Refiners in Asia expect the world’s largest oil exporter, Saudi Arabia, to raise the official selling prices for its crude oil going to Asia in January due to stronger winter demand, according to a Reuters survey.
Several major refiners in Asia, the top importing crude oil market, have recently increased spot purchases of crude oil to meet stronger demand as consumption is recovering from the lows seen earlier this year and as winter in the northern hemisphere approaches.
According to the Reuters survey of six refiners in Asia, the buyers of crude expect Saudi Arabia to lift the price of its flagship Arab Light crude grade in January by $0.65 a barrel on average. Forecasts ranged from expected increases of between $0.50 and $0.85 per barrel.
Saudi Arabia typically announces the official selling prices (OSPs) for its crude oil to all regions for the following month around the fifth of each month.
The pricing of Saudi crude oil generally sets the trend for the pricing for Asia of other Gulf oil producers such as the United Arab Emirates (UAE), Kuwait, Iraq, and Iran. The pricing of Saudi Aramco affects as much as 12 million barrels per day (bpd) of Middle Eastern crude grades going to Asia.
Setting the prices for December earlier this month, Saudi Arabia reduced its OSP for its flagship Arab Light crude grade to its key market Asia as the Saudis appeared unconvinced that near-term demand had much room to grow.
The cut in Saudi prices was in line with Asian refiners’ expectations, who had said in a Reuters survey that they expected either a small cut in prices or flat prices for December compared to November because of weakening refining margins and weakening Dubai benchmark prices.
Over the past month, the Dubai and Oman benchmark prices have strengthened amid stronger demand for spot cargoes, according to data compiled by Reuters.
The energy industry has been plagued by the sharp and deep drop in oil demand for months, and the outlook does not look too good either—with or without vaccines. Traditionally, China has been the one bright spot on the global map as the large consumer that is always thirsty for crude. Now, there appears to be another driver of hope for oil demand: Brazil. The biggest country in South America has been one of the most severely affected by the coronavirus pandemic, but unlike other places that suffered mass infections, this has not harmed fuel consumption.
On the contrary, Bloomberg reports Brazil’s fuel consumption this year has been higher than it was in 2019 and is seen growing further next year driven by strong demand from the agricultural sector, which just finished planting a record amount of corn and soybeans, and from road traffic.
“The rebound in fuel demand was a big surprise,” Paula Jara, an analyst at energy consultancy Wood Mackenzie told Bloomberg in an interview. “When you come to think about it, Petrobras is arguably a unique case worldwide because they were able to raise fuel-making pretty quickly.”
In October, according to Bloomberg, Petrobras processed 1.85 million barrels of oil daily, up by a robust 17 percent on a year earlier, in response to the higher demand. The state major is now even facing a shortage of gasoline in the northeast that it needs to address amid a seasonal demand surge, Argus Media reported in late November.
The increase in demand in the final weeks of the year is coming on the back of eased movement restrictions amid the pandemic and, of course, the holiday season when many will travel to be with their families. Meanwhile, the chances for restrictions to be reimposed are slim, meaning there is little to challenge the surge in demand.
As for traffic patterns, Brazil is demonstrating what many theorized the pandemic would do to people’s driving habits: trips to offices and college campuses have declined as they have elsewhere, but driving for other purposes, such as grocery shopping, has increased. Also, longer journeys out of town have also increased in Brazil, according to the Bloomberg report, driving demand for fuel higher.
In this context—and with demand expected to continue strong—it is no wonder that Petrobras has shown no particular interest in joining the energy transition rush we see in Europe and, to a lesser extent, the United States.
“We are not facing an identity crisis. We are an oil company,” the chief strategy officer of the Brazilian state major told the Financial Times in a recent interview. “The demand will not disappear, and we don’t see other technology able to replace fossil fuels on a large scale [soon],” Rafael Chaves Santos added.
According to BP’s 2019 Energy Outlook, energy demand in Brazil is set for annual growth far exceeding the global total: 2.2 percent versus 1.2 percent in global annual growth. Although the supermajor forecast that the share of renewables will grow strongly in the country’s energy mix, it also noted that oil production will also continue to expand strongly, with Brazil accounting for close to a quarter of the total global increase in production by 2040.
