Oil storage is as essential to ensuring a steady supply of the commodity as it is to influencing its trading prices. The growing import of oil products in emerging economies is expected to increase the demand for oil storage worldwide. Moreover, the supply/demand imbalance will increase with the growth in emerging economies, especially in Asia Pacific, and create more trade, subsequently benefitting the global oil storage market. The growing investments by major oil trading companies in tank storage are also expected to drive the global oil storage market.
According to a report published by Transparency Market Research (TMR), the global oil storage market is anticipated to expand at a 4.73% CAGR by volume between 2016 and 2024, reporting a rise from 1,337 mn cubic meters in 2014 to 2,027 mn cubic meters by the end of 2024.
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TMR analysts shed light on three important questions that companies operating in the oil storage market have:
Q. What are the common strategies adopted by players in the global oil storage market?
The most commonly adopted strategies by key players in the market include establishing alliances and partnerships. Key players such as Kinder Morgan Inc., Royal Vopak N.V., Oiltanking GmbH, NuStar Energy L.P., and Buckeye Partners L.P. are resorting to mergers and acquisitions and joint ventures in order to expand their crude oil storage infrastructure. Since the degree of competition is high in the market, players are raising funds for the development of new pipelines and expansion of terminal networks through strategic alliances. For instance, Kinder Morgan acquired Hiland Partners in February 2015 and this has helped the company to enhance both its terminal and storage structure.
Q. What are the recent developments in the global oil storage market?
On September 2016, Suncor Energy Inc. announced that it is selling one-third of its stake in its oil-storage terminal in northern Alberta to the Fort McKay First Nation, as it strives to strengthen ties with aboriginal groups present in close proximity to the oil sands.
Another development in in the market is the rising demand for crude oil in emerging nations due to the substantial drop in the price of oil. The petroleum ministry in India for instance, has announced that it would increase its oil storage capacity to take advantage of the lowered crude oil prices. To execute this plan, India has set up three petroleum reserves in Mangalore, Padur, and Visakhapatnam and two new storage facilities are expected to be set up in the states of Rajasthan and Odisha, each with about a 5 mn mt of capacity.
Q. Which regions are expected to be lucrative markets in the global oil storage market?
The Middle East and Africa region has been the leading contributor in the global oil storage market with a 30% share in 2014. North America and Europe followed the Middle East and Africa in terms of holding dominant shares. The market in Asia Pacific is also anticipated to pick up speed and grow in the coming years. With Saudi Arabia intending to expand its use of oil storage tanks in Japan and China, the Asia Pacific oil storage market is expected to witness significant growth. While Saudi Arabia intends to fend off potential competitors by strengthening ties with these two key Asian buyers, such developments will simultaneously help Asia Pacific to grow in the market.
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