Peter Van Wessel – Regional Director, Oiltanking Europe & Peter Boers – Managing Director, Oiltanking Amsterdam
Peter van Wessel (PW) and Peter Boers (PB) recount the evolution of the global petroleum industry and how storage companies such as Oiltanking have adapted to capitalize on growing demands and sustain a competitive positioning in the market.
You both took on your positions at the beginning of this year. What mission have you established for yourselves in these new roles?
PB: Oiltanking has been active in the Netherlands for more 40 years now, and my main mission is to maintain the company’s longevity through effective and sustainable operations. This is a very interesting company in the port of Amsterdam, and I truly appreciate the dynamic and flexible nature of the enterprise. A lot of gasoline flows through the terminal, comprising a large part of our business. Aside from gasoline, we also deal with a variety of other products including jet fuel, diesel, naptha, kerosene, and crude oil. With our extensive history in the storage business, we’re very much focused on the long-term growth of our company and bringing the utmost value to our stakeholders every step of the way. Other initiatives encompass safety, people development, streamlined processes, and collectively reinvesting in our asset base to be more flexible and deliver returns.
PW: My priorities as regional director center on maintaining fruitful connections with all stakeholders and mitigating threats, while identifying and capitalizing on opportunities. If we look at Europe, and what is already going on in the Netherlands, oil is becoming more and more of a strategic asset. In the past, we only had shareholders and customers—they were your most important stakeholders. Now, the government and public are also interested in our business. Our position as the logistics hub of Europe is always pitted against fluctuating market conditions, and it’s imperative that we adapt our strategies accordingly.
Construction on your Amsterdam facility began in 1974, and the facility is the first deepwater terminal Oiltanking ever constructed. Given the terminal’s historical importance to the organization, can you please outline the strategic importance of the Netherlands to your European and global operations?
PB: Amsterdam makes sense as a European center for Oiltanking, as it is close to all businesses we have. Amsterdam, Rotterdam, and Antwerp (ARA) are very important from a logistical standpoint in serving as an inland gateway for Europe. We are very active from the gasoline side where we have streams not only coming from every part of Europe, but also from refineries in ARA, the Baltics, and other inland refineries. After the gasoline products arrive at Amsterdam, we do the proper blending according to our clients’s specifications. From this terminal, the cargos get shipped to multiple regions around the globe—Latin America, Gulf Coast, Africa, North America, Middle East, and Far East Asia. That’s our structure in terms of gasoline. From the diesel side we see imports come from the Baltics and North America, which are processed through the terminal by means of break bulk and then further distributed into the countries via inland waterways. Jet fuel is also very crucial component of our portfolio. After quality conversion, we transport jet fuel directly to Schipol Airport through a 20 km pipeline, accounting for approximately 10 percent of our overall volume. So looking at it from a collective standpoint, when you’re providing logistical services for the entire European, and in turn global market, the region’s strategic capabilities speak for themselves.
How will shifting market forces in the United States and the Middle East impact Amsterdam’s current market positioning as the leading gasoline port in Northwest Europe?
PB: We do see the balance shifting with the growing presence of shale resources in the US. Traditionally an importer, the US is now a net exporter of oil, although you still have to distinguish between the different regions because in the Gulf coast there is a surplus, while in the East coast there’s a shortage. From that perspective, things are still changing, and it also depends on how the US is going to develop in terms of deeply penetrating the global gasoline market when all the signals are there. Besides the US, we see growth in developing regions such as Africa, where the increasing dependence on fuel oil is closely tied with the economic growth. Latin America also remains a region of interest. Although, Latin countries have plans to build refineries, it might take some time before they materialize, so in the meantime imports are still a core component in meeting their local consumption. Historically, the Middle East has been lacking in refined products, but now they have several refinery developments in the pipeline, which will enable self-sufficiency, and perhaps even constitute overcapacity. Moving forward, the Middle East will quite possibly act as a swing player between the markets of the East and the West. Talking about the Far East, we have seen for instance, the increase of mixed aromatic cargos going to China—supported by local government—highlighting the market as more politically driven, rather than demand driven. Depending on arbitration options, the cargos might even go to other places in the Far East. But the fact remains, there’s going to be a European surplus in gasoline for a long period of time, despite periodic downturns. As such, we expect the center of gravity will remain in ARA, especially in Amsterdam, for the time being.
How is the Oiltanking terminal strategically positioned to maintain its relevance globally?
PB: Our terminal’s capacities, infrastructure, and services collectively position us at the logistical heart of Europe’s energy operations. It’s very easy to bring cargos from, for instance, Germany to Amsterdam or from Amsterdam to Rotterdam. We have the proper and flexible infrastructure required for successful storage and transportation, which is very important from a blending perspective. For instance, niche players that solely operate as a standard gasoil storage facility, cannot seamlessly transition into a gasoline storage facility mainly because of safety measurement and tank size requirements. The infrastructure needs to be specifically customized to accommodate effective gasoline blending. Fortunately, Oiltanking boasts comprehensive pipelining infrastructure and jetty capacity, which collectively support our gasoline business and produce a competitive advantage among our peers.
PW: Amsterdam is the currently the main location for gasoline blending and will most like remain that way for the years to come. Oiltanking Amsterdam is the busiest and most flexible terminal in Amsterdam with the best jetty capacity. Moving forward, all our investments and strategic initiatives will focus on maintaining that position in the market.
