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Vopak faces energy transition
ADAPT AND THRIVE
RESULTS • VOPAK HAS REPORTED A STABLE FIRST HALF AS IT PROGRESSES WITH ITS PLANS TO ADAPT TO THE COMING ENERGY TRANSITION AND CHANGING PRODUCT FLOWS
ROYAL VOPAK HAS reported first half revenues of €603.2m, a 2.4 per cent increase over first half 2020, with group EBITDA – excluding exceptional items – rising by 1.0 per cent to €406.6m. The figures for the second quarter were similarly ahead of last year, excepting that Vopak booked another impairment charge, amounting to €69.7m, recognising “a further deteriorating business environment and lower occupancy rates in the first half of 2021” at the Bahia las Minas terminal in Panama, which it operates on behalf of Chevron.
Commenting on the results, CEO Eelco Hoekstra says: “In the first half of 2021, combined strategic delivery and financial performance was good, driven by contributions from the growth projects and cost efficiency, notwithstanding weak markets. We continued transforming our portfolio for the future and invested more than €146m in growth.
“Covid-19 pandemic continues to impact the industries we serve and the disruptions in supply and demand of products indirectly impacted performance,” Hoekstra continues. “The tank storage industry experienced lower earnings as it continues to face supply tightness leading to a lower requirement for excess storage of products. During these challenging times, we were able to safely serve and support our customers at all our locations around the world. We are positive on the speed of the shift of our portfolio to industrial and gas infrastructure which supports the acceleration in the field of new energies and feedstocks. We are pursuing various options to actively contribute towards hydrogen and ammonia logistics, and new infrastructure solutions for CO2 and flow batteries.”
Overall tank occupancy averaged 88 per cent during the first half, the same as a year ago. Higher demand in the Netherlands, Belgium and Singapore offset declining volumes at Fujairah and in Panama and Indonesia.
NEW AND COMING PROJECTS During the second quarter, the first phase of the new Qinzhou terminal, in which Vopak has a 51 per cent interest, started operation. The terminal, near the Vietnamese border in southern China, offers 290,200 m³ of tank capacity for chemicals, with five berths for vessels. Since the end of the quarter, the new Vopak Terminal Corpus Christi completed cold
AS IT LOOKS TO A LOWER CARBON FUTURE, VOPAK IS
FOCUSING ON DEVELOPMENTS IN GROWTH MARKETS IN
CHINA AND INDIA AND IN PROJECTS TO SERVE
commissioning and will receive its first products later this year; the terminal is dedicated to serving the needs of the ExxonMobil/Sabic joint venture, Gulf Coast Growth Ventures, which is due to open a new ethane steam cracker and derivative units in the fourth quarter.
This past June, Vopak was awarded a contract for storage and services of a liquid products terminal by Huizhou QuanMei Petrochemical Terminal, which will be built and operated as part of ExxonMobil’s proposed Huizhou chemical complex. Vopak will have a 30 per cent ownership stake in the 560,000-m³ terminal and the pipelines to connect the terminal to the jetty and the chemical plant.
“We are excited for this opportunity to serve ExxonMobil via this greenfield industrial terminal in a safe, sustainable and efficient way,” Hoekstra (right) said at the time. “This project fits perfectly into Vopak’s growth strategy for industrial terminals. We are very proud of our expertise and long track record of storing vital products with care for our customers and our drive to continue to invest.”
In mid-July, Vopak announced it had joined forces with Aegis to help develop the LPG and chemical storage and handling business in India, forming a joint venture, Aegis Vopak Terminals, in which Vopak will have a 49 per cent stake. It will operate a network of eight terminals with a combined capacity of some 960,000 m³. The transaction, expected to close early in 2022, will also involve taking a 24 per cent holding in the Hindustan Aegis LPG business, a joint venture between Aegis and Itochu. Vopak will contribute its existing terminal in Kandla to the joint venture, along with Aegis’ sites in Kandla, Pipavav, Mangalore, Kochi and Haldia and the two Hindustan Aegis sites.
“This is an investment in a growth market and by joining forces with Aegis we aim to deliver growth over the next ten years in line with the new joint ventures’ and India’s ambition for LPG,” says Hoekstra. “We are very excited for this new partnership. Aegis is a reputed local partner with a ready organisation and proven track record of conceiving and executing tank farm assets in strategic locations along the Indian coastline.”
“This joint venture with Vopak will accelerate the growth of Aegis in the terminals business and has the potential to allow Aegis to diversify into new areas of gas storage such as LNG and other energy projects including renewables in partnership with the world’s leading independent tank storage company,” adds Raj Chandaria, chairman of Aegis Logistics. “We expect the deal to be significantly earnings enhancing for Aegis shareholders due to the deployment into growth opportunities of the combined financial firepower of the two groups and management in the terminals business.”
Vopak also reports that, in collaboration with Gasunie and Gate terminal, it is investigating the development of an independent hub terminal for liquid CO2 on the Maasvlakte in Rotterdam, which will be able to receive and deliver liquid CO2 via ships and will be connected to the depleted gas fields in the North Sea. This will make the necessary infrastructure available to all market parties, including those that do not have a direct connection to a CO2 pipeline. In addition, the terminal can be an important catalyst in the creation of a market for the reuse of CO2 as a raw material.
LOOKING AHEAD “We have gained momentum in 2021 in capturing opportunities to serve largescale industrial clusters and will continue transforming our portfolio and position our company in leading locations towards more sustainable forms of energy and feedstocks,” Hoekstra says.
“Our ambition is to be a safety and sustainability leader by focusing on care for people, planet and profit. We continue to seek opportunities towards our ambition to be climate neutral by 2050 at the latest. Our main contribution to a more sustainable world is to actively innovate infrastructure which will contribute to the introduction of the new vital products of the future,” Hoekstra adds.
Part of that innovation involves increasing digitisation and Vopak has continued to roll out its new cloud-based system for its terminals as part of a broader effort to develop its digital architecture across its infrastructure and logistics chains. “Our digital strategy aims to innovate and will allow us to have more access to data in all aspects of our business,” Hoekstra notes. Vopak has committed to investing €30m to €50m a year between 2020 and 2022 in IT and says that this year’s spending is expected to be at the high end of the range. “We expect this programme to be completed by the end of 2023,” the company states. www.vopak.com
