Taking heart in the resilience of midstream
Despite low oil prices wreaking havoc on the upstream sector, the logistics and storage segment remains well insulated
In my message to readers in the last issue’s Special Report on logistics and storage, I had attempted to draw attention to the crucial importance that the midstream sector had assumed, especially in the prevailing tumultuous circumstances that the global energy realm finds itself today.
Last month, on my trip to the UAE’s northern emirate of Fujairah, I was introduced to a whole new (to me) dimension of the midstream sector – the reason why it has resisted the blows of low oil prices considerably better than the upstream or downstream sectors.
As we were driving down Fujairah, both sides of the road lay strewn with giant tanks storing crude oil and refined products and the complexes teeming with busy workers. During my interview with the executives of the Fujairah Oil Terminal (cover story on Page 26), the entity’s commercial director summed up the relative prosperity of the midstream segment quite plainly to my understanding: “As a matter of fact, low oil price is good for liquid bulk storage companies.”
In the current scenario dictated by subdued oil prices, producers are increasingly hoarding their produce in those tanks, he says, while traders are lying in hopeful wait that once prices bounce back they will load the crude oil onto ships bound for consumers. As a result, midstream companies such as FOT are enjoying 100% occupancy of its storage tanks. Quite an interesting phenomenon.
Also, in some pleasing news for the upstream sector, oil ministers from some of the key OPEC members have resolved to meet with Russia on the sidelines of an industry event in Algeria from September 26-28. Although the cartel’s members in two previous attempts – the informal meet in Doha in April and the formal conclave in Vienna in June – have failed to convince each other of the merits of freezing oil output, with Iran hopefully at the negotiating table this time, one can never guess what the outcome might be.
On another note, I would like to thank all the companies and individuals who have nominated for the Awards this year – as always we’ve been overwhelmed. As a return gesture, we have kept the door open to receive more quality nominations, so sneak in with your entries before time runs out.
I would also like to use this platform to announce that I have now been officially entrusted with the task of managing this magazine’s affairs. Hoping to keep O&GME’s flag fluttering high!