VLCC floating storage bookings hit at least 71

Oil traders since March have booked at least 71 very large crude carriers (VLCCs), or nearly 10pc of the global VLCC fleet, at an average rate of $77,000/d and with the option to store oil as the global crude glut continues to fill land-based storage tanks.

Shell has led the chartering pack with 13 such bookings of the 2mn bl-capacity tankers, followed by trading firms Gunvor, Vitol, and Trafigura with eight, six and five, respectively, according to Argus data.

Two of the Shell-booked VLCCs, the Maran Corona and the Eliza, are already storing crude. The Maran Corona loaded a cargo of Mars crude in the Louisiana Offshore Oil Port (LOOP) on 23 April and has sat nearby since, according to vessel tracking from oil analytics firm Vortexa. Shell initially fixed the tanker back in late March for a US Gulf coast-Asia voyage that included a storage option.

Also idling within a few miles of LOOP is the Eliza, which Shell booked in March on a six-month time charter at $120,000/d with a three-month extension option. The ship loaded a Mars crude cargo on 7 April.

Rapidly dwindling land storage space for crude in the US has made the region a particular focus for floating storage.

But this tanker duo is more the exception than the rule, as they are part of the group of only nine of the booked VLCCs vessel tracking indicates are currently being used for storage. The other seven short-term time chartered VLCCs now in storage are sprinkled throughout the world. The rest that are not currently used for storage could be in the coming months as land storage is further squeezed. Many of their time charters have yet to commence and some of the time chartered VLCCs have been re-let out on the spot market.

As an example, one of the 71 VLCCs is the DHT Edelweiss, which was offered this week by its time charterer to transport a Brazil-Asia spot cargo for Repsol with 29 May loading. Prior to that, the charterer leased the VLCC from the tanker's owner, DHT, for a year at around $67,500/d with an option to extend for six months. Repsol's spot market booking failed in the end, according to shipping reports, but the spot market offer shows the flexibility of these short-term time charters.

Not just VLCCs

VLCCs, because of their size and ubiquity, are an obvious choice for use as floating storage, but other smaller tankers are used for storage as well. Argus has identified 31 Suezmaxes and 23 Aframaxes that also recently been booked on floating storage-likely short-term charters, at average rates of $49,000/d and $28,000/d, respectively.

While the amount of crude in floating storage has more than doubled since early March, the majority of the tankers storing are not among those booked for it. Much of the increase in floating storage is the result of unforeseen logistical or storage issues at ports that have arisen from Covid-19 containment measures or the virus-related oil demand destruction.

One of the VLCCs that vessel tracking data shows is storing crude is the BP-chartered Amyntas, which has been sitting near Rotterdam with a US crude cargo since 21 April. BP initially fixed that ship on 19 February, before Covid-19 containment measures sapped global oil demand, on a standard US Gulf coast-Europe voyage. The fixture included no mention of floating storage, per shipping reports viewed by Argus.

Vortexa data show 136 crude tankers, from Handysizes up to VLCCs, storing crude, although shipbrokers say the actual number is much higher.

By Nicholas Watt