[blackwasp]

While fuel prices have been falling, traders are now looking at storing cheaper oil for later use. However, with land-based storages filling up fast, some are resorting to hiring large tankers - that usually are used to transport oil - to infact, store oil.

With oil demand in freefall, traders are resorting like never before to using the world’s fleet of supertankers as temporary floating storage facilities, filling them with millions of unsold barrels until better times. It’s an unusual trade, but one that’s among the most lucrative around right now, just when everyone on Wall Street struggles to make money.

The traders aren’t the only ones making money. Shipowners are racking up exorbitant fees. Two years ago, the daily price of a standard supertanker, known as very large crude carrier, or VLCC, was about $18,000 a day. This year, one owner managed to get a record of more than $400,000 a day.

“There’s been a huge interest in storage and that’s helped to lift freight rates,” said Halvor Ellefsen, a tanker broker at Fearnley’s A/S. “The bottom line is that everybody in the shipping market is acutely aware of the contango, and the profits it can give traders.”

Out of hundreds of supertankers in the world, large numbers of them are being hired not for their primary purpose -- shipping crude from A to B -- but to store oil amid a lack of space in shore tanks.

Source

[ArjunPadmakumar]

Its been norm nowadays to use the largest of supertankers, the ULCCs and VLCCs for storage of oil rather than movement of crude.

There are a variety of reasons for it, the uncertainty in markets due to Covid-19, the fact that these supertankers, especially the Ultra Large Crude Carriers(ULCCs) with a deadweight of over 300,000 tonnes and 330+m long and over 60m wide cant access majority of ports as well as Suez and panama canals make them less viable for movement of crude. Thus what majority of shipowners or operators do is transform them into floating storage units(hulk that no longer move under their own power-plant) and FPSOs and stationary rigs. An FPSO is a floating production system that receives fluids (crude oil, water and a host of other things) from a sub-sea reservoir through risers, which then separate fluids into crude oil, natural gas, water and impurities within the topsides production facilities on-board.

The golden age for Supertankers unfortunately are over. Back in the 70s till 90s there existed tankers that are unmatched even today by the largest container vessels (400m length with 22k TEU capacity), or the oasis class cruise-liners (360m).They were also more dense, thus profitable to operate as there was no regulation to have double hulls, a practice that become a norm after multiple oil spills in the 80s. The batillus class tankers and seawise giant were a whooping 400+m long and weighed over 500,000 tonnes fully loaded!

Today the largest tankers afloat are Ti class, including Ti.Asia, the one in post above, 2 of the 4 existing have already been converted as of today.Supertankers today are more or less identically designed with Twin hulls, standard 330m lengths and Adhering to MARPOL regulations. Even then most of them are retired as soon as they turn 20 as its a huge liability for ship owners in the unprecedentedly tough times today and most of them will end up as Oil storage hulks in outer harbors of seaports or worse scrapped altogether.

[moralfibre]

The Jahre Viking which was the largest ship to be floating in the seas at one point of time ended up becoming a storage tanker off Al Fujairah port. It was economically unviable for it to be used for transport duties.

ULCCs and VLCCs more or less end up doing this as a norm.

[ArjunPadmakumar]

Originally Posted by moralfibre

The Jahre Viking which was the largest ship to be floating in the seas at one point of time ended up becoming a storage tanker off Al Fujairah port. It was economically unviable for it to be used for transport duties.

ULCCs and VLCCs more or less end up doing this as a norm.

Yes,the jahre viking especially had an interesting life!

The tanker entered service in the late 70s and was initially denied delivery by the company who ordered it due to some vibration issues.It was later lengthened in the 80s to a massive 458m! (as if its original length wasn't long enough ). Then in the gulf war it was badly destroyed in an attack and many of its fans thought it would be the end of it. But no, She was towed to the Keppel Shipyard and rebuilt with a brand new superstructure! Then she traveled all across the globe awing every automobile and engineering enthusiast due to her sheer scale.She remained in active service till 2009 when she was floated off Al Fujairah.

She has a couple of facts which might interest us!

Over her 30 year old (long life) she changed owners a lot of times and had many names like Seawise Giant, Happy Giant, Jahre Viking, and Mont.

Her captain was an Indian gentlemen, S.K Mohan, in fact most of her crew were Indians with a sizeable number of Malayalis

She was scrapped in Alang, Gujarat and her anchor was saved and sent to Hong Kong.

Jeremy Clarkson has done a video on the vessel and her crew.Watch it,its a classic you wont regret!

https://youtu.be/WX2HFVHbo18

[anandhsub]

In the olden days shipping/storage costs used to determine the oil contango. Now it is the oil contango that is driving shipping and storage costs