The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
South Korea has run out of oil storage space that can be leased to third-party companies, according to people with knowledge of the matter, as a global glut spurs a scramble for places to store crude.
State-run Korea National Oil Corp (KNOC) currently rents out about 30 million barrels of onshore tank space to third parties including international traders and producers.
Such leases typically rent these tanks to support trading and supply activities in the region under what’s known as the joint-stockpiling scheme, which requires them to divert inventories to domestic users in the event of an emergency. Oilhub Korea Yeosu Co, in which KNOC has the largest stake, also has 8.2 million barrels of storage capacity for commercial use.
While some short-term leases by KNOC are set to expire later this year, the freed-up storage space will likely be set aside for strategic purposes, or to help local fuel producers with logistical demands, one of the people said.
Coronavirus lockdowns have eviscerated energy demand worldwide, although many refiners can’t completely halt their activities due to existing fuel supply contacts to some customers. Such processors are, however, running at lower operating rates, which means they need storage space for both crude and fuel.
Many traders as well as refiners across the globe have also been scrambling to get their hands on tank space as the lure of cheap oil and favourable market conditions makes the strategy attractive.