Storage, Distribution to Support Energy AutonomyTue, 01/21/2020 - 19:55
Q: Which factors led to Vopak’s decision to expand its terminal operation in the port of Veracruz and how is the project coming along?
A: Vopak has been in Mexico for over 40 years. Until 2011, we worked exclusively on the storage of vegetable oils, petrochemicals and chemicals in the ports of Altamira, Veracruz and Coatzacoalcos. In 2011, we acquired a 60 percent stake in the Altamira LNG facility, with 40 percent owned by Enagas. Upon the Energy Reform, we decided to enter the fuel distribution market. We analyzed this market and the refinery and pipeline networks and made the decision in 2016 to begin our energy sector footprint in the port of Veracruz. We believed that greater infrastructure was required to meet the needs of the regional market that Veracruz serves. Our Veracruz's terminal idle capacity offered the chance to integrate a new segment of diesel and gasoline imports to optimize our asset utilization at the port while we developed additional infrastructure to satisfy fuel imports customers demand.
Phase one of the Veracruz terminal expansion began construction in 2017. The first phase is already in operation and involved the retrofitting of existing tanks, as well as the construction of new capacity and a stateof-the-art truck loading facility and automation in order to serve the market. With this first phase, we are adding 470,000 barrels of capacity for diesel and gasoline. The second phase (498,000 barrels for diesel and gasoline) is being built and once finished in 4Q20, will be connected to all the infrastructure from Phase One. This will enable Vopak and its clients to optimize supply from ports where gasoline and diesel are imported, particularly from the US' Koch Industries, that has already committed to a long-term contract as the off-taker for the full capacity of the newly built storage in Veracruz.
Q: How are automation technologies being integrated into Vopak’s Mexican terminals?
A: We are taking advantage of existing technology that will deliver operational, environmental and financial benefits. Technology reduces human intervention and, therefore, human error. For this reason, we are trying to fully automate the critical processes at our assets. We are investing in automatic truck loading systems that allow easier loading. Our automation program includes different layers of protection to avoid errors. One layer will include the certification of all transfer points along our transportation process to track every barrel received and delivered. We will provide access to clients so that they can also trace products. Our focus on tracking of products and availability of information is aligned with the new requirements provided by Mexican authorities that will take effect in 2020. Both the customs authorities and CRE will be implementing control systems to monitor the supply chain in an effort to reduce fuel theft and increase transparency along the value chain. Vopak is happy to see these protocols take effect because they align with the control measures we have implemented at our own storage terminals.
Q: How can infrastructure aid Mexico’s energy security and how should its construction be approached?
A: Infrastructure and storage is an integral part of any nation’s energy autonomy. This reduces vulnerability to shortages and unforeseen difficulties. In Mexico, with the supply problems present in 1Q19 and in 2017 when Hurricane Harvey hit Texas, the need for comprehensive storage became evident. We believe the country’s need for infrastructure is in line with our investment decisions, and therefore, we feel comfortable investing in fuel distribution in Mexico. Infrastructure must be developed in the most efficient way possible because it is such a capital-intensive enterprise. Therefore, requirements must be properly analyzed to highlight deficiencies that can then be solved. Efficiency plays a key role in the distribution infrastructure design process, which will result in lower final prices at gas stations.
Vopak is a tank storage company based in Rotterdam that handles oil, chemicals, gases and LNG among others. The company has a history spanning over 400 years and is present on six continents.