Our business | Executive Board report | Global LNG
Key developments
Dirk van Slooten, Global Director LNG: “LNG is a relatively new market for Vopak, one we explore since the beginning of this century. In 2011, LNG became an operational business unit of Vopak, rather than a business development department. Together with joint venture partners, we have two terminals, Gate terminal (the Netherlands) and Altamira - TLA - (Mexico), with a combined storage capacity of 840,000 cubic meters and a total throughput capacity of 19.4 billion cubic meters per annum (bcma).
Gate terminal is ideally located for access into the Northwest European market. TLA is attractively located on Mexico’s east coast, making it easy to import LNG into the country and potentially serve the nearby islands in the future. Gate terminal has an annual throughput capacity of 12 bcma - one third of the total Dutch market - and TLA of 7.4 bcma. Both terminals are occupied and contracted with long-term contracts.
Gas is of prime importance to many national governments, who want security of supply for their country via an independent energy source unconnected to their normal pipeline network. We therefore put major effort into convincing governments to see us as a credible partner. We create partnerships with local (infrastructure) companies to enter new markets. Our joint venture partners, such as Gasunie for Gate terminal in the Netherlands and Enagas in Mexico, are independent, trusted players in their markets, with the necessary knowledge and contacts with the local authorities.
Gas is abundantly available globally, accessible and affordable. For this reason, liquefaction facilities are being constructed near new gas production areas and receiving terminals are opening up worldwide.
Gas is the cleanest fossil fuel and therefore environmental benefits are pushing consumers towards using natural gas, either to generate power for domestic use or as transportation fuels. Gas is also ideal for use in combination with wind and solar power, as gas generators can be switched on and off as required.
For example, the introduction of the Emissions Control Area (ECA) requires all ships in the North Sea, Baltic Sea, Gulf of Mexico and off the US East Coast to use clean fuel with very low emissions, making LNG a preferred solution. In the Netherlands, the so called Green Deal initiative aims to promote the use of natural gas in both road transportation as well as using gas as a bunker fuel for coasters and barges.
The Fukushima nuclear disaster in 2011 drove up demand for LNG in Japan, sending prices in the Far East rocketing. At the same time, the boom of the shale gas industry in the US led to a decline in imports of natural gas to the US, but triggered US exports. These developments spurred Vopak’s decision to accelerate its activities in developing LNG terminals.
Vopak’s strategy is to create hub terminals, such as Gate terminal and TLA, for the import, but also to redistribute LNG in smaller quantities to satellite terminals for distribution to local markets. This is what we call our break bulk model. In 2012, Vopak and gas infrastructure company Gasunie signed an agreement with Shell as launching customer for the LNG Break Bulk terminal we plan to build in Rotterdam. The terminal plans to facilitate small-scale LNG distribution in Northwest Europe and make LNG available for distribution to marine bunkering and truck fuelling stations.”
Growth opportunities
“Vopak is the first company to develop the break bulk concept - in Rotterdam initially - and we are working to expand this to other strategic locations. In France, we are working with our partner Shell on a feasibility study to develop the Fos Faster LNG Terminal at Fos-sur-Mer (Marseille), to serve the southern European market. It has a planned capacity of around 8 bcma, more than 15% of France’s annual gas consumption.
Our business | Executive Board report | Global LNG
terminal itself. Developing satellite terminals usually takes a minimum of two to three years before they are operational from the start of the construction.
Growing populations with increasing energy demands are fueling the need for additional energy sources such as gas. To meet this demand, we are analyzing suitable locations and initiating contact with national authorities to establish Vopak as a credible and reliable operator and partner in the LNG market. We are looking worldwide at possible locations, notably in the Far East.”
Customers, service and operational excellence
“We are using the experience we gained in 2012, our first full year of operation, to improve our standards and procedures to the benefit of future operations.
Gate terminal was named LNG Project of the Year at the 2012 European Gas Conference in Vienna. The jury said the terminal would ‘serve as an independent distribution point for European energy companies to address the rising demand for and declining production of natural gas in Northwest Europe. The terminal will both increase the security of supplies as well as enable new players to enter the European gas market’.
One of our challenges at the start of the first terminal (Gate terminal) was preparing an annual unloading schedule for multiple customers for the full year ahead, including the inevitable conflict resolutions. We now know which ships will be discharging and when for the next 12 months.
The LNG market is still developing; globally, there are only two or three players that could be considered to be independent, open-access, multi-customer terminal operators. Moreover, we lead as an initiator of the break bulk concept.
So far, informal surveys show our customers are very satisfied with the services we deliver. We will conduct our first formal measurement of customer satisfaction, via the company-wide NPS survey, in 2013.”
Safety and sustainability
“We reported two process incidents at Gate terminal to the authorities. There were no injuries and the impact on the environment and local community was minimal.
TLA achieved nine million working hours - in a period of ten years - without a single lost time incident, including construction of the terminal. Although LNG operations is a highly industrialized process being executed very safe, we will step up our safety training to ensure we maintain this exemplary record, also once our satellite terminals become operational and we start loading onto trucks and barges.
Regarding sustainability, our LNG operations are almost emission-free. For example, we use excess hot water from a nearby power plant to regasify the LNG. The LNG market itself is driven by environmental initiatives such as the Green Deal in the Netherlands, which aims to reduce emissions from trucks in cities, and on the shipping side, switching to LNG in Dutch ports and rivers. Vopak is an active participant in these Green Deal initiatives.”
Our business | Executive Board report | Global LNG
Employees
“With around 150 employees worldwide, Global LNG is still a small part of Vopak, but is growing, with new projects under development. Our staff is motivated and energized by the challenges of setting up our operations and by flawless execution as we strive to continuously improve our processes and capabilities.
Our development of employees is linked into that of the global staff and other divisions. We intend to introduce a management development program in 2013.”