As the global energy dynamics continue to evolve, Asia is identified as a key growth region for storage in the future, according to Karl-Heinz Schult-Bornemann
When considering future investment regions for tank storage Asia is an attractive proposition.
Not only is Singapore the second largest storage hub in the world, over the last 10 years the region has experienced a significant increase in storage capacity.
According to Karl-Heinz Schult-Bornemann, Asia still has a large gap between demand and output and relies on imports, thus supporting a demand for storage capacity.
Schult-Bornemann, assistant professor at Otto-von-Guericke-Universität, says that despite a drop in the rate of economic growth in China, a growth of 6% is still significant.
He says: ‘This is one place to put your money. Asia has a huge gap between demand and output and so Asia is a great place to invest in storage infrastructure.
‘Anything you invest in China will have a huge growth rate. They have been dependent on supply coming from sea vessels but now they are building pipelines, mainly for gas, from Russia.
‘China is a natural opening for storage. This gap is so huge there is a lot of additional storage needed.Of course investing in a planned economy always requires special attention.’
Elsewhere, in Europe, storage operators are still benefiting from the gap between demand and output from its own sources. The region still relies on imports of crude and other projects however, looking ahead, demand will start to decrease as governments focus more on energy efficiency and more renewable and environmentally-friendly forms of energy.
Schult-Bornemann adds: ‘Europe still has a gap even though it is a mature market and there is a lot of storage capacity.
‘In Gdansk there is a really big capacity addition, which I do not think is economically necessary because Poland has a good supply via pipeline from Russia.
‘But the government does not want to be dependent on Russia so they are trying to build a big buffer. It will have capacity for three months of Polish consumption and it has the backing of the EU as they also want to be independent from Russian supply.
‘This could be something that continues in the future – where investments are not needed in storage from a micro economic perspective but geopolitics could kick in if some countries don’t want to rely on pipeline supply.’
The shale oil boom in North America is expected to continue unabated. In fact Schult-Bornemann expects North America to become self sufficient as a result of shale fracking based on import projections for 2020.
‘There is no forecast that the US will cut down on fracking oil and gas. For the first time it is a safe bet that this production will not go down this year.’
Schult-Bornemann will be speaking on the first day of the conference about the global energy outlook and fracking.