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April 28, 2020

The impact of Covid-19 on the global oil storage sector

By GlobalData Energy

From using up reserve storage spaces to paying premium for leasing third-party storage spaces, oil companies are dealing with a plethora of challenges due to sudden decline in demand post the Covid-19 pandemic. Distant storage locations increase costs further as transportation fees gets factored in along with the storage fee. Additionally, the relatively shorter shelf life of gasoline and jet fuels and the limitations of storing light crude alongside heavy crude, compound challenges for these companies.

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COVID-19 continues to dominate headlines the world over. It has already affected our lives forever. The way we work, shop, eat, seek medical advice, and socialize will all be different in the future. Quite how different remains to be seen, but all industries must plan for multiple eventualities.  Faced with an explosion of conflicting information on how to plan and implement successful recovery strategies, decision-makers are in dire need of a single, reliable source of intelligence.   GlobalData’s COVID-19 Executive Briefing gives you access to unparalleled data and insights to successfully navigate the uncertain road to recovery across the world’s largest industries. Understand every aspect of this disruptive theme by delving into: 
  •  COVID-19 infection update, with statistics on the spread, testing by country, as well as the latest data on vaccines and therapeutic developments 
  • Economic impact overview, covering stock market indices, GDP, unemployment rates, policy responses & GlobalData’s economic recovery scorecards 
  • Sector developments, with access to sector insight summaries, cross-sector indices and the leaders and laggards in each industry vertical 
Whatever your company’s imminent strategic plans, the long-lasting impact of COVID-19 must not be overlooked. Find out how to futureproof your business operations – download our report today. 
by GlobalData
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North America is battling severe shortage of storage capacity. The US Energy department is leasing spare strategic petroleum reserve (SPR) capacity to private companies. However, with US crude inventories surging, it may be only a matter of time before the country runs out of storage space. North American oil producers and refiners are planning to use unconventional and cost-effective methods of storage such as rail cars, oil tankers and pipelines.

Asia-Pacific, on the other hand, is dealing with inflated storage costs that have become nearly 40% dearer due to excessive demand. Despite higher price, companies such as SK Energy and Nayara Energy have taken on lease, SPR spaces from their respective countries to store crude.

Saudi Arabia is filling up its huge spare storage capacities with domestic production to export these crude volumes as and when global oil prices appreciate. In the wake of demand destruction and dearth of storage space, the Kingdom’s oil giant, Saudi Aramco, has offered up to 90-day deferred payment option for its crude deliveries to European oil refiners.

In Europe, maintenance activities at storage terminals are being delayed in Germany, Italy, and France, due to the Covid-19 outbreak. Capacity expansions of storage terminals are also likely to be delayed as the activities are hindered due to limited number of workers. Tankers anchored at ports are serving as floating storages to store surplus crude volumes.

The brighter side of this chaotic situation can be the likelihood of operators thinking on the lines of building enough storage spaces to tackle such unforeseen challenges. This may pave a way for increased investments in storage projects from private and foreign entities, particularly in nations that lack enough storage space. While India is one such example, developing four additional SPRs, countries like Japan and South Korea may follow suit, especially in building emergency reserves.

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Free Report
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Navigate your business through the ‘new normal’

COVID-19 continues to dominate headlines the world over. It has already affected our lives forever. The way we work, shop, eat, seek medical advice, and socialize will all be different in the future. Quite how different remains to be seen, but all industries must plan for multiple eventualities.  Faced with an explosion of conflicting information on how to plan and implement successful recovery strategies, decision-makers are in dire need of a single, reliable source of intelligence.   GlobalData’s COVID-19 Executive Briefing gives you access to unparalleled data and insights to successfully navigate the uncertain road to recovery across the world’s largest industries. Understand every aspect of this disruptive theme by delving into: 
  •  COVID-19 infection update, with statistics on the spread, testing by country, as well as the latest data on vaccines and therapeutic developments 
  • Economic impact overview, covering stock market indices, GDP, unemployment rates, policy responses & GlobalData’s economic recovery scorecards 
  • Sector developments, with access to sector insight summaries, cross-sector indices and the leaders and laggards in each industry vertical 
Whatever your company’s imminent strategic plans, the long-lasting impact of COVID-19 must not be overlooked. Find out how to futureproof your business operations – download our report today. 
by GlobalData
Enter your details here to receive your free Report.

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