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Interview

Jan Valkier – CEO, Anthony Veder – Netherlands

10.06.2015 / Energyboardroom

The CEO of Anthony Veder talks about the company’s shift from general shipping to its current core business of liquefied gas shipping, and the transition towards small-scale LNG.

Having been in the Netherlands for almost 80 years now, Anthony Veder is one the few companies that focuses exclusively on liquefied gas transportation services. Please give our readers an overview of the company’s leadership directives in recent years?

We were initially a very diversified company in the mid 90s, as many other shipping companies were in those days. We then made a strategic decision to divest all non-core assets and focus on one specific niche—liquefied gas transportation. After shifting in this direction, we began predominantly moving gas for the petrochemical industry including ethylene, propylene, and butadiene. These petrochemicals still serve as the bread and butter of our business, comprising the majority of our transport volumes. A very important product for the chemical industry and a fundamental component of plastics, ethylene alone contributes about 50 percent of overall volume.

In 2005, we were looking to grow the company further but recognized the limited market opportunities within the segment that we operated in. We wanted to stay within the gas tanker business, so we initially targeted small-scale LNG, and then later expanded into mid-size LPG and ammonia transportation. After years in the industry, Anthony Veder is now a leading provider of gas transportation services, catering to a diversified set of segments including petrochemicals, small-scale LNG, LPG, and ammonia.

Positioned as Europe’s gas hub, the Netherlands boasts a multitude of geographic and technical capabilities across the energy sector. With that in mind, how has the country helped establish Anthony Veder’s current position in the small to mid-scale LNG transportation market?

Holland is now catching up in the small-scale LNG market. The Gate Terminal in Rotterdam, and the decision to build a break bulk facility, further strengthens Netherlands’ position as Europe’s gas roundabout. When initially constructing our small-scale LNG carriers, we developed them in line with the loading compatibilities of large-scale terminals, which no one at the time could predict the value of due to the import-centric nature of terminals. We see that dynamic changing now. In Norway, there was a developing small-scale LNG market, but their own production would never be sufficient enough to satisfy growing demands. That’s why we thought it would be much cheaper to import LNG, and then break bulk the resource into smaller quantities for more effective distribution across Europe. We anticipated this trend very early on and reflected it in the construction of our ships—adjusting the manifold heights and carrier sizes to accommodate large loading terminals.

We have been loading our ships at quite a few of the big import terminals, including Gate, Zeebrugge, Huelva, and we’re now seeing these terminals investing in break bulk facilities and constructing the corresponding jetties and ports to further accommodate small ships. Favourable to our growth ambitious, the market is now really starting to develop, especially in Europe.

With Anthony Veder’s Coral Energy and Coral Methane, and other builds such as Gasunie’s break bulk facility at the Gate Terminal, small scale LNG shipping is clearly an area of widespread interest—especially from a supply security standpoint. How much of an impact will this niche have on the company’s strategic focus moving forward?

There are three segments driving demand in the LNG market. The first segment is domestic use. For example, we are now supplying the city Stockholm with natural gas. Previously they had a factory that made gas out of heavy fuel, but now they get gas from Norway with our LNG carriers. The second segment covers industrial usage, such as the case with refineries and other large energy consumers switching to LNG as a cleaner alternative. The third factor that has helped drive LNG growth is ship bunkering. Especially with the North Sea and the Baltic areas being designated as sulphur emission controlled areas (SECA), many operators are switching their carriers over from using gas oil as a fuel to using LNG. As this is a relatively new trend, the market has seen a lack of LNG bunker facilities—encouraging a few companies like GDF Suez, Shell, and Anthony Veder to construct bunker vessels to provide LNG fuel for ships. With a relatively small competitive landscape currently, we see this niche as a prominent market opportunity in Northern Europe.

Speaking to the government’s energy agreement for sustainable growth, the country is now experiencing an energy transition that enforces the ideas of production, clean consumption, and cost-efficient supply security. To what degree, if at all, will LNG bunkering penetrate the overall maritime and offshore industries in the future?

We’ve made the business case with our client SABIC, which is transporting ethylene from the UK to the continent. It’s a voyage across the SECA-designated North Sea, so advocating clean and cost-efficient energy is an imperative. We’ve been able to make the case money wise that within a certain period the investment in LNG as a fuel is paying off. The second thing is that SABIC can tell their customers that they are transporting ethylene in an environmentally friendly manner. We believe that’s what every company wants in the long run, at least from a public perception standpoint, which is why we strongly feel that the interest in LNG bunkering will continue to develop across the industry’s agenda.

