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Interview

with Bas Hennissen, Director Industry and Bulk Cargo, Port of Rotterdam

31.01.2010 / Energyboardroom

The Port of Rotterdam has major projects underway, Gate Terminal, the construction of Maasvlakte 2, expansion of refineries, new power plants and so on. Hence, could you briefly present the Port of Rotterdam highlighting the main comparative advantages that explain the port attractiveness for such important projects?

The Port of Rotterdam is a private company whose shareholders are the City of Rotterdam and the Dutch State. As a private company, we have to fund our own investments via income. This income is mainly generated by activities such as shipping, port use and rented space. Besides, the Port of Rotterdam takes loans from banks and financial institutions to finance its projects in the port area.

As a result, in the next 10 years the Port of Rotterdam will invest more than EUR 4 billion in infrastructure projects – EUR 2 billion for Maasvlakte 2, and the remaining amount will be invested in projects such as nautical infrastructure, roads, tunnels and so on.

Our income comes predominantly from energy related activities – containers are important but overall the energy related industry overpasses it in importance. This has spared the Port of Rotterdam greatly from the consequences of the current economic crisis, which affected greatly the containers trade but not so much energy related activities. Thus, the Port of Rotterdam has a much more stable source of revenues than other ports such as Antwerp and Amsterdam, more dependent on containers’ shipment.

The Port of Rotterdam is right now the 4th biggest port in the world. The reason for its size is because we have unrestricted access to the European hinterland. We are located in the heart of the North Sea with no locks; we are opened 24/7; and we have large depths of up to 21 meters with direct access to Germany. That naturally makes the Port of Rotterdam the largest port in Europe.

What are the main industrial clusters created in the Port of Rotterdam area and what are the most important for the Port in terms of revenues?

The Port of Rotterdam is mostly an ‘energy port’ – especially related to activities involving Oil, Gas and Coal and the entire value chain that surround these products. Needless to say, in terms of cargo flows for these three products we are the number one port in Europe.

In the oil sector we have five large refineries. However, the oil that comes to the Port of Rotterdam is connected actually to ten refineries thanks to a wide network of pipelines systems in Germany and in the Netherlands. This attracts both the traditional oil industry and also biofuels companies.

As you know, there is an obligatory biofuels mix percentage that is currently increasing from 5% to 10% – naturally this means important new investments in the sector. The Port of Rotterdam is already the biggest ethanol port of Europe with increasing amount of trade with countries like Brazil. We have now four biodiesel plants, and for instance Abengoa and Neste are building new biofuel plants.

Refineries are continuing to invest in cleaner fuels and procedures. It is true that refineries in the hinterland are struggling with the increased competition from new refineries being built in the Middle East, India and China. Thus, in order to compete and survive refineries have to be larger and create economies of scale. This has been the answer of the local refineries, which have concentrated even more their regional activities around the Port of Rotterdam to gain in scale and international competitiveness.

Coal is our second biggest energy carrier. The Port of Rotterdam has the two largest coal terminals in Europe; one from EMO and the other from ThyssenKrupp. Traditionally the Port of Rotterdam has been shipping coal to Germany, but what we have seen now is the construction of a few large coal fire power plants in the Port of Rotterdam area, transmitting instead the energy to the main consumer markets.

Naturally, this is very interesting for the Port of Rotterdam because it creates a domestic demand of coal. It is also interesting for the power plants because they are side by side with the coal infrastructure and it’s interesting for the coal terminals because they have their costumers side by side.

What is even more interesting for the Port of Rotterdam is that these coal fire plants have an obligation for the next four years to burn up to 30% of biomass. This offers us the opportunity to work on another promising type of cargo which is biomass. With these developments the Port attracts cargo and, with it, it generates the income.

Last but not least, gas is a very new and promising commodity for us. With gas resources coming to an end, there is an increasing concern about the security of supply. As a result, the Port of Rotterdam is harboring projects such as two LNG terminals. Gate Terminal is already under construction and the Lion gas project – carried by 4gas is under development.

With the size of these terminals the Port of Rotterdam will occupy a major position in LNG in North-Western Europe. We believe this is an important commodity for the future and the Port of Rotterdam has a very strategic position and unique infrastructure to offer. The Port of Rotterdam is already connected to the gas grid and it can immediately pump in the gas received into the grid.

Besides, the port has many important local consumers. As a matter of fact, there are four power plants being build right now with investments of between EUR 4 to EUR 6 billion in this area. All these assets clearly show why the Port of Rotterdam is better known as ‘the energy port’.

The Port of Rotterdam is a colossal port responsible for the trade of more than 400 million tons per year, occupying an enormous area. In order to accommodate further growth you are building Maasvlakte 2 – which comes with a cost. Having this in mind, how are you still being able to attract investors to this brand new area?

