Tarragona hosts Med Hub Day online

COMING TOGETHER

PORTS • TARRAGONA ONCE MORE HOSTED ITS MED HUB DAY, THIS YEAR IN VIRTUAL FORMAT, TO HELP PROMOTE THE ROLE OF PORTS AND TERMINALS IN THE CHEMICAL SUPPLY CHAIN

THE IDEA OF a ‘hub port’ is hard to define but it has certain characteristics: it acts as a central distribution point, breaking bulk and handling imports, exports and transhipment cargoes equally well. It likely has a significant hinterland and good connectivity by various modes and is probably accompanied by a vibrant industrial sector.

For the chemical trades there are certain well-identified hubs around the world and, in Europe, that means the ‘ARA’ ports – Amsterdam, Rotterdam and Antwerp – with their regional partners along the coast between Hamburg and Le Havre and inland on the Rhine system.

There is nothing equivalent in southern Europe, though. The port and bulk liquids storage terminal picture is very fragmented, particularly in Italy and further east. Over the past decade, though, the port of Tarragona in Spain’s Catalonia region has made a great effort to develop the idea of a hub port for the western Mediterranean. It has some great advantages: a well established and significant refining and petrochemical industry, deepwater access and decent hinterland connections, let down only by the lack of a Euro-gauge rail link.

Together with ChemMed, the port of Tarragona has for the past three years organised an event, the Med Hub Day, to bring together stakeholders and experts in the area of ports and terminals to discuss the role of ports, terminals and other logistics players in the development not just of the ports themselves but also their client industries, with a specific focus on the petrochemical sector.

This year, the IV Med Hub Day was by necessity online, like all other events. While that hampered the possibility of informal networking – despite a ‘speed networking’ session being included online – the organisers did, over the course of a few hours on 19 and 20 November, bring together engaged and engaging speakers to discuss the issues pertinent to the bulk liquids storage and port sectors.

Perhaps predictably, those issues were dominated by how industry has coped during the Covid-19 pandemic, how that pandemic has influenced corporate behaviour, and how the wider oil, gas and chemical industries are going to face up to the challenges of sustainability, decarbonisation and the circular economy in a post-pandemic world.

THE BIGGER PICTURE Speakers at the IV Med Hub day came from ports in the Mediterranean and northern Europe, bulk liquids storage terminals and chemical manufacturers in the same regions, and some external consultants who brought their own perspective on issues such as the regional tanker market and the impact

PORT TARRAGONA HAS INVESTED HEAVILY IN

of the ‘IMO 2020’ rule on maritime and terminal operations.

But perhaps the most notable speaker was Antonio Turiel, senior researcher at Spain’s High Council for Scientific Research, whose paper addressed the impending transformation of the energy markets in an age of Covid-19.

Turiel began by looking at the dramatic slump in oil prices in early 2020; while this was partly the result of the sudden fall in end-user demand as a result of pandemicrelated travel restrictions, and partly to do with increased output by Saudi Arabia in an attempt to shore up its market share, its origins go back further. There has, Turiel said, been a significant reduction by oil companies in upstream activities over several years – exploration and production have simply been less profitable.

As a result, new oil production is not coming onstream fast enough to replace ageing reserves and as a result, according to a recent report by the International Energy Agency, global oil output could now decline sharply in the near term. Investment in existing fields could reduce the rate of decline, but energy firms have shown little interest in making significant investments during the uncertainty caused by the Covid-19 pandemic – as have corporations in other, related fields.

The energy majors are also looking at a future where the demands of sustainability and decarbonisation are likely to put a lid on oil demand. Meanwhile, oil is getting increasingly expensive to produce and, at current prices, fracking is essentially uneconomic. Firms involved in fracking in the US are, Turiel said, often highly leveraged and are struggling to meet their debts – he expects some bankruptcies soon.

NO MORE DIESEL In this scenario, efforts need to be put into developing non-oil transport fuels, Turiel said. In particular, changing refinery economics – partly as a result of the IMO 2020 rule - have resulted in a loss of diesel production. If mobility is going to continue, alternatives need to be found, and quickly. Turiel offered his views on the pros and cons of the contenders.

Firstly, natural gas: production is still increasing around the world and there is a large and well established distribution network. LNG has been around for decades and its handling is well understood; new liquefaction and regasification facilities are being opened. On the other hand, there is competition for natural gas supplies from other sectors, including power generation, and the long-distance transport of LNG is expensive. Applying LNG as a transport fuel is also expensive in terms of retrofitting engines, though more attractive for newbuilds.