The chief executive of Petrobras recently referred to the renewables rush among other oil companies as a fad, questioning the plausibility of Big Oil’s pledges to become net-zero companies by 2050.
“That’s like a fad, to make promises for 2050. It’s like a magical year,” Roberto Castello Blanco told Bloomberg, adding, “On this side of the Atlantic we have a different view of climate change.”
This does not mean that Petrobras has no emissions-cutting plans. It does, aiming at a 25-percent reduction by 2030. But at the same time, the company is not embarrassed about its core business and is planning an expansion of production while others curb theirs. Based on the demand outlook, the Brazilian major is not wrong.
July 9, 2020 – Total oil products held in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose on the week, after dropping for the previous three consecutive weeks, according to consultancy Insights Global.
Stocks reached their highest levels on record during the week to 11 June, then fell for three weeks before rising again during the week to yesterday. The relatively modest stockbuild masked widely divergent trends across the different surveyed products.
ARA gasoil stocks rose on the week, supported by high inventories at destinations along the river Rhine. Gasoil barges typically flow from the ARA area into Germany and other Rhine markets, but with supply inland still high, flows on the route fell to their lowest since February. Tankers departed the ARA area for France, Ireland, Italy, and the UK, and departed for South Korea. Tankers carrying gasoil cargoes also moved between the ARA area and the North Sea, mostly functioning as floating storage vessels.
Gasoline inventories rose on the week. Buying interest from typical export destinations was low, with inventories in other regions also high. Gasoline tankers departed for Canada, east Africa, Mexico, Suez for orders, west Africa and the US. The US and west Africa are typically the primary destinations for ARA gasoline cargoes, but with demand from both areas low, the highest volume departed for Canada instead. The volume of blending components moving around the ARA area on barges appeared slightly higher on the week, but remained low. Blending activity is under downward pressure from high component prices. Tankers arrived in the area from the Baltics, Norway, Russia, the UK and the North Sea where, as with gasoil, tankers have been used as floating storage since the beginning of the Covid-19 pandemic.
Naphtha inventories fell, the lowest level since 14 May. No tankers departed the area, and cargoes arrived from Algeria, Norway and Spain. Local demand for the product from gasoline blenders was low. But interest in stored volumes from petrochemical end-users appeared to firm slightly on the week, supported by European refinery runs still being significantly lower on the year.
Fuel oil stocks fell in the week to yesterday. Tankers continued to depart for the Mideast Gulf for use in power generation, while tankers arrived from Finland, France, Russia and the UK. The incoming cargoes were relatively small in size, and no aframaxes arrived.
Jet fuel inventories were the only surveyed product group to hit fresh all-time highs, for the third consecutive week. Stocks rose the previous week. Demand from the aviation sector remained very low. A tanker arrived from South Korea, and one departed for the UK. Jet fuel supply in the region is being buoyed by the increase in refinery output. Refiners are responding to rising road fuel margins by increasing runs, but thereby have to produce more jet fuel despite it being dramatically oversupplied.
April 23, 2020 – The total volume of oil products held independently in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and trading hub fell during the past week, largely as a result of higher fuel oil flows to Singapore, according to consultancy Insights Global.
Overall stocks reached seven-month highs a week earlier, and inventories of gasoil and gasoline continued to increase during the week to yesterday amid low demand and steep contango in the forward curve for both products. The overall fall was mainly the result of the VLCC Bunga Kasturi Lima departing for Singapore carrying fuel oil across two separate bookings. Demand for bunker fuels from within the ARA area remained low, supporting the viability of the arbitrage route.
Stocks of naphtha and jet fuel also fell. Naphtha inventories fell on the week on lower imports. Tankers did arrive from France, Norway, Poland and Spain but carrying relatively small cargoes. The volume of naphtha heading up the Rhine into Germany on barges fell, and demand from gasoline blenders was very low. Naphtha is more economical as a blending component when it trades at a heavy discount to gasoline. But northwest European naphtha was assessed above the benchmark Eurobob oxy gasoline quote yesterday, making it uneconomical. Demand in northwest Europe came predominantly from the petrochemical sector, where high prices of rival feedstocks are probably supporting interest in naphtha.
