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What does the fall in oil price mean for the tank storage industry?

Hydrocarbon Engineering,

A year is a long time in the tank storage industry. This time last year the price of a barrel of oil was averaging US$104. Now, nearly 12 months later, the price is around US$44/bbl. The effects on the tank industry have been significant, with traders seeking out storage in order to sell at a profit in the future when the price rebounds. Traders are buying up storage at such a rate that the International Energy Agency anticipates with stocks levels already at an 80 year high, the limits of some regions tank capacity are now being severely tested.

With the demand for storage rising, other more unconventional sources (whether on the high seas in floating storage, in rock caverns in Singapore or simply being drilled but remaining in the ground untapped) are being utilised. So, whilst the low price of oil provides challenges for sections of the energy industry, for storage it presents a major opportunity.

“2015 started with mixed feelings about the reaction of oil companies with regard to oil price development,” said Hendrik Schaake, Business Development Manager at Endress+Hauser. “To some extent, we do of course face the effects of these developments with some new projects being postponed or cancelled. However, many projects are still ongoing since the price drop is not a result of a decrease in demand. Furthermore, we see a strong increase in interest for optimisation solutions for existing installations to streamline product and business information flows; reduce losses and assure safety.”

“In terms of storing oil on the high seas, there are an equal number of benefits as there are risks,” said Edwin Lammers, Executive Commercial Manager of the SOHAR Port, while commenting on the role of super tanker storage. “For example, towards the end of last year, the spot price for oil was lower than in the futures market. This is one of the reasons why crude oil is being stored at sea as companies currently see a greater benefit in buying up physical oil stocks and immediately selling futures. The challenge, of course, is that if interest rates or storage costs increase, the cost of storing oil out at sea would eclipse any future profits.”

Tank World Expo

Tank World Expo has assembled a host of global speakers to discuss this issue and many others representing facilities, terminals and ports in the UAE, Oman, Egypt, Jordan, Turkey, the Netherlands, Nigeria, India plus exhibitors based in 15 different countries across three continents. All are preparing to visit Dubai for two days of expert insight, practical case studies, in depth discussion, technology launches and networking. With exclusive rights in Dubai, Tank World 2015 will provide a unique platform for over 80 speakers and 100+ technology and solutions providers exhibiting.

For more information about the event, please visit the website.

Adapted from Tank World News press release

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