Hydrogen is the alternative fuel attracting the most investment in Europe at the moment. It has a high energy density per mass and very clean exhaust; it also allows direct conversion of electricity to fuel. Hydrogen can be synthesised from water and, if renewable electricity is used, is carbon-free (although at present almost all is derived from natural gas). Ports would be well placed to provide hydrogen through electrolysis, using offshore wind power, Turiel observed. The downsides of hydrogen include the fact that its energy density per volume is very low; the movement of liquefied hydrogen requires very highpressure tanks (at least 700 bar); if used in fuel cells, its energy efficiency is very low, and worse in direct burning. There are also engineering challenges posed by the deeply cryogenic temperature it needs to be reduced to in order to liquefy.

Electricity offers an easy route into decarbonisation in some applications, particularly for rail. It has a high energy efficiency and, with regenerative braking, some energy can be recovered. Disadvantages include low energy density and limited autonomy. Further ahead, there are concerns about the availability of cobalt and lithium in sufficient quantities to manufacture all the batteries that will be required.

But, Turiel continued, the EU’s Green Deal demands a complete net decarbonisation by 2050; this points to the use of green technology and a circular economy, meaning an increase in the use of rail transport for both freight and passengers and a massive increase in new electrolysis capacity. Along with the Chemical Strategy for Sustainability, this will generate intense changes in energy production and use.

There is, Turiel added, no single solution: rather, a combination of technologies will be needed, many of which are already available. »

TERMINAL OPERATORS HAVE RESPONDED

We are, he said, in “an era of very, very, very rapid change” and the next five to ten years will be critical for all markets and especially the transport sector. There will be new challenges – and opportunities – for those in the logistics chain.

PORTS IN ACTION As HCB readers will be aware, there are plenty of examples of ports stepping up to meet those challenges, not least in northern Europe. Jordi Anglès Jové, commercial coordinator at Port Tarragona, explained earlier, during his introduction about the port and its recent developments in fostering the ChemMed chemical cluster and expanding handling capacity for chemicals, is already looking at new marine fuels, including LNG, hydrogen and LPG.

A panel discussion featuring Genoveva Climent Dewit, commercial director of Port Tarragona, Sandra de Mey, commercial manager of North Sea Port, Javier López, commercial director of Port of Algeciras, and Philippe Guillaumet, general secretary of MedPorts Association, followed up on that theme. Guillaumet, who was formerly with the Port of Marseille before taking up his current role when MedPorts was formed in 2018, said that not all ports can become a hub but that the energy transition will offer an opportunity for many to grow in terms of both throughput – with new trade flows – and in terms of sustainability.

The panellists were also asked to explain how their ports are mitigating the risks posed by Covid-19. All agreed that it is imperative that ports provide continual operation – they are essential assets and have a significant role to play in ensuring the seamless supply of hygiene products and pharmaceuticals, as well as food and other goods that consumers rely on. That means, as Climent explained, they have to guarantee their internal processes, such as the provision of pilotage, customs officers, reception facilities, and so on. At the same time, she added, ports have had to monitor and protect the health of their own personnel and take care of their clients, while all the time maintaining a focus on environmental issues. Lopéz said he felt the crisis has brought the community together: all stakeholders have accepted the need for new sanitary conditions and it has fostered a cooperative mindset.

Coming back to the concept of the ‘hub’ port, Lopéz said it is up to each port authority to set its own strategy, based on the traffic it handles. For instance, the Port of Algeciras is looking at ways to make sure it can handle the largest containerships and is working closely with some ports in North Africa to develop cross-Mediterranean trade. It is also looking at encouraging intermodal transport as it handles a lot of import flows, which generate road traffic.

Tarragona, similarly, is aiming to boost intermodal transport into its hinterland, with the Euro-gauge rail link between Tarragona and the French border now due to open in late 2021. “We have to provide the right facilities to allow companies to move goods efficiently,” Climent said. Trade flows have changed hugely over the past decade and, with the coming energy transformation, that trend will accelerate and the port has to be able to handle all modes of transport.

Multimodality will be a key success factor, de Mey agreed, highlighting the fact that some 400,000 tonnes of products are moving every year between Ghent and Tarragona, going first to Antwerp by barge and onto rail for the trip to Tarragona.