Jet fuel stocks fell, pushed down by the departure of a tanker for the UK and at least one for use as floating storage in the North Sea. Part cargoes arrived from the Mideast Gulf and Asia-Pacific. Local demand was low, which freed up several barges in the ARA area that have typically been used to carry jet fuel to Amsterdam’s Schiphol airport. Some market participants have sought to take advantage of excess barge capacity in the region to use the vessels as floating storage, particularly in the gasoil market.
Gasoil inventories, including those of heating oil and diesel, rose. The Ice gasoil forward curve is in steep contango and consumer demand for heating or road fuels was broadly stable at a low level. Demand comes predominantly from market participants seeking to store cargoes. Ice May gasoil traded weaker than the month-ahead Ice June gasoil contract at lunchtime today, creating a clear incentive and encouraging the rare use of barges as floating storage.
Gasoline inventories also rose on low demand and steep contango in the forward curve. Demand in Europe has dropped by more than half in some major European markets since travel restrictions were imposed. A single tanker departed for key export market the US, but outflows to China rose as refinery run cuts east of Suez and the easing of lockdown measures supported gasoline demand. Tankers also left the ARA for use as floating storage off Amsterdam, as well as leaving for the Mediterranean and Singapore. Tankers arrived from France, Russia, Spain, Sweden, the UK and an LR tanker arrived from Finland.
30 January, 2020 (Argus) — The total volume of oil products held independently in storage in the Amsterdam-Rotterdam-Antwerp (ARA) area rose on the week, steadying after a sharp drop from week highs in the previous week, according to the latest data from consultancy Insights Global.
Overall ARA stocks reached a bit higher than in the week to 29 January. The small rise was driven by a raise gain in gasoil inventories, which offset reductions in gasoline and fuel oil inventories.
Gasoil stocks rose in the week to 29 January, with cargoes arriving from India, Algeria, and Russia. Russian gasoil exports are likely to rise in January after the export schedule at the port of Primorsk was set at a multi-year high, up sharply in December. Gasoil cargoes departed ARA for west Africa and the UK. Lower prices in Europe have seen buying interest from west Africa pick up, which has prompted gasoil to depart Europe for west Africa in January, the highest since August. Demand in northwest Europe remains weak for gasoil, which could also explain the stockbuild.
Gasoline stocks dipped lower on the week, as exports rose. Cargoes departed ARA for Nigeria, the UAE, Puerto Rico, Libya and the UK. Exports from ARA to Puerto Rico have risen sharply this month, according to data from oil analytics firm Vortexa, with flows for January. The stockdraw could also have been driven by lower flows of gasoline along the Rhine into ARA, amid low water levels along the river. Gasoline arrived in ARA from Sweden, France and the UK over the monitoring period.
Fuel oil inventories in ARA dropped in the week to 29 January. Inflows into ARA came from Norway, the UK, and Germany, while no cargoes were spotted delivering fuel oil from Russia — the world’s principal fuel oil exporter — into ARA. Russia typically exports high-sulphur fuel oil, demand for which has been curbed by the IMO 2020 global marine fuel sulphur cap. Russian fuel oil has instead found firm demand in the US, where it is being purchased for coking units. Fuel oil tankers departed ARA for Malta this week, which could result in onward shipments east of Suez.
Naphtha stocks in the ARA gained, according to Insights Global. No naphtha cargoes departed the trading hub, while cargoes entered from Spain, France, Russia and the UK. Naphtha demand has weakened from the petrochemical sector amid falling prices of rival feedstock propane, while buying interest from gasoline blenders is also weak as a result of a closed arbitrage to the US Atlantic coast.
Jet kerosine inventories dropped on the week. Jet was delivered from the UAE, while no vessels were spotted taking jet out of the trading hub, implying the stock draw may have been linked to higher overland shipments. But jet fuel stocks in ARA could soon grow as a result of the coronavirus outbreak in China, which has resulted in the cancellation of thousands of flights globally, and severely hampered jet fuel demand in Asia-Pacific. That could result in more supplies heading into Europe from east of Suez.
