Tank Storage Magazine v16 i02


Volume: 16
Issue: 2
Date Published: April 1, 2020



Storage markets shocked into new fundamentals

After years of being a statistical factor in oil market developments, looking at the OPEC+ and US shale oil confrontation, driven by stable growing demand and reoccurring supply issues, the fundamentals of the total constellation have changed dramatically. The year 2020 has started with a bang, not only for the global economy, commodities and trade, but also for midand downstream oil and gas players. The normal fundamentals of the global oil storage sectors all would be on green with an ongoing supply demand conflict and a fractured OPEC+ production cut strategy. A renewed flux or even glut of oil and gas volumes would have been pushing stocks and storage figures of most players into the green, with increased interest of investors, operators and institutional investors at the same time. A fractured OPEC+ strategy and an all-out oil price war would have opened up the doors for optimism at offices worldwide of oil and petrochemical storage companies as with higher supply than demand figures, storage would be a hot item. First signs in 2020 of these normal phenomena were seen in the offshore VLCC storage markets, as rental rates for VLCCs and other oil and petchem tankers showed exponential rate levels. After that Saudi national oil company Aramco opened up the gates of hell for US shale oil and Russian crudes by stating it would raise supply levels to 13 million bpd the coming weeks. Oil prices plunged even further after that and other OPEC+ members, such as Russia and the UAE, reported higher production volumes the next weeks. CLICK HERE TO READ THE FULL ARTICLE: https://issuu.com/margaretdunn/docs/tsm_april-may_20_vol_16_issue_2_lr

Towards tank tops

The oil market is currently deep in uncharted territory having to deal simultaneously with a supply shock from the abrupt termination of the OPEC+ production cut agreement and a demand shock from the coronavirus (COVID-19) pandemic. The market has demonstrated before, that it can deal with either shock by itself. The great financial crisis of 2008/2009 was solved by a combination of stimulus spending and OPEC cuts, while the decision of OPEC to cut production in November 2014 stimulated demand strongly enough to tackle the oversupply. Each of these events was noteworthy enough to go into oil lore. With OPEC+ abandoning its long-term strategy of market management we are seeing the opposite of what would normally occur in a demand shock. Instead of quickly cutting supply in the face of massive demand losses stemming from COVID-19, Middle Eastern OPEC countries are priming their pumps to push even more oil onto the market in a bid to reclaim market share lost in previous years. If Saudi Arabia and others continuously play hard ball, we are looking at a market surplus of several million b/d for the remainder of this year. Whether the surplus is 2, 3, 4, 6, or 8 million b/d will depend on how disastrous for the economy COVID-19 really is and how long OPEC opts to keep supplies elevated. There is also the key question of how much spare storage capacity is available.  The outbreak of the coronavirus in China and its subsequent spread throughout the world has devastated global oil demand. At this point it is still difficult to gauge the full extent of the damage... CLICK HERE TO READ THE FULL ARTICLE: https://issuu.com/margaretdunn/docs/tsm_april-may_20_vol_16_issue_2_lr  

Serving Pakistan's Energy Needs

Gas & Oil Pakistan (GO) is positioning itself to capitalise on the country’s flourishing market dynamics with plans to substantially increase its storage terminal network to meet the growing demand for oil products. The company, headquartered in Lahore, currently has four owned and operated depots and two storage terminals. Its most strategically important terminal was commissioned in the fourth quarter of 2018. Built on 15.5 acres of land close to the PARCO Mid-Country Refinery, the Mahmoodkot Terminal comprises 84,225 MT of capacity for diesel (HSD) and gasoline (PMG). It has a 12-bay loading gantry capable of filling more than 100 tank trucks of 50,000 liters in capacity in a single eight-hour shift. The terminal is connected with the 800 kms long pipeline running from Karachi to Mahmoodkot operated by PAPCO (Pak-Arab Pipeline Company). The terminal serves markets in the southern and central Punjab area as well as providing its depots with stocks of imported HSD. In an interview with Tank Storage, Zeeshan Tayyeb, chief operating officer, says that the dedicated pipelines have given the company the flexibility to receive both products at the same time from the PARCO refinery. CLICK HERE TO READ THE FULL ARTICLE: https://issuu.com/margaretdunn/docs/tsm_april-may_20_vol_16_issue_2_lr