What trends do you see locally in terms of the products you handle in the Netherlands?
PW: From a speculation standpoint, demand for gasoline might go down in the long term, with the demand for gasoil and jet fuel going up. In line with industry trends, each port plays a different role. Rotterdam is very strong on black products, while Antwerp is growing with respect to gasoil. Another trend we see in Holland is perhaps an overcapacity of tanks in ARA, with many of them beginning to age past their useful life. The first generation of these tanks was built in the 1970s, with the last generation built a few years ago, but there are even older fixed assets built in the 1950s and 1960s as well. Combined with changing legislation regarding tighter emission controls and safety and environmental regulation, the older terminals need to invest a lot of money to keep up. With such constant capital-intensive maintenance, consolidation in the industry is inevitable. Fortunately, Oiltanking boasts the scale to accommodate short-term market fluctuations and comply with increasingly stringent regulations, while also continuing to reinvest in the company to produce more streamlined and innovative ways of operating.
What was the rationale behind the March 2015 divestment of 45% stake in Oiltanking Terneuzen B.V.?
PW: The rationale is that we are family owned and we prefer to stay family owned. So going to the stock market is not an option for growth. In some places, the long-term strategy is to divest, but we typically retain managing control, and use the raised equity to invest in other promising countries or projects—ultimately unlocking value in ways we couldn’t have otherwise done. We want to continue to be a leading storage operator in ARA and Europe. If opportunities arise to expand or have a stronger terminal by, for instance, installing more jetties, then we will do that. The times of big greenfield projects are gone. But there are always opportunities for acquisitions, which we are prospectively evaluating.
How do you parlay the financial strength of our parent company Marquard & Bahls AG into a concrete resource here for your European operations?
PW: Given our extensive history in the business, we not only possess the flexible infrastructure that accommodates the consistently changing demands of our customers, but also long-term business relationships that highlight the stability of our family-owned business. Our shareholders are invested in every aspect of the business, constantly adopting visions of longevity. Oiltanking is part of a global organization that is fully committed to logistics and energy, spanning a breadth of services including inter-plane fuelling, tank storage, trading, bunkering, and even retail. With our decentralized structure, we’re able to provide quality services with the support of everyone in the portfolio, while simultaneously promoting an entrepreneurial and flat culture.
Oiltanking also prides itself on “doing the common, uncommonly well.” In addition to your storage solutions, what type of creative logistics solutions do you source from your Dutch base?
PB: Innovation is becoming more and more relevant. For instance, the innovative nature of our infrastructure connects every tank to every other tank and every possible jetty. That being said, however, we don’t nurture every possible operating model we come across. We focus on improving upon existing processes and procedures. With our stakeholders, we’re very much looking at what we do today, and evaluating what could be done better. We’ve also invested significantly in the sustainability of health, safety, and environment. We’re investing money in places where we can make it safer—implementing innovative mindware, software, and hardware.
What type of role does Oiltanking have in this energy transition?
PB: The terminal tries to be more efficient in terms of emissions, and we’ve invested in a very good recovery unit, which reduces emissions by 99 percent from gasoline cargos. We’re not at a point of complete environmental sustainability, but once we are there, we want to do it in a way that’s aligned with public interests. Especially considering our large presence in ARA, where there are big flows, it makes a lot of sense to invest in more eco-friendly solutions, as the impact will be self-evident.
PW: We are talking about many issues that this sector has with government, safety, and regulations. Using our core competencies, we’re constantly brainstorming ways that the company can help facilitate the transition. If you are in a good location such as in ARA, then you will be part of that transition. There will remain a need for logistics and energy. But what kind of energy will that be? That’s the one million dollar question.
What are your main ambitions for Oiltanking in the next five to ten years?
PB: The advantage of ARA is that everything comes together here. This is the place to be if you want to be efficient for the long term. From that perspective, my priorities will focus on growing our presence in the region, but in a more efficient manner. Working smarter, not harder is the core of my management philosophy. In line with those efforts, we look forward to continuing to play a role in energy logistics, whether it’s oil, gas, or other considerable areas.
PW: The world is changing so fast, including Europe. What’s important, though, is to change the company in line with changes in the market. There will always be a need for tank storage, which fortunately, complements our assets well. That being said, however, future growth isn’t without its own set of challenges. We have to juggle multiple fronts to stay competitive, whether it’s from a public perception, environmental sustainability, regulatory compliance, or operational perspective. On a regional level, if we can grow, then we will grow. In the last decade we almost doubled the size of our company, and although we don’t have concrete targets, we have full confidence in maintaining our status as the leading tank storage provider and an employer of choice.
Why have you chosen to work with a company like Oiltanking?
PB: The company provides a lot of freedom to act, creating the motivation to undertake responsibility when given the chance. I also enjoy working with my colleagues in an open and supportive environment. We have a lot of potential to grow. But now, it’s a matter of closely working together and putting a bit more structure behind a few initiatives, then we will make greater strides forward.
PW: We work in the global energy business, so there’s never a dull moment. It has brought me to Hamburg, to Jakarta, to Rio, and now back here. The business is very dynamic and quite interesting to work in. Additionally, the sense of responsibility, with thousands of employees depending on you every day, motivates me and pushes me forward. Combined with a prominent company like Oiltanking that has committed shareholders with long-term prospects, I foresee a very prosperous future with the company.