There are close to 170 asphalt sea carriers in the world, with total loading capacity of over 1.2Mtons. The fleet has doubled in size over the past 10 years and its capacity has trebled, with the average ship now able to load about 7kt. Growth has been quite steady over the period, supported mainly by high demand for transportation in the Far East; and in fact this is where 70% of the ships are operating today, serving the markets of India, China, Indonesia, Vietnam or Australia.

More recent builds tend to have higher loadable (+25%) as this reduces the cost of transportation per unit tonne of bitumen moved: important to ensure supply stays competitive when bitumen is transported over long distances, and both refiners and receiving terminals have been gearing up to accommodate the bigger vessels. Also, new ships are located more evenly across the East and West regions, reflecting a higher demand for transportation in Europe, where shipped volumes have increased steadily, following the closure of several crude oil refineries over the past 10 years. In fact, when a production facility shuts down markets will rebalance in a number of ways; for example, by reducing exports or with nearby refineries expanding their sales footprint, however in order to fully meet the demand previously served by the facility some of the bitumen imports will need to sourced from further afield. I think we can safely assume that on average the equivalent capacity of 1-2 additional ships may be required for every refinery that stops producing. As the Energy Transition accelerates consolidation in the refining industry an accelerated growth in the global capacity of the bitumen fleet is required. It takes 2-3 years to build a new bitumen ship, are there enough orders today to support the accelerated growth of this vital part of the bitumen supply chain?

Black Diamonds are Refineries still operating. Grey Diamonds are Refineries currently shutdown or announced shutdown / conversion.

There are still close to 90 crude oil refineries in Europe, with a total distillation capacity of over 15,000 kbd. Most are small (avg. 200kbd), quite old and with a relatively simple set-up. Having difficulty competing with the new plants in the East and Russia and, with current operating margins at historic lows, the industry is struggling. The future does not look any better with further demand erosion brought by electrification and costly investments required to abate emissions. An increasing number of operators are choosing to shut down and convert their plants to storage terminals or to bio-fuels processing.

Up to 30% of Europe crude oil refineries may close, causing major shifts in trading patterns, is there in enough capacity in the supply chain to accommodate this change? What about bitumen supply in the region?