The phenomenon of floating storage and the economics behind it
The UK P&I Club has issued the first issue for 2015 of its magazine ‘Hellas Hilights’ including an analysis of Club’s Self Assessment scheme, the issue of cappuccino bunkers and a brief overview of the Philippine Legal System. Also, it includes an article by Alec Kyrle-Pope, Senior Claims Executive, UK P&i Club providing an economic overview of floating storage.
The practice of chartering vessels to be used as floating storage is not a new or particularly mysterious concept in the tanker business. Most offshore production operations will have one or two FPSOs or FSOs bobbing about and it is certainly not unheard of in conventional trades for a Charterer to ask a laden vessel en route to a discharge port to drift and await orders whilst the market oscillates and a cargo is sold afloat.
However, it takes a perfect storm of various oil market elements for the practice to become a widespread trend and commercial tonnage to be pulled out from normal circulation to sit fully laden at strategic locations across the globe for months on end.
The purpose of Mr Kyrle-Pope’s article is to look at the phenomenon of floating storage, the economics behind it, its affect on conventional tanker markets and pose the question; are all the market ingredients currently present for a return to the floating storage epidemic of 2009?
You may find it at Club’s ‘Hellas Hilights’ 2015 , Issue 31
Source: The UK P&I Club