Since the beginning of 2000, Insights Global has been involved in numerous consultancy assignments.
These ranged from market studies of specific sectors such as the chemical, wholesale and retail, tank storage, trading and shipping, and oil industry.
Also, different regions have been covered such as Northwest Europe, Mediterranean, ARA, Singapore, and the US.
Since 2014, Insights Global has been heavily involved in due diligence projects of storage assets, specifically commercial DD. Some of these were part of the winning bid.
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”
For several years, Insights Global has published market outlook reports on oil products for the ARA region. This report has been revised on a year-on-year basis.
As from 2018, we have produced new market outlook reports, now covering ARA & chemical products and Singapore & oil products. Our intention is to cover all major trading hubs for both research areas.
In this registration form, you are able to select the trading hub and research area of interest. Just fill in your name and e-mail address. You can make multiple selections. We will sent over a sample report and contact you shortly.
A tank terminal can have various functions for its clients. A tank terminal can be needed for logistical purposes, as a trading platform and for strategic storage purposes. In ARA they are likely to have a combination of these functions.
Depending on market circumstances a terminal that functions excellent in certain high value segments can ask premium storage rates and will find enough demand to rent out its tank capacity.
However, markets change and this can alter clients’ requirements and shift profit potential and demand between market segments. To identify which and how market variables influence commercial circumstances for tank terminals, storage players need to be in sync with their environment.
In the world, there are considered to be four major oil trading hubs: ARA, Houston, Singapore, Fujairah. These four port areas have their own different identity and their own local trading dynamics. In this high level research, we will compare investment intensity in these locations. For comparison purposes in ARA, we have split ARA in only Rotterdam and Antwerp.
In these 5 ports combined there are 146 terminal companies active. Most of the companies are situated in Houston (53), followed by Rotterdam (31), Antwerp (24), Singapore (21) and Fujairah (17). Looking at the capacity, these ports sum up to 76.35Mcbm. Most capacity is available in Houston (25Mcbm), followed by Rotterdam (19Mcbm), Singapore (15.28Mcbm), Fujairah (9.35Mcbm) and Antwerp (7.65Mcbm).
When we divided total storage capacity with the number of terminals we can calculate the average capacity per terminal. Biggest average tank size is in Singapore (0.73Mcbm), followed by Rotterdam (0.62Mcbm), Fujairah (0.55Mcbm), Houston (0.47Mcbm) and Antwerp (0.32Mcbm).
This calculation says something about the local storage footprint and the port’s specialty. For instance, Singapore is an Asian bunker hub which facilitates fuel oil storage. There are a number of big underground caverns there. Antwerp is focused on specialty chemical storage which need smaller tank sizes and lower average storage capacity per terminal.
For these five port areas, it is believed that around 22 expansions projects (existing greenfield, brownfield and planned additions) will add almost 8Mcbm to current capacity. Fujairah has 7 projects, followed by Houston (6), Antwerp (5), Singapore (3) and Rotterdam. Looking at the growth per capacity, port that shows the largest storage additions is Fujairah (29%), Antwerp (11%), Houston (9%), Rotterdam (7%) and Singapore (5%).
The conclusion of these statistics is that the major oil trading hubs have different strengths, serve a different purpose and show their own investment dynamics. Insights Global has presence at all these ports. We have the statistics and local knowledge to help investment companies value storage assets they would like to include in their investment portfolio.
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