The tank storage industry is a very competitive market and it brings many challenges to its players. Tank terminal operators for liquid bulk are facing both internal and external factors that can affect the efficiency and the progress of their business.
A few internal factors involve the company’s organization, processes, availability and infrastructure, etc. Terminal operators can be also challenged by external factors, such as competition, regulations and the economy. With more than 7,040 tank storage facilities worldwide, it can be very tough for storage operators to position themselves in the market.
What exactly do terminal operators need to know in order to face their competition?
1 Location
Location for terminal operators is key for the success of their business. Before starting with any terminal construction project, a lot of thought is put into the geographical location of the terminal. In order to analyze the location, a storage operating company needs to have insights on all other players that are active in that area. Besides other factors, analyzing the competition in a certain area can indicate if it is viable to invest in a project.
If a terminal operator already has an existing terminal in a certain region, it is important to know the neighboring competition. Who are those terminal operators? What is their market share? What cargo types do they support? What is the infrastructure of those terminals? All these are a few crucial questions, that terminal operators should ask themselves.
2 Market share and total storage capacity
Another important factor for a terminal operator is to know the largest storage players in the region. This gives the ability for a terminal operator to analyze his/her position in the market and at the same time understand the power of their competition.
How can they easily determine the market share of their competitors? For example, if a terminal operator is interested in Barcelona Port or has an existing terminal in the port, they can look at the total storage capacity of all the terminal operators. In the image below it can be seen how insightful market share is when identifying the biggest players in the port (the market share is drawn from the total capacity of each terminal in the port).
3 Cargo types
For terminal operators it is important to know what cargo types their competitors are able to store. This gives an opportunity for them to create diversity and flexibility in product storage at their terminal. In today’s storage industry, the clients of storage operators see diversity and flexibility as an added value. Thus, there are a few important factors that a terminal operator needs to analyze:
Demand in that region
Production in that region
Import and export flows
Imbalances
Storage availability in that region
4 Different terminal functions and access modes
A tank terminal can have the following functions:
Strategic storage
Logistical storage
Import/Export
Trading hub
These four different terminal functions create different level of competition for terminal operators. Tank terminals that are located in the same trading hub and that are providing the same storage services are in direct competition. A strategic storage that is located next to a logistical storage might not be in direct competition, but terminal operators should still thoroughly analyze the level of competition.
The function of a terminal can also dictate the access modes for a terminal. Terminals can have the following access modes: sea, rail, road, pipeline and barge. A terminal with more access modes can be connected with different international trading markets and provides more options and flexibility for its potential clients.
5 Planned investments and expansions
Terminal operators need to know if there are any new projects or planned expansions in their region. A new terminal can mean stronger competition while a new expansion creates more power to an existing competitor. If terminal operators are aware of the new changes and are properly informed, they can better understand how to face the new challenges.
As the competition is significantly increasing, especially in port areas, terminal operators need to constantly evaluate their infrastructure system and consider expansion possibilities.
What should a terminal operator know about a new project/expansion:
Which company is it and what is their market share?
What will be the total added capacity for an expansion or what will be the total capacity of the new terminal?
When will the project be completed?
What products will the terminal be able to store?
What access modes will the terminal have?
6 Logistical performance
A very important factor for marine terminal operators is to analyze the logistical performance of their competition. This includes the following operations:
Throughput
Berth occupancy
Average visit duration
Tank turns
What does the logistical performance measure?
It determines the productivity and performance of a certain terminal. For a terminal operator, it is a good indicator if the competition is underperforming.
Conclusion:
The six factors mentioned in this article are very good indicators and analysis tools that a terminal operator can use in order to determine the efficiency of its terminal. And also to create a plan in order to improve the market share of the terminal. Nevertheless, besides these six factors there are many other factors that can help to evaluate the competition and were not mentioned in this article.
If you are a terminal operator have you thought about these factors?
The oil and gas storage market is approximately 1.30 billion cubic meters in size and it is estimated to grow as more than 70 new projects and expansions are set to be completed till 2022¹. There are approximately 5000 tank terminals worldwide that offer their storage space for third party leases. These terminals are located all over the world and in some regions, they form clusters with large storage capacities. The four major storage hubs are located in Antwerp-Rotterdam-Amsterdam, Singapore, Fujairah and Houston.
