Bas Hennissen – Vice President Industry and Bulk Business, Port of Rotterdam – Netherlands
The Port of Rotterdam’s vice president of industry and bulk business shares his extensive vision on the Port of Rotterdam with regards to current market challenges, the attractiveness of the port, and how the Port of Rotterdam is working with ports worldwide to standardize rules regarding the shipping of LNG.
What explains the port’s attractiveness for such important projects?
The port can be considered a petrochemical ecosystem because it has multiple functions, which include production, storage, and trade of petrochemical products. The Port of Rotterdam is unique amongst other ports because it has four refineries located in the actual port, six refineries linked to the port via a pipeline and about 40 chemical facilities. We also host numerous storage facilities that cater to various types of oil and gas business models, such as refinery terminals, trading terminals, and specialty terminals. All in all, the Port of Rotterdam is an attractive place for companies to do business in.
What factors or criteria do you use to decide which projects are funded?
Thanks to our location and our superb nautical infrastructure, we attract companies that are worldwide leaders in their field. When a company decides to invest in the Port of Rotterdam, we will invest in surrounding infrastructure such as harbor basins, jetties, rail and roads so that the company itself can focus on its own facilities. For instance, when Gate terminal built its LNG terminal, Port of Rotterdam built the harbor basin.
What benefits has the Port of Rotterdam seen since Gate terminal for Liquefied Natural Gas (LNG) was completed a few years ago?
Both Gate terminal and Port of Rotterdam invested a large amount of money to build the terminal. However, soon after it opened in 2011 the Fukushima nuclear disaster happened, which meant that the actual import volumes of LNG were much lower than anticipated as Japan was buying all the LNG available worldwide. Both Gate terminal and Port of Rotterdam have subsequently adapted the business model to supplement the import function of Gate terminal with new functions like LNG trading and back loading, and LNG as a fuel for shipping an trucking.
In that respect Gate terminal and Port of Rotterdam have started to build the LNG Break Bulk Terminal this year. This project will further strengthen the port’s ambition to become the number one European import, export and bunkering hub for LNG.
What is the port doing to promote the use of LNG as a bunkering fuel?
On a most basic level, the port provides the infrastructure and has built a harbor basin to ensure that this transition can be done. To compliment this physical contribution, we have created rules and regulations and port bylaws as the first port worldwide to allow for ship-to-ship bunkering of LNG. As the first port that allows such a process, we have set precedence for other ports to follow and have contributed to the creation of a global standard. Furthermore, we also take the lead in providing regulations and cooperating with other ports in Europe and we have started cooperation with other ports throughout the world, such Los Angeles and Singapore to ensure a unilateral standard.
Additionally, the Trans European Transport Network program (TEN-T) includes subsidies that promote LNG use and standardization. Within this context, the Port of Rotterdam leads one of the programs that promotes the use of inland shipping for LNG. The intent of this program is to develop a LNG corridor from Rotterdam to Basel and on to the Danube in Romania. Countries that want to retrofit their barges to use LNG as fuel are being granted funding (up to 50 percent) via this program.
Pioneering appears to be a common theme incorporated into Dutch businesses—Allseas has even decided to name the largest ship in the world the Pioneering Spirit. How does the Port of Rotterdam embody the Dutch pioneering vision?
Pioneering and reinvention is always at the tip of our tongues because we believe in remaining ahead of our competition in order to meet the future needs of our clients. This year we have many projects in the works. For example, two container terminals that will open this year at Maasvlakte 2, the most recent port expansion. When we heard the Pioneering Spirit was coming to Europe, we decided to build what is in essence a “parking spot” for this massive vessel. An ideal location was found at Maasvlakte 2, where suitable space is available pending long-term future developments. We believe this is an interesting development for both parties, as it is a great strategic location for Allseas to finalize their vessel, as well as a location to create future opportunities for the Port. In this vein, we are in talks with Allseas and and other offshore companies to develop this area into a decommissioning cluster to meet the growing demand for decommissioning of platforms in the North Sea. There are currently several hundred platforms on the Northsea that need to be decommissioned, in the next decade and we believe that Maasvlakte 2 can provide the space needed for this to take place. This is the kind of forethought that goes into the planning of the Port of Rotterdam!
In light of current market challenges, what is the port doing to remain the most competitive port in Europe?
The shale gas development in the US enormously impacts Europe, especially as the continent exported gasoline to the US market for quite some time. The US is now moving towards energy independence, and, consequently, the opportunity for European ports to export to the US is declining. The US may soon become an energy exporter to Europe. This has provoked a clear a shift in investments plans of the refinery and chemical industries due to the cost advantage in the US. The Port of Rotterdam has responded by strengthening its position as the most cost effective port in Europe.
An example of new investment in this respect is the new ship-to-ship facilities in the port for transshipping oil and chemical products. Such ship-to-ship transfers are normally done in the North Sea but are more reliably undertaken in the actual port. We facilitate our customers the best we can, for example by giving the opportunity to reserve such a space online 24 hours a day. To further enhance our offering, we are constantly deepening waterways and harbor basins to allow the passage of larger ships to the refineries.
To what extent does the port act as an ‘amplifier’ for the Dutch oil and gas sector, and the Dutch economy in general, giving the country a much greater role in the global scene than it would have without the port?
The oil and gas sector in the Netherlands prides itself on expertise and innovation. The Port of Rotterdam stands as the physical location where companies interact and innovate together. Rotterdam is in fact the home base of many key players in the sector. As an example, projects involving LNG have all started out at the Port of Rotterdam because it promotes the cooperation and standardized rules necessary to move the industry forward. The developments and regulations we put in place here are later passed on to the rest of the world.
How has the Port of Rotterdam increased its global footprint?
The Port of Rotterdam has invested heavily both domestically and abroad. The Port of Rotterdam holds 50 percent ownership of the Port of Sohar in Oman, which allows us access to a base in the Middle East. In Latin America, we are now investing in a greenfield project in Espirito Santo, Brazil that is being constructed with a local player. As a leading international port, these international ventures also help to facilitate our customer’s investments overseas and to create new opportunities for both them and us. For example, several of our clients decided to set up ventures in the Port of Sohar following our involvement in the facility.
What obstacle has the drop in oil prices created for the port and what have you done to mitigate the risks?
Diversification of the port, in light of the current market situation, allows us to remain competitive. Although traditionally we have been more of an energy and oil hub, we have since expanded our services into containers, which now represent close to 30 percent of our business.
Within the energy space, we have also invested heavily in renewables and biofuels, and the port already boasts the largest renewable fuels cluster in the world in terms of volume and production. Our strategy includes the development of a new biobased chemicals cluster at the Port of Rotterdam. Overall, the combination between renewables and petrochemicals is key to our diversified portfolio.