TERMINAL ZONE Another panel session featured speakers from some leading European bulk liquids storage terminal operators. Those terminals play a key role in the supply chain and, said Eduardo Sañudo, general manager of Vopak Terquimsa, in a hub port they help to reduce the number of port calls needed by ships. In Tarragona, where Terquimsa has two of its three terminals in Spain, the deep draft and having the appropriate infrastructure on the jetties is important.

Nuria Blasco, general manager of Terminales Portuarias (Tepsa), noted that the perspective on hub ports differs between north-west Europe and the Mediterranean, which lacks a ‘natural’ hub location. She said it is an egg-and-chicken problem: the region needs a hub to attract business but someone has to invest in the infrastructure first. Port

Tarragona has done a good job in putting that infrastructure in place but it takes time to make it attractive; she also mentioned that the rail connection needs to be in place before Tarragona can achieve its hub dream.

Martine Union, key account manager at Gadot Belgium, identified the presence of multimodal transport as a key feature of hub ports as it helps to establish cooperation within the port community and attract additional flows. Sañudo brought in the idea of digitisation, saying that the ability to provide real-time information to customers is increasingly valuable and is helping to reduce inefficiencies. “Cost drives decisions so we need to be efficient,” he said. Union agreed, saying North Sea Port is aiming to connect all stakeholders to move towards open communication. She also gave the example of the level of cooperation in the port of Ghent in terms of the import, export and storage of tank containers and the growing use of inland waterway transport to move containers to the main ports.

Paul van Herrewegen, business development director at Rubis Terminal, which has just completed its acquisition of Tepsa, said that, while the ARA ports benefit from being a ‘natural’ hub, Tarragona also has the hinterland and connectivity to play a similar role. In the ARA ports, the density of the petrochemical cluster and the resulting combination of product flows is enough to attract new customers, but terminals have to offer flexibility, in terms of different tank types and sizes, to provide for the different needs of different players.

Blasco agreed, pointing out that a client looking for hub operations is different to one that just wants to rent storage capacity. Any terminal needs agility and the ability to serve both types of customer.

VIEWS FROM THE PRODUCERS Hub ports offer advantages to chemical producers, too; in fact, said Julia Echevarría,

ACHIEVING CRITICAL MASS HELPS TO ATTRACT director of Dow Chemical Ibérica’s hydrocarbon plant production, it is crucial. A major producer needs the port facilities and shared common infrastructure, which is capital-intensive. Cooperation with other parties in the hub is also valuable, especially in times of volatility and strained supply chains. “It’s about competitivity, safety and supply security,” she said.

José Manual Segura, production director of BASF Española, said that having producers together in a hub, sharing facilities, brings synergies while also offering a critical mass to service providers, something that a stand-alone facility cannot do. He also highlighted that the presence of a logistics hub within a chemical cluster provides a link with public administrations, creating a partnership with private companies. This will be key for the future success of the energy transition, he felt. Ramón Nieto, chemical production director of Repsol’s Tarragona site, also noted that clustering chemical facilities allows all of them to coordinate maintenance turnarounds, ensuring continuous supply and removing competition for finite maintenance capacity. He also commented that those same factors have been beneficial during the Covid-19 crisis; with a lot of service providers on hand, there is less chance that service supply will be affected should one of them have to suspend operations because of infections.

Also during the panel session featuring chemical producers, Esther Freijanes, supply chain manager at Elix Polymers, responded to a question about the supply chain challenges for 2021. She predicted that the biggest challenge of all will be huge demand volatility; suppliers and their logistics chains will have to be able to adapt quickly, and have in place processes that adapt to the needs of customers. A hub port makes this easier, she added.

Elix is moving more product onto rail, which offers flexibility, Freijanes added. But she foresaw other challenges: Brexit for one, and the potential for tight capacity and rising freight rates in the shortsea shipping sector. But these challenges are also opportunities to do better than the competition.

The IV Med Hub Day also featured presentations from Patrick Hore of DB Cargo BTT and Andrew Wilson, head of energy and tanker research at BRS Brokers. HCB will return to those presentations next month. Meanwhile, it is to be hoped that conditions will have eased sufficiently by November 2021 to allow the Med Hub Day to take place in person once more. www.hubdaytarragona.com www.porttarragona.cat