Oil Storage Market Trends

Growth Drivers

• Increasing energy consumption: The increasing demand for energy in myriad industries is one of the major driving forces behind the expansion in the capacity of oil storage facilities. Many entities are upgrading their storage infrastructure to meet the increasing volumes of oil imports for the continuity of energy supplies. For instance, crude oil imports in China increased by 6.2% in March 2023 compared to 2020 levels, hence expanding the requirements for bigger storage solutions to manage the increased import volumes. This points to a wider trend globally, where increased industrial activities and greater economic growth increase the demand for higher and more efficient oil storage capacities.
• Expansion of strategic petroleum reserves: Increasing demand for strategic petroleum reserves (SPRs) is considered one of the key drivers of oil storage market growth as nations seek to secure supplies of energy against disruptions that may arise in the future. These SPRs not only help in smoothing energy prices in times of supply shocks but also play an important role in geopolitical leveraging. In fact, the ongoing efforts to expand such SPRs represent one of the most important elements of national energy strategies, a buffer that ensures energy stability during times of global uncertainty and contributes to long-term viability within the global energy context.
• Investment in alternative fuel storage infrastructure: The industry is witnessing huge investments directed at storage facilities that correspond to cleaner fuels such as LNG and LPG. For example, the joint venture between Aegis Logistics and Royal Vopak in March 2022 expanded the company's LPG storage in India to adapt to the growing demand for fuels that are more environmentally friendly. This shift will support not only domestic energy needs but also position these companies to cater to international markets seeking sustainable energy alternatives as well. It follows that the development of LNG and LPG storage facilities is increasingly becoming an integral part of the wider energy transition, which in turn drives the oil storage market.

Challenges

• Geopolitical instability and supply chains: The situations in key oil-producing regions contribute to geopolitical tensions, disrupting supply chains and delaying key infrastructure projects. Such setbacks have indicated that oil storage facility development stands highly susceptible to geopolitical factors, which tend to operate against the benefits of timely capacity expansions. The instabilities also affect currently operating fields while leading to further uncertainties that may discourage investments within the oil storage industry.
• Adherence to environmental regulations: Stricter environmental regulations continue to alter the oil storage landscape by forcing service providers into a greener mode of operation, embracing green technologies. Conformity with such dynamic environmental imperatives involves considerable investment in green technologies and infrastructure upgrades, which can be a challenge for oil storage providers financially and operationally.