Post by Curtis Bell
The World Has Never Stored More Oil and Gas at Sea. Does This Increase the Risk of Maritime Terrorism?
With the world’s governments intensely focused on mitigating the consequences of the global COVID-19 pandemic, violent non-state organizations around the world are suddenly operating in a radically changed environment. One important yet mostly overlooked change is the rapid increase in offshore oil and gas storage, which has now reached unprecedented levels. The offshore tankers and storage facilities that are holding the world’s excess supply of oil and gas are new and vulnerable soft targets. A failure to protect them could have devastating environmental, economic, and geopolitical consequences.
THE SHARP RISE IN OFFSHORE OIL STORAGE
As the pandemic spreads and economies slow, the global supply of oil and gas has quickly outpaced global demand. The United States Energy Information Administration forecasts that the global consumption of liquid fuels will decrease 5.2 percent in 2020 relative to 2019, and this fall in demand would be the sharpest drop since the organization began collecting these data 30 years ago. Many industry experts are forecasting shorter-term decreases of as much as 20 percent. The abrupt collapse in demand is reflected in the price. Brent Crude, which hit a recent peak of nearly $69 per barrel during the first week of January, plummeted to less than $25 per barrel by early April. Ongoing competition among major oil producers, including a massive price war between Saudi Arabia and Russia, has contributed to the global glut.
The excess oil and gas must go somewhere, and much of it has headed to long-term storage offshore. In Europe, dozens of idle tankers full of unused oil and gas sit just outside the continent’s major ports. The China National Offshore Oil Corporation, China’s largest buyer of liquefied natural gas, is reportedly unable to purchase additional gas due to offshore storage limitations. Oil is also filling previously unused tanks throughout the Caribbean, North Africa, Singapore, and elsewhere.
Taken together, all of this means that the world has never stored so much oil and gas on the surface of its oceans. According to Kpler, offshore storage facilities held just 46 million barrels in April 2019. Industry estimates suggest this amount climbed to just under 90 million barrels at the beginning of March and further to more than 160 million barrels in mid-April. Conventional storage sites are quickly running out of space, so oil and gas producers are instead leasing tankers to hold excess product. In fact, shipping rates on the world’s very large crude carriers have climbed nearly sevenfold just since February.
ASSESSING AND ADDRESSING THE SECURITY THREATS
What security threats are posed by storing all of this oil and how can states work to mitigate the risks?
As traditional storage sites fill, oil producers are being forced to look into suboptimal options. The Wall Street Journal recently reported, for example, that European oil traders have sought to lease a storage facility in Morocco that has been offline for more than five years. Others have decided to store oil and anchor laden tankers near areas with known security risks, including off the coasts of Venezuela and Libya. With the cost of storage onboard active tankers increasing precipitously, some suppliers are even looking to pull old and out-of-service vessels out of the salvage process.
This turn to suboptimal offshore storage creates specific vulnerabilities that states should proactively address. First, new sites are unlikely to have the best security practices used at more frequently utilized places of storage. This could make them much more vulnerable to intentional targeting by violent non-state actors who stand to gain from acts of terrorism. Maritime enforcement authorities can address this risk by providing security in well-defined, protected anchorages and ensuring that the crews on these vessels adhere to best management practices. They would not be starting from a clean slate—many practices could be adopted from industry practices aimed at reducing armed robbery of vessels at anchorage and the International Ship and Port Facility Security (ISPS) code, which outlines security measures for ship security officers and port facilities while also creating common standards for communication with security personnel, flag states, and the International Maritime Organization.
Second, even where violent organizations would not intentionally target new storage facilities, states should be extremely alarmed by vast quantities of oil being stored in suboptimal conditions off of their shores. The environmental and economic consequences of an unintentional spill could be catastrophic for coastal states already facing the prospects of a pandemic and a long-term economic downturn. Ship operators and coastal states should ensure that tankers used for storage are in the appropriate condition. States could take the additional measure of defining suitable places of anchorage located far from the dense ports or sensitive ecosystems where an accidental spill would be significantly more costly and disruptive.
Coastal states must mitigate these risks because the vulnerabilities are significant and the worst-case scenarios would be devastating. For years, the international maritime community has worried about the FSO Safer, an abandoned oil tanker holding more than a million barrels five miles from the coast of Yemen in the southern Red Sea. A breach of the Safer’s hull, either due to terrorism or to deterioration, could destroy coastal fisheries and disrupt global commerce through one of the world’s busiest shipping chokepoints. The ongoing global glut of oil and gas means similar vulnerabilities could appear all over the world. Intentional and proactive efforts to address this risk will decrease the chances of a disaster.
This content was created when Stable Seas was a program of One Earth Future.