Looking at storage to 2020

Even 28 years ago, Asia was the place to be when it came to future growth prospects, according to a speaker at Tank Storage Asia who spoke under Chatham House Rules. The region has been so successful that it has completely exceeded all expectations that were placed on it back then. Now both economic growth and population growth in the region have hit 4 – 5%/y however, energy demand is at half that rate and this is due to energy efficiency.

Supply balances

The below are all discussed with a time scale of up to 2016.

Refineries that are expected to be built in the Middle East and China are most likely going to be constrained and limited by government export rulings, as countries around the world are now seeking to become energy self sufficient and follow the path of the US and its shale revolution. Looking more closely at Asia, there is most likely going to be an increase in the production of middle distillates and lighter products. This will likely be due to the discovery and prospecting for unconventional/shale resources that are currently being conducted. Asia, in total, is expected to be responsible for 33 – 34% of global oil demand by 2016 and the above speaker also commented that it will account for 10% of oil production and home approximately 3% of the world’s proven oil reserves. So, Asia’s rise in the global oil market is expected to be fast paced and bring a big impact. Things will be a bit more balanced in South East Asia. It will only be the home of 5% of total Asian demand however, the region is home to the majority of Asia’s refining and production capacity, meaning that it will be a place of great importance. Yet it has been forecast that production will decline in the South East as China builds more refining capacity and comes to the fore in production. Also, coal may make a small come back as prices are now being depressed, making it a cheaper and appealing source of energy.

Looking at supply balances in the rest of the world, supply and demand will shift dramatically along with patterns of trade and this will of course be heavily impacted by European and Australian refinery closures. As demand for gasoline in Europe drops, refineries are suffering and Australia is seeing an even bigger impact. Australia is going to become more and more reliant on storage facilities as time goes on and this makes it a very promising market region for investors.

Storage

The storage story around the world was said to be one of growth and prosperity at Tank Storage Asia. Crude imports are soaring, refinery capacity is being rationalised and the US is realigning itself to become as self sufficient as possible. This all bodes very well for the storage industry.

To 2020, it is anticipated that investments in the storage sector will hit US$ 30 billion both for crude and oil products. China alone is expected to invest heavily in storage and increase its capacity by 50%. China will of course not only be investing in its domestic assets, it is expected to aggressively increase its storage presence in refining hubs across the globe. A short while ago China was investing in the oilsands in Canada and refineries across the globe, but as the importance of storage becomes more evident, this is expected to be the next big investment for the nation. However, when it comes to domestic storage projects in Asia there are hurdles to jump. Infrastructure is in need of high levels of investment as do services. Building storage capacity will be all well and good in Asia, but further investment in other areas is needed to ensure that the return on investment is at its premium. Also niche investments need to be available to appeal to all types of investors.

Conclusion

At this time of change, it was said at the event, shipping routes and supply balances will play a big part in the future of the storage industry, however, Asia will be a focus no matter what, with Singapore being a big key player.

Written by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/06102014/tsa-storage-to-2020/