Over the last year, global oil storage statistics have undergone the biggest transparency push since the launch of the Joint Organisations Data Initiative (JODI) database in 2005 with greater availability of data taken by satellites orbiting the earth. Three companies (Kayrros, Orbital Insights, Ursa) are already active in the field and more are likely to launch similar services over the coming years. While this new technology has already proven useful, the expected launch of several new satellites during 2019-20 will make images more numerous, clearer and cheaper.
Oil storage is one of the most opaque fields in oil market analysis. Reliable figures exist for OECD countries and are regularly discussed in this Report, while statistics for around 20 to 30 other countries are available in the JODI database. However, data for the rest of the world is hard to obtain. No one knows the true extent of global storage movements, making analysis of global supply and demand fundamentals difficult. We estimate that stock figures available for 2Q18 in the IEA and JODI databases cover countries responsible for 59% of global demand, a large but not overwhelming share. This percentage is likely to fall over the coming years as most new storage capacity is built in countries with less transparency on stocks, such as China.
The increased availability of satellites, as well as fast computing and cheap online storage to enable the processing of millions of pictures, has favoured the emergence of this new source of data. Additionally, new players in the space transportation market (such as SpaceX) have significantly reduced the cost of launching satellites, while new miniaturisation techniques mean satellites are much cheaper to build than in the past. It is now possible to measure the height of floating rooftops in tank farms by beaming a signal onto earth that is not disturbed by poor weather or night-time. This is a development of radar. It is currently available in low resolution from two satellites launched by the European Space Agency (ESA) – Sentinel 1A and 1B – in 2014 and 2016, and in medium resolution (i.e. better quality) from other providers. The signals recorded by ESA are mostly free to use and are available every 6 days for Europe and 12 days for most places on earth.
Money has flowed into new companies building cheaper, smaller radar satellites typically weighing less than 100 kilos versus the 1-2 metric tonnes of current models. This is likely to make data gathered from satellites more readily available in coming years. During 2019-20, at least four companies say they aim to launch new radar satellites into space: Capella wants to launch a constellation of 36 satellites for hourly visits of every location on earth; ICEYE has plans for 18 satellites; Umbra Labs is working on high-resolution radar technology and XpressSAR has plans for four satellites focused on countries with cloudy conditions.
Assuming proper mapping of existing infrastructure, radar technology allows for better granularity of oil stocks data and should in time make it more difficult for traders to hide their activity from competitors. It is also timelier than official publications, an advantage for people looking to trade on the information. The current data available from providers shows interesting correlations with the IEA’s Monthly Oil Data Service (MODS) for OECD crude stocks, but is not yet complete enough to allow for a full comparison. This is expected to change over the coming months as coverage improves.
However, underground storage cannot be seen from space, even if there are ongoing experiences to monitor reservoirs injecting water into underground tanks. Additionally, oil products are not covered by current datasets and may never be as they are more commonly stored in fixed roof tank farms, which cannot be monitored by satellites. Globally, Ursa says a large majority (75-80%) of floating top tanks contain crude, while a significant majority (85-90%) of fixed top tanks contain oil products, despite exceptions such as Rotterdam. Perversely, it is also possible to imagine a world where operators stop building floating rooftops – typically cheaper to operate for volatile products – to avoid being spied on.