ID: MRFR/E&P/2633-CR | August 2020 | Region: Global | 155 pages
Impact of Covid-19 Outbreak on Oil and Gas Storage Market
The covid-19 outbreak has serious effects on the global economy since many sectors are affected by the current circumstances and operations of various sectors have come to standstill. In oil & gas sector, companies are dealing with lot of challenges due to decline in oil prices post covid-19 pandemic. As a result of pandemic and containment measures globally, the travel has almost come to halt which has resulted in declining oil demand. Also, it has created demand shock in storage space, both onshore and offshore locations quickly filling up. With onshore locations being exhausted, the companies are looking out for floating storage and distant storage locations. These distant storage locations result in further increase in cost considering both transportation and storage fees. In addition to this, the shorter life of gasoline and limitation of storing these jet fuels alongside heavy crude oil poses another challenge to the oil companies.
FIGURE: Cushing Crude Stockpiles Surge
Due to exhaustion of onshore storage facilities, the hiring rates for crude oil carriers have gone up almost seven times compared to that in February 2020 since countries are looking for offshore storage facilities. For instance, the vessel charges are about USD 160,000-170,000 a day in April 2020 as compared to USD 25,000 a day in February 2020. Also, these rates might increase up to USD 200,000 per day in near future. As of 17th April 2020, the crude oil storage hub in Cushing, Okhalama, U.S. was 70% full and is expected to be 100% full in couple of months. The total capacity of hub is 76 million barrels. The U.S. Department of Energy is in process of leasing around 77 million barrels of available space in the Strategic Petroleum Reserve to private companies to store their oil. As a result, oil producers are looking out for alternative options such as oil tankers, pipelines, SPR spaces, rail cars, expansion of storage terminals, and so on for storage of crude oil both on land and sea.
Source: Primary Experts, Secondary Sources, and MRFR Analysis
Source: U.S. Energy Information Administration