Third of chartered VLCCs are for floating storage
VLCC chartering for floating storage in Middle East continues to grow, says consultant agency Poten & Partners, despite stabilisation of the oil price.
Several charter contracts for the largest tankers, VLCC, are for deposits of oil, according to numbers from Poten & Partners, with an acceleration of the trend in the last four to six weeks.
"Surprisingly enough, it appears that the utilisation of VLCCs for floating storage has increased in recent weeks," writes Poten & Partners in a new report, adding that Iraq and Iran are seeing the most activity.
"Vessel tracking information reveals that about a third of the vessels taken on time charter earlier in the year are now used for floating storage,” the report adds. “Most of these are in the Arabian Gulf, but there also some in Singapore, West Africa and the Mediterranean."
The development benefits the market for very large tankers, which experienced the same trend in 2009 with more than 10-million barrels of oil on board tankers.
The idea is that it is of greater financial benefit to store oil at sea until the price rebounds, providing quick access to the market to recoup the expense on long-term charter, than it is to sell oil at its current rate.
Although the price of oil has gone back up slightly, it is not enough to prompt trading houses to start selling instead of storing. The trend has sent spot rates for daily charter of VLCCs to record highs, with rates exceeding US $100,000 per day at present.