Maasvlakte 2 is mostly conceived for containers. Containerships are getting larger and larger, so Maasvlakte 2 will be in charge of this increased capacity. However, we will also have a lot of extra space to offer the industry.

With the realization of Maasvlakte 2 the Port of Rotterdam has also introduced important sustainability criteria. When we were granted the approval for this project we obliged ourselves to make it under strict sustainable procedures.

For instance, the container terminals are going to be obliged to put more than 20% of their cargo to the hinterland on the rail and 45% on barges – very different from nowadays where over 50% is carried away by truck. We expect that ten years from now the Port of Rotterdam will have a CO2 collection infrastructure at work connecting our companies to some of the gas fields in the North Sea, allowing them to get read of their CO2 emissions at competitive prices.

These ambitions have a strong impact on attracting companies. It is very hard to build a coal power plant these days if you don’t deliver high environmental solutions. Hence, it is important as a port to deliver solutions on the environmental front as well, reason why we have the Rotterdam Climate Initiative.

As a port we need to invest in more CO2 capture infrastructure together with the energy companies. The Port of Rotterdam is responsible for most of the CO2 emissions in the Netherlands and it is our role to provide the necessary infrastructure for the industry here to take CO2 emissions away.

Therefore, as part of the Maasvlakte 2 environmental criteria on new power plants, these companies will be able to be connected to a future CO2 grid, becoming CO2 neutral. Those measures attract other cutting-edge industries such as coal gasification, biomass gasification and all types of industries and technologies that fit very well our long term development vision.

This is another reason why the Port of Rotterdam is such a unique spot for companies to invest. First of all, this is a main industrial cluster and there are not many places where you can build power plants or terminals anymore in Europe. Secondly, here we have large consumers, being easy to strike local contracts. And thirdly, in the future industries should be able to connect both to the electricity and CO2 grids. Thus, the circumstances to invest in future energy projects are much more interesting in the Port of Rotterdam than elsewhere.

Many of our interviewees active in the Port of Rotterdam area have highlighted an increased concern over their capacity to replace baby-boomers that will soon retire due to a lack of young workers. How is the Port of Rotterdam helping its companies to overcome this pressing issue?

This was an issue largely ignored in previous years. Now, together with Deltalinqs, we have recognized the importance of this issue and we are putting together a big effort by investing considerably in the promotion of the Port of Rotterdam and the industry around it between schools and universities through the country. The Port of Rotterdam is trying to make sure that students are aware of the good opportunities to work here.

Besides, the Port of Rotterdam is promoting infrastructure projects to facilitate the access to the port by the population living in the other side of the river so we can drawn workers from the Hague region as well. The Port of Rotterdam is lobbying hard to build a tunnel shortening considerably the driving distance from the Hague to the port, making it much easier to attract people from an important region.

The Port of Rotterdam used to be the biggest port of the world, nowadays it is the fourth. Looking towards the future, how do you think the Port of Rotterdam should be portrayed in the international arena and what role it will have in the international trade network?

The Port of Rotterdam is not competing with any Asian port. The larger emerging markets become the better for us. The Port of Rotterdam is the larger destiny port for countries like Brazil and we have very close allies with Ports such as the Port of Santos. In the same way we have close ties with the Port of Shanghai and Singapore. Indeed the Port of Rotterdam does compete with other local ports such as Antwerp and Hamburg, but mainly in the container business and not so much on the energy sector.

We also compete with other Oil and Chemical clusters in England and Germany, for instance. In order to sustain our leading position there are important things we need to do. Firstly, we need to further attract sustainable industry, having to work on new kind of technologies such as biochemicals and biomass conversion, synthesis gas clusters, coal gasification, hydrogen production – those are all brand new types of technologies that we perceive as the future of modern industry, hence the future of the Port of Rotterdam.

If in the next twenty years an increasing amount of the cars will be electric vehicles, it will require a large amount of electricity, which has to come from new sources. We believe that the Port of Rotterdam is well placed to sustain this future need with all of our new and clean power plants; and with Maasvlakte 2 we have space for many others to grow with that market. However, the Port of Rotterdam wants to grow in energy production only if the power plants settled here are the most modern and environmentally friendly.

By saying that and by knowing that the Port of Rotterdam is a uniquely attractive location, you attract new investments with cutting-edge technologies that will reshape the future of the energy industry. When we see that the most modern power plants in the world are establishing themselves here we know that this is a direct result of our sustainable development vision and efforts – and that they are paying off.

In a few words, how would you describe the future of the Port of Rotterdam and the industry around it?

The Port of Rotterdam is and will continue to be Europe’s energy entrance. In a few words, we are a world class energy port.

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