storage market in the whole region, including Scandinavia, experienced somewhat of a downturn.
‘However, over the last couple of year demand has been fairly strong and I would image that most storage companies in the region are running at more or less full capacity.’
Looking to the future, Lilja says that the company is actively exploring new storage opportunities.
‘We are actively looking both in Scandinavia and elsewhere and will happily look at any new opportunities that may arise.’