Offshore oil needs more tankers as volumes needing transport are expected to increase by 35% this decade
Demand for shuttle tankers in countries with strong offshore oil production and limited pipeline infrastructure is expected to grow steadily in the coming years, with product volumes to be transported reaching 3.3 billion barrels per year. year before the end of the decade, jumping 35% from 2.5 billion in 2021, according to a report by Rystad Energy.
The analysis focuses on the five key tanker shuttle markets – Brazil, Canada, Norway, UK and Russia. In places where subsea pipelines are not viable, tank shuttles are essential for moving liquids from wells to refineries and terminals. Besides minor declines in total utilization in these countries in 2018 and 2021, tanker shuttle activity has increased year-over-year since 2013 and is expected to grow further by a compound annual growth rate (CAGR ) by 3.5% between 2021 and 2030.
The North Sea was once the pioneer region and largest market for shuttle tankers due to its harsh environmental conditions and fragmented field structure, but the concept has been exported to other offshore areas with great success . Brazil is now the largest market for shuttle tankers due to its ultra-deepwater oilfields and will account for more than half of the shuttle market demand from 2026.
“There is a need for a new influx of tankers to meet growing demand and replace some of the aging capacity that will be taken out of service. Crude oil extraction will continue for many years to come and, given the economic strength and competitiveness of the offshore industry, new investment in offshore production is expected to continue to expand, ensuring a bright future for the shuttle tanker industry,” says Oddmund Føre. , senior vice president of energy services research at Rystad Energy.
Soaring offshore production in Brazil has led to a significant increase in the use of shuttle tankers, with activity up 55% from 695 million barrels in 2013 to 1.07 billion in 2021. a further 72% increase is expected by the end of 2030, when the total volumes handled by tankers in the country will reach 1.84 billion barrels. This meteoric rise will see Brazil consolidate its position as the world leader in the tank shuttle business.
Although overtaken by Brazil, Norway and the United Kingdom remain important players in the tank shuttle market. Norwegian tankers handled 763 million barrels in 2021, while their British counterparts handled 312 million. By comparison, Canadian shuttle tankers transported only 96 million barrels, and Russian shuttle tankers transported 213 million. However, the Russian market is expected to steadily decline over the next few years, shrinking by nearly half to 122 million barrels by 2030.
With nearly 100 vessels currently in service and a handful on order, the tank shuttle market remains one of the smallest and most studied segments of the shipping market. Despite its small size, there are significant variations and differences between regional tank shuttle markets. The North Sea and the Norwegian side of the Barents Sea have about 25 shuttle tankers in service and account for 25% of the world market. Although the North Sea market offers greater diversification than other markets, Equinor and state-owned Petoro are responsible for more than 35% of the volumes discharged from the oil fields.
The high standards and operational knowledge in the North Sea has helped other regions to adopt the same infrastructure. Brazil is now the largest market with 40 ships and three times the production of the North Sea. Unlike in the North Sea, however, Brazilian field operators have developed their form of regulation without the authorities playing an active role. Knutsen NYK Offshore Tankers (KNOT) and Altera Infrastructure are two of the leading tanker shuttle owners operating in Brazil with decades of experience operating vessels in the North Sea, helping to create seamless and efficient operations in the waters depths of Brazil. The Brazilian market is less diversified, with Petrobras managing 70% of offshore shuttle production with ships chartered either by the Brazilian giant itself or by international operators. While international companies must leave Brazil every 90 days to comply with local content regulations, Petrobras can operate more efficiently with significantly more ship travel than its international competitors.
In Russia, the tanker market is the same size as the North Sea market, but it is split between the Russian Arctic and Russian Far East markets. The former focuses on shuttling the Arctic oil fields to Murmansk, the latter bringing crude and condensate from the Sakhalin fields to the Asian market. Due to the relatively light class of Russian shuttle tankers and the fact that they are ice classed, vessel intensity per barrel produced in the region tends to be higher than in other markets.
The North Sea will be a key driver of increased activity as a new wave of investment follows the Norwegian government’s tax regime, introduced in mid-2020, which aims to incentivize sanction activity to file d by the end of 2022. Brazil has also made its voice heard. on its ambitions to become more energy independent, with many wells to be drilled by 2030. In addition, we see that an increasing number of international players are entering the scene in Brazil with their participation in the production of crude oil. This trend alone will drive up demand for shuttle tankers, as vessel intensity per barrel produced is higher than local leader Petrobras.
Source: Rystad Energy