The oil trading business is extremely competitive and trading companies are focusing on providing high level services. Major trading companies are investing in logistics and infrastructure in order to satisfy their customers and have advantage over their competitors.
What are the most essential factors that traders are looking for when assessing a storage opportunity?
1. Location and function
For trading companies it is important to have an overview on the location of terminals across the world and the operators of these terminals. Traders should be able to break down the terminal storage market according to the location and function. Tank terminals have different classes depending on their purpose. There are strategic, logistical, import/export terminals and trading hub terminals. Traders are interested in terminals that offer them the possibility of using their assets for trading activities. F.e. the blending services provided in Amsterdam offer gasoline traders the possiblity to blend the product to a country’s spec and move it to WAF or US.
2. Reliability
It is becoming very common that there are a lot of fake companies that claim to be real tank farms and are usually claiming to be located in major trading hubs. It can be difficult to distinguish real tank terminals from the fake ones, as some scammers are building websites almost identical to those of real terminal operators. Trading companies should be able to have access to trustworthy data that informs them about real tank farms in order to prevent scams.
See here a lits of websites that are claming to be real tank farms in Rotterdam.
3. Contacts
Key contacts are very important for any company in order to build a strong network and to drive business success. However, due to many privacy laws it is increasingly become very difficult to find key contacts, especially in the tank storage industry.
After trading companies have done their research and defined a strategic focus on certain terminals, they need to find contact details of those terminals. With these contacts, mainly the commercial manager of the operator, conditions of a tank storage agreement can be negotiated.
4. Flexibility
Multimodal terminals can optimize and facilitate the transportation or products, but it can also minimize costs for trading companies. Terminals have sea, barge, rail and pipeline access that move products into different parts of the world. More access modes offer trading companies more flexibility. For example, if barge freight rates go up due to low Rhine water levels, trading companies can switch to rail delivery.
Truck: Delivering products with a truck offers the possibility to reach complex terrains.
Rail: Rail access can be low cost and offers fast delivery.
Pipeline: Fixed pipelines might be costly to build but for a long term these offers continuous supply.
Barge: Using barge transportation on certain rivers can be low cost and offer connection to local markets.
Sea: Sea access offers connection to international markets and different ships in size and purpose can be used.
5. Tank and cargo types
When analyzing suitable terminals trading companies can also analyze the tank types that a terminal holds. As oil products require different storage needs, tanks can vary in their design, shape, material and equipment. Different tanks can suggest the products that certain terminal stores thus indicating if the terminal is suitable for a trader’s needs. Moreover, it is important to have information on the cargo types that a terminal can store. Even though tank types can give a good indication on the products that the terminal can hold, it is not always accurate, as some tanks can hold more than one product type.
Conclusion
For trading companies to successfully lock in profits of an oil trading deal, some supply chain analysis is required. A trader seeks full flexibility and optionality to cash in opportunities. Finding a fitting storage is therefore of upmost importance. The factors that play a curcial role in this storage assesment are: location, reliability, contacts, flexibility and tank & cargo types.
¹ TankTerminals.com
The data for this article was gathered with the support of TankTerminals.com database platform. With only a few clicks and couple of seconds the information of the biggest market players in the various regions was obtained.
By Greta Talmaci
If you have any questions, please email me at: gtalmaci@insights-global.com.
Read here about “The hottest terminal locations of 2020”
Insights Global structurally forecasts the future supply and demand of oil products in the ARA region and naturally incorporates IMO 2020 into its models. In our forecasting models we predict an annual growth rate for marine fuels that is adjusted for efficiency gains of ships, while the split between HSFO and MGO in bunker demand switches in 2020 and is submissive to price changes and upcoming alternative fuels. We predict a sharp decline in heavy fuel oil demand with simultaneously a jump in the demand for (marine) gasoil in 2020. The heavy fuel oil demand is expected to more than half in size, whereas MGO demand is predicted to quadruple. Our assumption for the post-2020 era is that the shipping industry will gradually switch back to fuel oil using scrubbers or 0.5% LSFO. Furthermore, LNG will take in a more dominant position, up to 11% in 2030. This will diminish the share of gasoil used and lead to a slight decline in gasoil demand between 2020 and 2030.
