The Southern Hemisphere will soon enjoy markedly improved access to oil storage facilities, with the recently announced expansion to already vast tank farms in Saldanha Bay, South Africa. The oil storage facilities max out at 45 million barrels, but the amount of oil in the hub remains mostly a secret.
Why? Saldanha Bay oil storage is half underground, making it almost impossible for satellites to conduct a proper flyover. Many world traders would love to understand the full value of the oil in these tankers.
Brief History of Saldanha Bay
Saldanha Bay is the largest oil storage in South Africa. The government, looking to sovereign resources to counter UN sanctions, created the hub to ensure the country’s oil supply. After apartheid broke down, private oil traders quickly took advantage of the capacity for their own use.
In two major instances, commodity traders made a fortune waiting out the swings in oil prices, storing oil in Saldanha when prices were low and selling when high.
What’s Next for Saldanha Bay
The bay is now expanding. Twelve new tanks will add another 13.2 million barrels’ worth of storage capabilities. Construction is a partnership between South African MOGS and German Oiltanking and began in 2017.
This expansion will likely draw companies looking to store large amounts of crude.
Because it sits in a location very close to the Cape of Good Hope, it holds a great deal of potential as a stopping point of the transit route between the Americas, Asia and Europe. 5.8 million barrels of crude oil made their way through the Cape of Good Hope in 2016. Even though the route is longer than the Suez Canal, it is more cost effective and safer. (The war in Yemen creates a huge problem for people wanting to move oil through the Bab el-Mandeb passage.)
Impact of Saldanha Bay
Oil prices are currently falling again, and traders will need a place to store their oil. You can bet that South African’s Saldanha Bay will increase in importance as the volatility continues to create uncertainty in the market.
Traders will continue to move their stockpiles into Saldanha Bay, and they will do so in bigger volumes than ever.