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Survey: Med crude storage brimming over

  • Market: Crude oil
  • 11/02/15

The fall in international crude oil prices since June and the accompanying contango has increased the attractiveness of long-term crude storage in the Mediterranean, to the extent that existing commercial tank capacity is fully utilised.

Commercial crude storage in the Mediterranean is dominated by two sites: Sidi Kerir and Eilat-Ashkelon.

The 30-tank Sidi Kerir tank farm is located on Egypt's Mediterranean coast. Sidi Kerir has a cumulative crude storage capacity of 3.3mn m³, equivalent to around 24mn bl, with 15 tanks of 750,000 bl and 15 of 850,000 bl. Sidi Kerir is connected to Egypt's Ain Sukhna terminal, on the Red Sea, by two parallel 42-inch diameter 320km-long pipelines, known as Sumed, with a transport capacity of 2.5mn b/d.

Majors BP, Total and Royal Dutch Shell all have leased storage at Sidi Kerir, as have Swiss-based trader Vitol, Russia's Lukoil, Chinese firm Unipec and state-owned Saudi Aramco. Another Mideast Gulf producer, Kuwait's state-owned KPC, signed a deal in September last year with Sumed operator Arab Petroleum Pipelines (APP) for up to 4mn bl of crude storage in Egypt, with some of the volumes destined for storage at Sidi Kerir , as KPC is keen to boost its market share in the Mediterranean. Although Kuwait holds a 15pc interest in APP, it has been 20 years since KPC last leased storage at Sidi Kerir.

Buyers of Mideast Gulf oil often discharge crude at Ain Sukhna for storage at Sidi Kerir via the Sumed pipeline system. Volumes of Iraqi crude in storage have been rising at Sidi Kerir, at a time when weaker demand in the Mediterranean coincides with rising crude exports from Iraq's southern terminals. Egypt's state-run EGPC has also been taking advantage of Sidi Kerir's tank storage to swap cargoes of its light sweet crude for imported Iraqi medium sour crude, deliverable at the Mediterranean terminal.

In neighbouring Israel, crude storage is split between the Red Sea terminal of Eilat and the Mediterranean port of Ashkelon, which are connected by a 42-inch 254km pipeline. Eilat has 8.75mn bl of crude storage capacity in 16 tanks at the Ramat Yotam tank farm, while Ashkelon has 14mn bl of crude storage capacity in 23 tanks. At least four trading firms – Vitol, Trafigura, Gunvor and Petraco – have leased crude storage space at Eilat and Ashkelon.

But all this tank capacity is effectively full, with traders saying no significant commercial storage capacity is currently available for lease in the Mediterranean region. By discharging crude oil into long-term storage, market participants are looking to secure profits from the "contango" structure in oil prices, when oil delivered in in future months is more expensive than that delivered in the near term.

Given a bearish outlook for oil prices in the coming months, demand for commercial storage in the region is likely to remain firm, and new companies could enter the market. The declining fortunes of the European refining segment could see more uneconomic refineries converted into storage facilities. Possible candidates include one or more of Eni's Italian refineries and Kuwait Petroleum Europoort (KPE)'s 88,000 b/d Rotterdam refinery, as well as a Total plant in Mediterranean France.

Other Mediterranean terminals offer sizeable crude storage capacity, although not for commercial lease.

At For-sur-Mer, on France's Mediterranean coast, SPSE operates 40 oil storage tanks with cumulative capacity of 2.26mn m³ for both crude oil and oil products. ExxonMobil, Total and Petroineos all have crude storage at Fos-sur-Mer, from where pipelines connect to their respective French refineries: Fos-sur-Mer (117,000 b/d), La Mede (160,000 b/d) and Lavera (210,000 b/d).