The cyclical nature of the gas industry, and broader energy market, typically creates a challenging operating landscape for many companies. From an executive standpoint, how are you structuring the company’s business to adequately withstand supply and demand fluctuations in the market?

We didn’t realize a year ago that the oil prices would cut in half. LNG, as an alternative to heavy fuel or any other energy source, is a different business case today with current climate than it has traditionally been in the past. The price of LNG has come down, as there’s now more than enough of a LNG supply to cover the current demands of the market. So these fluctuations are in line with the cyclical nature of the industry, but with a company like Anthony Veder, we don’t pursue strategic initiatives to offset near-term risks, but instead build up our portfolio using a long-term perspective with the lifespan of some carriers reaching 25 years. We feel this oil price is a temporary dip, and gas will evidently remain relevant considering the role it plays in the global energy transition. Additionally, we’re not a stock listed company, so that structure helps alleviate any shortsighted pressures and fosters the company’s innovative capacities.

Originally starting off with a modest-sized fleet, Anthony Veder has quickly expanded its portfolio of specialized vessels that can now accommodate the full spectrum of gases including petrochemicals, LNG, LPG, and CO2. In terms of business development, which gas segment is poised for promising growth?

Aside from LNG and LPG, we think petrochemicals will continue to grow. The worldwide demand for plastics will remain robust, although it may not be the most environmentally friendly product. Widespread dependence on plastic across a variety of applications is evident when looking at the usage per capita, especially in Europe and America, whether it’s plastic for cars, sewage systems, packaging, or other areas that contribute to better quality of life. With that in mind, we believe that petrochemicals will continue to grow at a modest, but healthy rate.

The LNG carrier Coral Energy is the world’s first direct driven dual-fuel ice-class 1A LNG carrier. What other technological R&D investments is the company undertaking to capitalize on prospective industry trends and stay competitive?

Launched in 2009, the Coral Methane was first of its kind, as an all-in-one vessel, and essentially acted as an enabler for this industry in kicking off the charge towards small-scale LNG. Since there was no dual-fuel engine available for this kind of ship at the time, we had to build two engine rooms with diesel-electric propulsion—very complicated and costly systems. Improving upon that vessel, the Coral Energy incorporates innovative technology that reduces the costs and also reduces the fuel consumption of the ship by having the engine feed directly into the propeller with a dual-fuel engine in place. That’s how we’ve managed to save on investment and fuel costs in an environmentally friendly manner. Incremental innovation is at the heart of our operations and we’re constantly looking for ways to improve upon our existing technology, especially regarding the LNG bunkering and flexible mooring capabilities of our vessels. We’re now working on a new project that is similar in nature to the Coral Energy, but slightly larger.

The company’s ambition is stated as becoming a gas shipping company that leads in safety, service, and sustainability. How much of an importance has HSE played into the company’s day-to-day operations?

Safety is number one on our agenda; all of our meetings start with safety. We always strive to have the best quality ships equipped with the best personnel protection systems, and a properly trained crew following robust safety procedures. That being said, however, we can have all the nice equipment in place, but human error still poses the largest risk in terms of variability. We’re now very much focused on implementing behavioural safety initiatives to mitigate such risks.

During your tenure in the company so far, what have been some of your proudest milestones or achievements?

One milestone that comes to mind is the decision we made to focus the company on one segment—gas. Following that decision, we had difficult times maintaining profitability, but looking back now, the move we made towards specializing within the gas sector—specifically small-scale LNG–has better unequivocally positioned the company for future growth. Instead of continuing with traditional thinking, we’ve since then strived to employ people with unique mindsets and diverse perspectives to develop new modes of value-creation at every possible angle.

As Anthony Veder’s leader since the late 1990s, what will be your strategic priorities moving forward, and where do you hope to see the company in the next five years?

We operate in an ever-changing environment that’s constantly innovating, but we will continue to grow along with the market and focus on what we do best. Considering the abundance of market opportunities, small-scale LNG will be a key focus area for us moving forward. In the Caribbean, for example, there are many small islands that produce electricity with diesel generators, which are expensive and environmentally harmful. Considering that the region’s fuel supply can be completely substituted with LNG, the demand of small-scale LNG is poised for growth. We also see a lot of potential in Southeast Asia. Indonesia, for example, produces a significant amount of gas, but mostly exports it to countries such as Korea or Japan. The country also possesses a range of small islands, which produce the perfect landscape for small-scale LNG. Within the next few years, we will be diligently focusing on international market expansion, while simultaneously striving towards positioning Anthony Veder at the forefront of safe and reliable gas transportation services.

 

Click here to read more articles and interviews from the Netherlands, and to download the latest free oil and gas report on the country. 

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