04-03-14: ARA Tank Storage Market – Fuel Oil flows

Drivers of ARA Tank Storage Market

The tank terminal market for storing oil products boomed from 2008 till 2011 but has undergone some major changes in recent years. Current signs are that the hey-days are over and that the market is normalizing. However, looking at expected changes in global fundamentals the tank terminal market is up for a rough ride indeed! PJK International has made a detailed study of the tank terminal market. It focuses on the central issue of profitability for storage companies in the ARA-region.
  • How will profit potential evolve in the medium term for tank storage companies?
  • How will the tank storage demand per product group change?
  • How will these tank storage drivers impact storage rates?


Tank Storage driver: Russian & Far East fuel oil flow

Russia’s relatively unsophisticated refinery sector produces much fuel oil. The production of fuel oil is also stimulated because of the export tax structure for oil products relative to crude oil. The fuel oil flow going from Russia via Rotterdam to South-East Asia is a very profitable business for the tank terminals in the Europoort (Port of Rotterdam) and in Singapore. Tankers load in Baltic ports and ship it to Rotterdam. As larger vessels cannot load in Baltic ports because of draught limitations, the ships are discharged in tank terminals in Rotterdam and the product is reloaded on VLCC’s for destination Singapore. In Singapore these VLCC’s are discharged and the fuel oil is either sold in the bunker market or redistributed to other countries in South-East Asia. Another important destination is China, where the fuel oil is either sold in the Chinese bunker markets or used by so-called ‘teapot’ refineries as feedstock for refineries.

In order to forecast how this lucrative transit flow will evolve into the future we analyzed and forecasted Russian export flows and Asian demand. To assess the longer term market also the potential impact of legislation (ECA 2015 and IMO 2020/2025) and marine fuel substitutes has been analyzed.

These questions and others were studied by looking at important themes that could potentially impact market fundamentals. If you are in anyway interested in this industry, you will find this study essential for your view on the market.

For promotional purposes, PJK International has made a short summary of the study. In this e-paper the contents of the study is further highlighted by giving a limited overview of important themes that have been analysed thoroughly. We will start by looking at how European refinery closures might impact tank storage markets. Second transit flows from Russia to Asia, specifically fuel oil flows, will be highlighted. Third, the influence of US refining renaissance is analysed and fourth, capacity developments are mapped out. Finally, storage rate developments are analysed.

PJK International, Tank Storage Specialist

The integral study became available at the end of February 2014. If you would like to acquire more in-depth knowledge about the tank terminal market study after reading this paper, please contact PJK International via mail: info@pjk-international.com or call: +31(0)-76-7676323. You can also pre-subscribe via our website and we will contact you about further deliverables.