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PUT THE BRAKES ON
These are strange times for all of us, but perhaps strangest of all for bulk liquids storage terminal operators. Last year involved many in preparing for the incoming ‘IMO 2020’ regulation on the sulphur content of marine fuels, which involved repurposing storage tanks to cope with low-sulphur material and provide additional segregation. That came on top of pressure to handle more environmentally friendly fuels and the prospect of having to deal with the approaching energy transition. As such, engineering departments were busy planning all manner of jobs, not least in the US, where the surge in crude oil exports, as well as
phase, not least on the Texas coast. But reports in January this year of a new strain of Coronavirus emerging in China presaged a complete turnaround in plans. The extended Chinese New Year holiday brought its own problems for some in the supply chain – problems that are yet to unwind totally – but as the virus spread around the world, measures to combat it caused the same personnel issues for terminal operators as it did for all other businesses. That was, though, not the least of it. Restrictions on travel led to a sudden fall in demand for gasoline, diesel and jet fuel;
TIME TO RETHINK So, as we head towards the middle of 2020, storage terminal operators have had some time to consider the implications. Many have changed their plans, cutting back on capital expenditure until the current uncertainty eases, reducing dividend payments and waiting to see how the crisis plays out. That is not to say that they are not busy. The demand-led slump has left many holding high volumes of inventory for producers and traders, waiting for demand to return, although throughput of crude oil and refined products has slowed remarkably. There are some bright spots in the chemicals and foodstuffs sector, particularly for those products that act as feedstock in the pharmaceutical and healthcare supply chains. HCB’s annual review of expansion and construction activity is no shorter than in previous years but most of the projects and plans listed on the following pages were put in place before the Covid-19 pandemic struck. It is understood that many construction
LNG, ethane, ethylene and other gases, was encouraging a massive new construction
this came on top of what was already an over-supplied oil market and caused a collapse in global oil prices. Efforts by the major oil exporting countries to rein in production came too late and are probably too little to reinvigorate market sentiment, at least until demand returns to more normal levels.
projects already under way are continuing as planned, based as they are on long-standing contracts or the anticipation of a financial return, although construction firms are employing their own safe working practices. However, some other projects that have not yet passed to the construction phase are being
EXPANSIONS • IN THE YEAR OF CORONAVIRUS, TERMINAL OPERATORS’ PLANS HAVE BEEN THROWN INTO CHAOS. BUT A LOT OF WORK IS STILL GOING AHEAD
OPERATORS IN THE US REMAIN BUSY INSTALLING NEW OIL EXPORT CAPACITY
HCB MONTHLY | MAY 2020
