Jorge Flores
Commercial Director
Vopak
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View from the Top

Capacity Growth Helps Clients Meet Higher Storage Needs

By Cas Biekmann | Wed, 10/06/2021 - 12:10

Q: How do Vopak’s positive results in 1Q21 reflect the existing opportunities in Mexico?

A: Vopak achieved great results and this is a clear indicator that manufacturing and consumption have grown. Vopak is a raw material storage company, meaning that if we see positive results, the market will also experience good results in general. Our goal is to be recognized as the market leader and preferred option for storing vital raw materials. In 1Q21, there was an uptick in the consumption of hydrocarbons. Due to the COVID-19 pandemic, there has been great demand for raw materials, such as ethanol, isopropanol, propanol and methanol. Some of these materials are used by Mexico’s industry to manufacture antibacterial hand gel, for instance. We have received many requests to store these materials in our three terminals, which are located in Veracruz, Coatzacoalcos and Altamira. During the peak of the pandemic, we stored around 20,000m3 of ethanol.

 

Q: How has Vopak adapted its plans to expand its storage terminals portfolio as a result of the pandemic?

A: This has become part of Vopak’s Mexican expansion strategy. We are building a 40,000m3 petrochemicals storage facility in Altamira and hope to finish by November 2021. The expansion is fully funded by Vopak but supported by three to five-year contracts with clients. We are constructing 16 tanks, each of them with a 2,500m3 capacity. The petrochemicals market is strong. There is a great demand for imports and thus for storage capacity at marine ports.

 

Q: How did February’s natural gas shortage resulting from the storm in Texas drive demand for storage?

A: The winter storm in Texas was a huge driver of demand. Many manufacturers and distributors realized that they needed to increase their Mexican storage capacity to avoid such disruptions, which can fully shut down their facilities. As a result, many manufacturers are asking for more storage capacity. This makes sense: a winter storm in Texas is somewhat unusual but every year, hurricanes and cyclones can cause similar disruptions. The event made clients recognize the need to store their essential raw materials.

 

Q: What is holding Mexico back from constructing more storage capacity and how might the midterm elections influence this situation?

A: There are several hydrocarbon terminals already in place in the country, with some of them developing their final infrastructural requirements to become operational. Vopak recently finalized its second phase at the Veracruz terminal, where we store 1 million barrels of oil. Another terminal is being developed by other companies in Tuxpan but I still believe there is greater need for hydrocarbon terminals throughout the country. Nevertheless, with the Supreme Court set to review the Hydrocarbons Law reform, players in the sector are waiting to see how the situation develops. Investors are still somewhat nervous about how potential reforms will affect the country. With the midterm elections, more of a balance has been restored in Congress. This is good for business. However, in politics anything can happen and alliances could shift. For now, investors feel more confident and comfortable. Still, investors in the sector will likely wait at least until the new Congress becomes operational in September 2021 before making investment decisions. Over the next four months, companies looking to develop storage might take a conservative approach.

 

Q: How do you see biofuels developing further in the Mexican market and what role could Vopak play in this regard?

A: Biofuels will be a growing market in the future, with demand rising steadily. We have identified that a lack of storage capacity for these types of products already exists. Vopak decided to expand its Altamira facility in part to address this issue. For the next two to three years, this will be an added focus for the company.

 

Q: How has the company established best practices to meet sustainability objectives?

A: Vopak is 100 percent committed to sustainability. Our sustainability program features internal KPIs that we measure every quarter. Vopak is also ISO 14001-certified for environmental management, one of the company’s core commitments. We are looking to decrease our CO2 emissions at every terminal as well. To this end, we are measuring our internal emissions. One way to reduce these emissions is by generating our own electricity. Vopak is doing internal research to install solar panels on its terminals to achieve this goal. I believe that this is the future for terminals and manufacturing plants in Mexico. Signing a contract for an off-site energy installation would also be a viable option.

Vopak is a tank storage company based in Rotterdam. It specializes in the handling of oil, chemicals, gases and LNG among others. The company has a history spanning over 400 years and is present on six continents, with three terminals in Mexico. 

Cas Biekmann Cas Biekmann Journalist and Industry Analyst