The transition from high sulphur fuel oil to marine gasoil and the changing demands for both products can be seen in the futures markets. The forward curve for HFO makes a steep dive towards the beginning of 2020 when the regulation comes into force. The gasoil prices show an inverted pattern: a small contango until the start of 2020 can be seen as demand for the product will be the largest when the legislation becomes active. After these initial price extremities of gasoil and HFO the markets settle down as HFO prices recover slightly while gasoil prices enter a backwardated situation. This is in line with our demand forecasts and resembles the extent to which alternatives such as scrubbers gain an increasingly larger share. We expect subsequent waves of investments in shipping but also in refining, as the production of 0.5% fuel oil becomes more profitable. For more complex refineries with a certain crude slate this will offer opportunities while for other, more simply configured refineries, their continuity is at stake.
A Change for
the Tank Storage Business
The ARA region currently is a
net-importer of gasoil and is the final destination for many of the world’s
gasoil flows. Estimates are that in 2022 the deficit would increase by between
+12% and +34% relative to 2018 values, primarily driven by IMO 2020. The changing imbalances of gasoil
and fuel oil in the ARA region will have an impact on the ARA tank storage
business. The lower fuel oil demand will increase the oversupply of fuel oil in
the region and as such affect all tank terminals who lend their facility to
this product. The
changing environment for fuel oil tank storage will eventually lead to higher fuel
oil storage rates in the region. Fuel oil storage rates are likely to remain depressed in
2019, but when the IMO regulation hits the markets in 2020 the oversupply of fuel oil is likely
to switch the markets into a contango, supporting the storage business. This
effect is expected to be reinforced when the crude markets switch to contango
as well.
Higher storage rates for fuel oil
are thus expected, but the current fuel oil tank storage business nevertheless faces
a tough time from a logistical point of view. Terminals in ARA specialized in fuel oil are
either busy in the bunkering market or in the transit business. In the first
case these terminals will suffer from the reduced size of the HFO bunker
market. In the second case the business is more related to the flow from Russia
towards Far-East. This transit flow is also expected to be marginalized in the
medium term and long term. Therefore tank terminal operators storing HFO will
need to anticipate on these changes and explore options in order to cope with
possible oversupply of fuel oil tanks. Less tanks for fuel oil storage will be
needed, but opportunities lie in diversification. From 2020 onwards more grades
of bunker fuel (a.o. ULSFO, 0.5% LSFO, 3.5% HSFO) will need to be stored, while
smaller tanks as well as blending capabilities will become more important.
Running up to the bunker fuel spec
change in 2020 the fundamentals for the gasoil storage market are likely to
improve following more interest in middle distillate tanks and the need for
more grades of gasoil. The contango that is developing in the gasoil markets
supports the storage rates as well. In 2020 however we expect a halt to the
growth of gasoil storage rates caused by a backwardated market structure
following the higher spot prices. After 2020 we expect storage rates to improve
with the gasoil markets following the contango formation in the crude markets,
albeit to a smaller extent. More tanks are needed in this bunker market to
store middle distillates which could increase competition, but occupancy rates
in the medium term will remain high due to increased demand.
In 2020 the international marine bunker fuel markets are in for a big change. For environmental concerns the International Maritime Organization will implement a new policy that limits the sulphur content of fuels burnt in maritime traffic. High sulphur fuel oil has been historically the most widely used fuel for maritime transport, but will most likely lose this position to low sulphur fuels such as marine gasoil or LSFO when the new regulation comes into force. This article dives deeper into the subject, and shares our vision on how the ARA bunkering market and international oil markets will change under the new policy.
As of January 1st 2020 the International Maritime Organization (IMO) requires all marine fuels to have a sulphur content of at most 0.5% of the total mass, down from the current maximum allowed 3.5%. With the exception of a few areas that already have special IMO requirements in place, the new IMO standard will hold globally. Traditionally the bunker fuel market has been a sink for refiners to unload their high sulphur refining resids into. In 2018 an average of seven million barrels of such heavy resids were produced every day, half of which was absorbed by ship bunkers. But the global refining system is not yet equipped to produce such quantities of fuel oil at a sulphur level of 0.5%. The impact of this new regulation is therefore big as most vessels will have to abandon their current fuel oil consumption, therewith completely changing the market dynamics for existing marine fuels and creating opportunities for alternatives.
