Oil and gas

Transporting Oil by Sea

07/08/2010



Most oil transported around the world travels on specially built ships called tankers. These ships carry large quantities of crude or refined oil to the areas where it is needed, often following the same routes. Oil transport is governed by very strict safety measures that oil companies, shipowners, and the states where they are registered must respect.

Significant Oil Freight

Huge quantities of oil are transported by ship between production sites, refinineries, and points of consumption. In 2008, the equivalent of 54 million barrels1 - i.e. about 7.2 million tons of oil - were shipped via maritime routes daily. This means that 2.6 billion tons of oil were transported by sea in 2008 alone, compared to 500 million in 1960 and 100 million in 1935.

Thus in order to meet ever growing demand, oil freight (crude oil, fuel, and basic petrochemicals products) is also constantly increasing. In 2008, it accounted for a third of total maritime trade worldwide2.

In 2008, 2.6 billion tons of oil were transported by sea.


The oil is transported on specially built ships called tankers. In 2007, total world tonnage was 380 million tons3, shipped in thousands of tankers. This rose by 35% between 2000 and 20074, because more and more ships were commissioned during this period and because tanker capacity increased as well. Tankers vary in size, and therefore can hold different amounts of liquid cargo, which is measured in tons of crude.

  • Supertankers are up to 400m long (as long as 17 tennis courts)! They can transport up to 500,000 tons of crude5.

   • Smaller tankers are 200m long and can contain up to 50,000 tons of crude6.



The Main Oil Routes

Tankers often follow the same routes between producing and consuming countries. Refined petroleum products (gasoline, diesel, and kerosene) are mainly transported within Europe, between Europe and Asia, Europe and the US. The most frequented routes for crude oil start in the Middle East. They pass through the Bab el-Mandeb Strait or the Strait of Hormuz, the world's main oil shipping lane. After this, they travel to:

   • The US and the rest of North and South America via the Cape of Good Hope

   • Asia via the Malacca Strait between Sumatra and Malaysia (this route leads to Japan and China, where oil demand has grown signigicantly since 2000).

   • Europe via the Suez Canal. Larger tankers cannot take this route because  the Suez canal is too narrow. These tankers pass the Cape of Good Hope to reach European ports. Thus, large oil tanker takes 2 weeks to one month to reach Western Europe from OPEC countries (Organization of the Petroleum Exporting Countries) in Africa, South America, the Arabian Peninsula.

Moreover, oil freight transiting through the Panama canal has increased considerably due to growing demand in Asia.


Oil transport costs are called charter costs, which vary according to demand.  Costs can double depending on the time of year for the same journey and the same tanker.  These costs account for 5-10% of oil's added value 7.



Who Transports Oil?

After the 1973 oil crisis, a number of oil companies lost control of the management of hydrocarbon resources to state-run companies in countries wishing to control their oil reserves. At the same time, these companies lost control of crude oil transport. Thus, they shut down subsidiaries that managed this shipping of crude oil and refined petroleum products.
For historical reasons, most tankers operating today do not belong to oil companies. Oil companies only own the tankers' cargo. Instead, they  outsource maritime shipping to specialized shipowners (carriers who outfit the ships and operate them commercially).

When a company wishes to transport oil to a refinery or point of consumption, it contacts the shipper to book a tanker. However, the ship is not chosen at random, because it must meet very strict safety and security standards.



Transport Safety - A Key Issue

Whether oil travels by sea or by land, the safety and security of operations is key. Every oil company sets its own quality, safety and security criteria for maritime shipping.  These criteria include:


   • The tanker's construction conditions and features.

   • Tanker condition and maintenance 

   • Crew Recruitment, training, and management 

   • Planning routes and the journey itself.

Shipowners are responsible for ensuring that their ships meet these criteria. Independent certification organizations inspect ships on a regular basis and issue sailing permits.

From time to time, oil companies also appoint specialized inspectors to make sure shipowners comply with regulations. Oil companies share the information gathered by inspectors in a computer database such as SIRE (Ship Inspection Report Exchange), set up in 1993. In 2004-2005 for example, SIRE contained an additional 10,000 reports on 4,000 ship inspections.

Before choosing a tanker for shiping crude, the oil company checks all the information available on it. If it believes that the tanker is not reliable enough, it may refuse to use it.
It may also exclude ships that are too old and that have received negative inspection reports, or turn down a crew that it believes has not received sufficient training.

Vrai ou Faux ?
Oil companies and shipowners are solely responsible for the safety of maritime oil transport.
False. Each ship is registered in a country and sails under the flag of this country. Therefore, the country in question is responsible for checking the ship's condition and on-board practices before issuing its registration. Many countries take this responsibility seriously. However, some countries register ships at very low costs but without carrying out strict checks on their condition - these are known as flags of convenience.

Despite the safety problems that may occur, maritime oil shipping accidents have fallen steadily. The number of major oil spills
(i.e. over 700 tons) decreased eightfold8 between the '70s and '00s. These encouraging results were made possible by the combined efforts of states, oil companies and shipowners. In fact, almost all the oil transported by sea arrives safely without a hitch.

 

[1] Source BP: Statistical review of world energy 2009
[2] Source UNCTAD: Review of maritime transport 2009
[3] Source UNCTAD
[4] Source UNCTAD
[5] Source UNCTAD
[6] Source Université de Montréal
[7] Source UNCTAD
[8] Source ITOPF: Handbook 2010
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