Trends in the oil market & tank storage in

ports

Dr. Michiel Nijdam

Structure

1. Oil products Market Overview of the oil products markets

Trends in the market

Expected developments

2. Ports and Tank storage Current capacity

Expansion

Trends and expectations

3. Evaluation Attractiveness of tank storage market

Possible risks

Price, capacity and competition

TRENDS IN THE OIL

PRODUCTS MARKET

Worldwide trade flows - Exports

Globalization of fuels production:

strong growth in trade of oil products

Source: calculations EUR, based on Unctad, Worldbank and Eurostat.

Price corrections: oils by average crude, all products by EU inflation

0

50

100

150

200

250

300

350

400

Exports 1995-2011 (index, price corrected)

WRLD all export

WRLD Crude

WRLD Oilproducts

Expectations IEA (source: IEA World Energy Outlook)

Future demand for oil shifts across the globe:

Trends in refining

Margins in refining under pressure; Refining on US Gulf Coast loss making

activity since 2009.

Trends in refining II

Low utilization rates around the world

Significant reduction in capacity in OECD countries since start of

global recession.

Possible future flows of oil products

TANK STORAGE MARKET

Trade and storage

Reasons for storage

As a buffer point in a supply chain

As a physical necessity

Trade stock for speculation

Optimal storage place

Good connections by sea, land and pipeline

Stable political environment

Knowledge level (Tech and HSE)

Oil product

usage

Fuel trading

Crude

extraction

Fuel

production

Storage

Storage

Storage

•Storage is essential in the

fuel supply chain.

•Most storage in seaports.

•Ever present demand for

storage because of trading

and speculation on oil

price

•Cargo transfers before

final consumption have

increased from 3 times up

to 10 times.

Trade and storage II

Europe: 20% throughput growth in

10 years

50,000

55,000

60,000

65,000

70,000

75,000

80,000

85,000

90,00020

02Q

1

20

02Q

2

20

02Q

3

20

02Q

4

20

03Q

1

20

03Q

2

20

03Q

3

20

03Q

4

20

04Q

1

20

04Q

2

20

04Q

3

20

04Q

4

20

05Q

1

20

05Q

2

20

05Q

3

20

05Q

4

20

06Q

1

20

06Q

2

20

06Q

3

20

06Q

4

20

07Q

1

20

07Q

2

20

07Q

3

20

07Q

4

20

08Q

1

20

08Q

2

20

08Q

3

20

08Q

4

20

09Q

1

20

09Q

2

20

09Q

3

20

09Q

4

20

10Q

1

20

10Q

2

20

10Q

3

20

10Q

4

20

11Q

1

20

11Q

2

20

11Q

3

20

11Q

4

20

12Q

1

20

12Q

2

20

12Q

3

20

12Q

4

Throughput total European ports

Trade oriented ports show most growth

0

5,000

10,000

15,000

20,000

25,000

Throughput oil products per quarter (x1000 tonnes)

Rotterdam

Amsterdam

Antwerpen

Tallinn

Bergen

Milford Haven

Augusta

Cartagena

Grimsby & Immingham

Le Havre

Porto Foxi

London

Oil products are a large market for all ports in

the ARA range

46%

25%

42%

16%

36%

17% 16%

40%

5%

27%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Rotterdam Antwerpen Amsterdam Ghent ZeelandSeaports

Total Liquid Bulk 2011

Total Mineral Oil Products2011

Liquid Bulk and Mineral Oil Products as percentage of total port throughput (calculations EUR, data for 2011)

Rotterdam locates 60% of tank capacity in

ARA-range

Source: Calculations EUR, based on port authorities, tankfinder.com and company websites

9,600,337

26,969,000

5,899,010

1,006,729 155,500

498,400

Tank capacity in ARA range (CBM)

Antwerp

Rotterdam

Amsterdam

Ghent

Terneuzen

Flushing

But only 20% of tank capacity in Rotterdam is

independent storage for oil products.

Source: EUR calculations based on Port Authorities of ARA ports and individual company information

12,385,000

800,000

4,500,000

5,884,000

2,300,000

200,000 900,000

Capacity in Rotterdam (CBM, 2012)

Crude oil at refineries

Crude oil, independent

Oil products at refinery

Oil products independent

Chemicals, independent

Veg oil at refineries

Veg oil independent

Tank terminal operators in Antwerp

Source: based on Port Authorities of ARA ports and individual company information

297000

613000

720000

300000

830000

952000

275000

100000

199000

466000

140000

Tank Terminals Antwerp (CBM, 2012)

Noord Natie Odfjell Terminals

Oiltanking

SEA-Tank Terminal Antwerp (S.T.T.A.)

LBC / LBC Cespa

Vesta Mercuria

ATPC (VTTI)

ADPO

ITC Rubis Terminal Antwerp

Vopak ACS

Vopak Eurotank

Vopak Linkeroever

Tank storage operators in Amsterdam

Source: based on Port Authorities of ARA ports and individual company information

1600000

1300000

1000000

600000

75000

1200000

43000

Tank Terminals Amsterdam (CBM, 2012)

Oiltanking

Eurotank Amsterdam

BP Terminal Amsterdam

NuStar

Vopak Petroleumhaven

Vopak AmsterdamWestpoort

Koole Zaandam

PoR estimates growth in oil products

throughput

Growth in volumes up to 2040, only in most negative

scenario decline in volumes after 2030

Expected throughput mineral oil products

Source: Port Compass 2030

Capacity independent tank storage, future

development

Capacity development at independent tank storage operators, 2004-2016

(source: Port of Rotterdam)

EVALUATION

Developments in market for oil products

Slight increase in worldwide oil consumption is

expected for the next 25 years

Global shift in supply/demand

Change in refining industry around Atlantic basin

> more worldwide flows of oil products

Closing refineries in Europe and US

Growing import of oil products in growing economies

Supply/demand imbalances will grow with upcoming

economies and create more trade

Logistics becomes more important

Tank storage investments

Oil-producers do not invest in storage:

independent tank storage and trader-owned

grows

Investments by major oil trading companies in

tank storage

Investments in tank storage can best be made

in logistically optimal locations

Conversion of refinery tanks can increase

capacity (too) quickly

Outlook

From 2025 more uncertainty depending on:

Usage of fuels for cars and trucks

Developments in the refinery industry

From 2050 when phasing out of fossil fuel for

transport takes place, tank storage business

might decline

Resulting outlook for tank storage in Europe:

Very positive for ARA range until 2035

Positive for some MED locations

Less atractive from 2050 onwards

Price effects

Europe has (small) risk of overcapacity because capacity

will grow in coming years.

But there is a physical limit to the capacity that can be

build

Demand is expected to grow

Demand will be more volatile

Price development will be moderately positive as a result

But occupancy rates will be lower