An important decision for shipowners
The shipping industry faces an important decision for their fuel use under the IMO 2020 regulation, and several options exist for shipowners who need to replace their HSFO consumption.
The most likely scenario is that the majority of the shipping industry switches to using marine gasoil (MGO), which doesn’t require any technical modifications nor upfront investments.
Second, the shipping industry could switch to a new 0.5% low sulphur fuel oil (LSFO) grade. Current global LSFO production capacity is however insufficient to cover a transition from HSFO to LSFO in the bunkering industry, and this change would need vast refinery investments.
The third option is to install scrubbers on board of ships and continue to burn HSFO while the exhaust gasses are being filtered. This is an expensive and lengthy investment for the shipowner, as installation costs range between 2-3 million per vessel and the delivery time to install the scrubber will have the vessel out of operation for a long time.
The fourth option is that the shipping industry switches to burning LNG. Significant investments and concerns about the availability of LNG as a bunker fuel however challenge the implementation.
The fifth option is that the shipping industry switches to methanol. Methanol has a low energy density however and in addition requires a multi-million investment. Given the ease of the transition to marine gasoil compared to the other products the market will initially shift its bunker demand by using marine gasoil when the new regulation goes into effect.
The
increasing of information stream due to digitalization and accessibility to
information sources, has led to numerous debates in the oil markets. Refiners,
traders, brokers, end-consumers and all other stakeholders within the industry
need to cope with decision making on various levels and are therefore relying
on certain proved sources in an industry which is full of closed doors and
limited availability of information. Transparency in this market is therefore crucial
to search and select the appropriate partners within the market and to make
smarter business decisions.
Market
transparency can be found in all different subjects within the oil and gas
industry. Price setting agencies, transport and tank storage rates overviews and
other statistical insights contribute to a level playing field, which can help
the customer make the best decision possible. By obtaining instantly accurate
information, one can reduce mainly costs, time
and effort. Objective players in the oil and gas environment, help balance the
markets by supplying vast amounts of data and information to all participants. Traders
interpret the macro-economic data of NGOs, governmental institutions and
central banks to weight their decisions and therefore depend on reliable
information. Falsified or incorrect information can give individuals an edge
and increases the costs involved for the other businesses.
Moreover, these objective market participants withhold fraudulent companies or individuals from entering and disbalancing the market. Associations such as, FERM Rotterdam (ferm-rotterdam.nl) provide insights over the fake suppliers of tank storage capacity, in order to limit the risks involved for other market participants. Individuals without proper knowledge of the markets, can easily become targets of these scams. Who is able to spot the differences when certain, legitimately looking, websites come across?
Websites about the same terminal in the port of Rotterdam, which one is legitimate?
For
businesses entering the market, these organizations are key to a fruitful
collaboration between suppliers and clients. In addition, these organizations
show which websites, companies or individuals to bypass. Companies and
terminals in the TankTerminals.com database are investigated by various
database administrators before being added in the vast database of terminal
details, characteristics, contacts and other relevant information. Data
supplied by the terminals and the managers of the terminals is thoroughly
checked before it is approved. The data is regularly updated and if possible
expanded with more data to give a transparent overview on the tank terminals.
This way, potential suppliers, customers and others interested have a quick
go-to list which reduces the efforts of going through all kind of information. The
completer the information in the terminal factsheets, the higher the
reliability, legitimacy and opportunities to connect with the relevant
contacts.
Market
transparency is imperative in getting quickly the right information and with as
little errors as possible. The oil and gas industry and its environment has
been closed and constrained. However, it is rapidly changing in the digital age
with the help of different organizations. The information, statistics and other
relevant news can be supplied to the interested individuals and companies in
order to get more insights, to make quicker and smarter decisions.
Author: Lars van Wageningen
GDPR Consent
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