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Interview

Juan Riva – CEO, Grupo Suardiaz, Spain

18.09.2017 / Energyboardroom

Juan Riva president of Grupo Suardiaz, one of the largest shipping companies in Spain, as well as president of the European Community Shipowners’ Associations (ECSA), discusses the uncertainty relating to the future of energy transportation in Europe, the importance of a holistic approach to LNG regulation at European level, and the importance of Spain in motorways of the sea.

Can you give our readers an idea of Suardiaz’s main activities and the key priorities on your agenda as president?

“Young people are key to Suardiaz’s innovative culture. I do my very best to ensure they are empowered and have enough room for organized innovation.”

Suardiaz Group is the third largest shipment company in Spain. A few years ago, our activity revolved around tankers, but now, our focus is directed at containers and barges. More specifically we work on the development of new barge concepts. For example, Cepsa has chosen us to develop their first multimodal barge project in Bilbao. Additionally, Suardiaz has a long history of partnerships of this kind with Repsol, for whom we have worked jointly in Barcelona, Gijon and Valencia. The project with Cepsa however, is focused on the development of a new gas barge rather than the traditional oil one.

What is the rationale behind the project’s focus on gas?

The European parliament is currently pushing for LNG friendly regulations. In more detail, the European authorities are trying to build LNG compatible capabilities across Europe by 2020. Therefore, it makes sense that energy companies adjust their investment strategies accordingly. As a provider to these companies, we have started presenting inland and port facility projects, some of which Brussels has approved. While the timeframe of enforcement of these regulations is uncertain, I am confident the future of fossil energies resides in gas. Eventually, the parliament is so eager to have these infrastructures ready soon; it is likely they will offer financial aid to build such facilities though the medium of credit arrangements.

To what extent do you see LNG becoming the new norm of fuel?

The importance of LNG in the future remains uncertain. I am convinced, LNG will become the new reference at some point in time but light is yet to be shed on the temporality of such event. Of course, everybody is concerned by climate change, but there are still some discussions as to what options should be supported over others. Certain people are concerned that regulations have been passed without acknowledging the full implications. Until 2020, it is unlikely we find out more on the real commitment to the European Parliament’s green concerns. As a result, investments in the sector seem to be on hold. In fact, 2016 was the lowest year for new building demand in many countries, not only in Europe. Stakeholders have postponed their investment decisions until regulations are clear. Moreover, not everybody in the industry will be focusing on LNG because other options exist such as scrubbers and dual fuels. Regardless of our opinions on the matter, as service providers, we have no other choice than to invest in all types of businesses, and all possibilities should be available to our existing and potential clients. Once the new regulations are adopted and the technology to use is made clearer, investments will be unblocked and it is likely that demand for new shipbuilding will rise again.

How do you account for that?

We need to make sure the engineers working for us in the future have the adequate knowledge to be working in these fields. Despite political pressure for greater environmentally friendly practices, even the decision maker might not have all the information to make the right choices. It has occurred more than once regulation had to be reversed after realizing they had the opposite effect of what was expected. In the case of LNG compatible infrastructures, it is of paramount importance that the parliament addresses the outcomes of new regulations from a holistic point of view. While on-site pollution might be lower there are no guarantees the LNG is a greener alternative to oil.

During my mandate as president of the Spanish ship owner association I was amongst the first to push for lower Sulphur levels in fuel.

As a matter of fact, during my mandate of the ship-owners association, I was the first to push for lower levels of sulphur in fuel. When the EU parliament passed a regulation on even lower sulphur levels in fuel, they expected to favor sea route over road and therefore lower pollution levels. Instead, the maritime alternative became uncompetitive. As a result, energy companies preferred road route and pollution levels were not affected. What I explain today is that we all agree that greener energies are important but we also have to make sure that all segments benefit there.

In the case of LNG regulations, I’m concerned if the parliament doesn’t consider the case from a holistic point of view, they will have adverse effect of what is expected.

Which implications do you foresee from changes in LNG regulations?

Europe is a very important region in the shipping industry. The countries represented by the European Committee for Ship Owners Association (ECSA) control more than 42% of the world’s transportation fleet. More specifically, Greece, Norway and the Netherlands are at the forefront of the ship owning business. Unfortunately, the regulations advanced by the European Parliament and uncertainty resulting from them could have a negative impact on the global role of Europe in this industry. Places with friendly regulations like Panama or Singapore could attract more of the ship-owners attention. Many people depend on the ship-owner sector in Europe. Indeed, crewmembers and inland staff would be directly affected. Journalists, insurance companies, investors and other auxiliary supporting industries would also suffer from a slowdown of the ship-owning activities in Europe. Furthermore, the ship-owning industry contributes to the bonds between European countries.

As you just mentioned, you are president of the ECSA (European Committee Ship-owners Association). Which countries are leading the LNG debate, and how involved is Spain?

The European parliament will be at the heart of the decision that could affect the entire European ship-owning industry. With ECSA representing the most important part of the ship-owning industry it was decided our Headquarters would be in Brussels. This decision has helped us advance our interests towards actors of the decision-making process. Spain is the European country with the most developed LNG compatible facilities. Surprisingly, Spanish politicians are not leading the discussion in this matter. Unlike countries like the Netherlands or Norway, our sea activities traditionally relate to tourism and fishing and the ship-owner industry is relatively small.

With regards to the LNG infrastructure in Spain and its geographical position, how do you intend to put Spain at the forefront of LNG transportation in the future?

I believe Spain already has an advantageous position if LNG regulations were to be enforced in the coming years. Unfortunately, Spanish shipping companies have seldom been given a chance to present their services to the rest of Europe. In the future, I think it is of the foremost importance that ship-owners and logistic companies combine their efforts to present a solid offering to European players in the energy sector. Taking advantage of the free trade agreements of the European Economic Area with Norway, Spanish companies could develop their transportation and logistics activities in the energy sector. While Norwegian companies have always subcontracted these activities, Spanish companies have never been given the opportunity to present their products, which are as good as anybody else’s. As a matter of fact, when presented with Suardiaz’s solutions, Repsol, whose choice could have gone to anyone in the world, chose to deal with us for the quality and innovation of our products.

You are the brain behind the “motorway of the sea”. Could you tell us more about this initiative?

European countries need to further integrate their energy sourcing policies as well as consider further importation from bordering regions. In many cases sea routes are as good an alternative as the road routes. In the past decade, Brussels has picked up on this and supported the implementation of sea routes. My goal is to promote the competitiveness of sea routes for the transportation of energy. Our main advantage is to do with the polluting effects of using roads and in certain cases the inability to use roads as an efficient means of transportation. In this regard, Spain can leverage on its geographical advantages to become the main player in south to north energy transportation. Spain has access to England and Northern Europe through the Atlantic Ocean, access to Italy, Southern Europe and Africa through the Mediterranean Sea. Additionally, the Canary Islands offer greater access to African energy exploitations.

How do you ensure Suardiaz remains on the cutting edge of innovation?

Young people are key to Suardiaz’s innovative culture. I do my very best to ensure they are empowered and have enough room for organized innovation. Additionally, an entire department of the company is devoted to product innovation. They make sure to include everyone’s inputs and never cut ideas. Also, the Spanish 2008 crisis has improved the talent pool available in Madrid. Indeed, the turmoil at the end of the decade has triggered significant expatriation. As a result, the managers that have come back to live in Spain after an international experience are better qualified. In a sense, this was a blessing in disguise, people have been pushed out of their comfort zone and improved their managerial skills. Suardiaz remains a modest company and does not necessarily have the means to send out managers abroad but our recruitment favors international experiences.

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