Logistical Challenges

Shipping oil half way round the world – from the US Gulf coast to East Asia – is a major logistical challenge. Such extra-long-haul shipments have to use the largest tankers – VLCCs of 2mn barrels – to make the economics work.

But many US Gulf ports are not designed for this. They cannot load VLCCs, requiring offshore transhipment from smaller vessels, which of course adds to the cost.

At the same time many potential Asian customers are relatively small refineries for whom 2mn barrels is too much crude to take in one go. And of course refiners everywhere prefer to take initial shipments of new crudes in more manageable ‘try out’ volumes. (CONTINUED - 323 WORDS)