On Turkey's Mediterranean coast, state-run Botas operates the Ceyhan terminal, with 10mn bl of crude storage. Around 25pc of this total is allocated for the storage of Iraqi crude pumped via the Iraq-Turkey pipeline (ITP). The crude in question is oil produced from fields in Iraqi Kurdistan as well as fields controlled by Iraq's federal government. In March 2014, sabotage attacks damaged a section of the pipeline well inside Iraq, stopping the flow of crude for months. Prompting a furious row with the federal government in Baghdad, the Kurdistan Regional Government (KRG) began exporting crude on its own account through undamaged sections of the pipeline. Late last year a tentative deal was reached between the KRG and Baghdad. It allowed for the routing of some Kirkuk crude through KRG-controlled pipelines and the allocation of Kurdish crude to Iraq's state-owned marketer Somo.

Crude volumes sold by Somo through Ceyhan will rise to 600,000 b/d in April from an average of around 375,000 b/d in the first three months of this year, Iraq's oil minister Adel Abdul Mahdi has forecast.

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TotalEnergies bids for west African crude on Argus AOM

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US claims success in Venezuela offshore raids

02/12/25
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02/12/25

US claims success in Venezuela offshore raids

Washington, 2 December (Argus) — US military operations near Venezuela have been so successful in stopping the flow of drugs by sea that the naval force is taking a pause, US defense secretary Pete Hegseth said on Tuesday. "We're stopping the drugs, we're striking the boats, we're defeating narcoterrorists," Hegseth said at a cabinet meeting chaired by President Donald Trump at the White House on Tuesday. "We've had a bit of a pause because it's hard to find boats to strike right now, which is the entire point." Trump added that "drugs coming in by sea are down 91pc, and I don't know who the [other] 9pc is". Trump did not provide any details to back his claim. Hegseth's comments could be a prelude to a declaration of victory that would allow the large US naval force deployed near Venezuela to disperse without taking direct military action against the country. They also could be an attempt to shift attention from a high-profile debate about the legality of the US operations. Either way, the Trump administration is no closer to explaining what it is trying to achieve in Venezuela than when it began to amass naval ships, Marines and war planes in the Caribbean in early September. As a legal rationale for the US naval operation, the administration has argued it is interdicting drug-laden boats allegedly launched from Venezuela. As the US force has grown in size, the Trump administration has hinted at possible land strikes against Venezuela or even an attempt at regime change in Caracas. But the Trump administration has now been forced to defend the legality of its Caribbean operations. The US naval force has reported lethal attacks on around 20 small boats in international waters near Venezuela since early September. The Pentagon initially said that the first boat it destroyed, on 2 September, carried drugs and 11 crew members, all of whom were killed by a missile strike. But the White House confirmed on Monday that two crew members survived the first attack on that boat and were then killed in a subsequent missile strike. A group of retired US military lawyers said the second strike amounted to a war crime or murder. Trump's administration is defending the 2 September strike as legally justified, while at the same time trying to shield Hegseth from responsibility. Hegseth on Tuesday assigned full responsibility for it to Admiral Frank Bradley, who is in charge of US special forces' operations. "I watched that first strike," Hegseth told reporters observing the Cabinet meeting. "As you can imagine, at the Department of War, we got a lot of things to do, so I didn't stick around." Then, "a couple of hours later, I learned that that commander had made the decision, which he had the complete authority to do," Hegseth said. Bradley "made the correct decision to ultimately sink the boat and eliminate the threat," Hegseth said. "I did not personally see survivors because the thing was on fire," he said. "There's this thing called the fog of war. This is what you in the press don't understand." The armed services committees in the US Senate and the House of Representatives have vowed to investigate the circumstances of the 2 September boat attack. Senators Rand Paul (R-Kentucky) and Tim Kaine (D-Virginia) said on Tuesday they will try to advance a resolution blocking the use of military force against Venezuela. Venezuela's president Nicolas Maduro appears to be taking the threat of a US land attack seriously, asking fellow Opec members on Monday to help "stop this growing aggression". Maduro made a brief televised appearance on Monday, after not speaking publicly for several days. He complained about enduring weeks of "psychological torture" from the US and shouted "Victory forever!" in English. Trump said on 30 November that he had spoken with Maduro the preceding week, but he provided no details. By Haik Gugarats and Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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