with Eelco Hoekstra, President, Vopak Asia Pte Ltd
About a decade ago, storage capacity in Singapore could not meet demand. As new players entered the market, the country witnessed a growth in capacity that resulted in a less proportional increase in demand. How has this trend affected Vopak in Singapore and how can it secure its market share?
Looking at the development of Singapore as a regional storage centre, Vopak was the first company to build terminals on Sebarok over 25 years ago. The reason to move into the Singapore market was the increasing significance of the refining industry in Singapore. In those days, there was no support for oil trade from independent players yet, making it an attractive market to enter. Since then the growth has been larger than before, supported by the fact that there is more business in this part of the world now. Singapore has been attractive for Vopak to invest in because it has a very transparent oil market. The transparency of the business being conducted in the country is supported by governmental support to ensure this transparency remains. Secondly, for markets to be effective from a pricing point, the market needs to have liquidity. Singapore has a high grade of liquidity supported by high volumes from both the refining and shipping industries. These two elements strongly support storage in this part of the world. In 2008, Vopak reached the milestone of more than 3 million cubic meters of storage capacity in Singapore. This represents slightly more than 10% of Vopak’s global capacity.
Your long term strategy does not only focus on expanding and developing new terminals, Vopak also aims to optimize its existing terminals. Can you identify the key areas where improvements can be made here in Asia?
First of all, Vopak has spent a tremendous amount of effort on operational improvement in the last couple of years. The Vopak brand is based on trust and reliability. The efforts for improvement are all done to sustain and support that brand image. Looking at operational excellence, safety is absolutely paramount and to have that, the company needs to have good infrastructure, processes as well as the behavioral aspect of the people involved. These efforts are continuous thrives supported by Terminal Health Assessments audits, safety days and different tools and applications built around these themes. Second of all, the way operations are run at Vopak Asia is based on the lean methodology which was introduced by Toyota several decades ago. The aim of adopting this is to better serve our customers. Third, Vopak has started a program in Asia called iCare, put in place to improve the way the company serves and listens to our customers in order to provide them the better value. In all aspects on how Vopak Asia delivers its services and maintains safety in operations, these are the processes that are key to sustaining the overall Vopak brand on a daily basis.
The standards in the oil and gas industry are driven by the large players. As a global market leader, how can Vopak lead the way in setting the industry standards?
Vopak has the belief that the company needs to be run in a sustainable manner. To ensure sustainability, the company focuses on three aspects: people, profit and planet. There is a clear long-term view on how to make the company sustainable. When the company looks at safety meticulously, how to operate, how to maintain and how to be sustainable and keep its people safe, a good business proposition does not only serve the industry but also the shareholders, the stakeholders, the suppliers and the people internally. The matter is much wider than a sole contribution to the industry standards.
To better serve the Latin market, Vopak Latin America moved its headquarters from Miami to Buenos Aires. One of the key reasons to choose Argentina was the availability of skilled talent. With an overall scarcity of skilled labor, what is your assessment of the situation in Singapore?
When Vopak Asia looks at how the company wants to be positioned in Asia, people is key to the company’s long term success. To attract the best, it is crucial for Vopak to achieve the profile of an attractive employer. The way Vopak Asia recruits and develops people is organized both internally and externally in such a way that the most competent people in the industry can be attracted. Training is one element on which the management spends a significant effort within the company. Nevertheless, the availability of skilled labor is an issue.
As a multinational, you can also give employees the opportunity to have them gaining international experience…
Absolutely, Vopak has a number of key advantages making it an attractive employer. The company is well known in the industry worldwide because of its global brand. Not only because of the global positions, but also skills, people can be offered careers within their functionality. In other words, someone starting as a technician can grow into a sales manager, to marketing manager for a terminal, marketing manager for a division, global account manager and so on. People can really make a career within one functionality at Vopak, whereby the global set of skills and sheer size of the company clearly matter. Vopak also has the structural elements in place to train its people and move them forward, such as its global performance management program.
To what extent can you leverage on this international expertise and exposure in different markets?
A good example of how the company can leverage on its skilled resources are Singaporean employees who were developed from the Singapore talent pool and then assigned to China and Indonesia as terminal managers. Whenever the company needs staff, it can source talent from different locations.
If this international talent pool allows for flexibility and international leverage, how do you remain flexible in adapting to local market needs and changing market conditions as the company grows in the future?
With almost 400 years of history, Vopak remains faithful to its seven values, one of them being agility. This implies that Vopak takes pride in taking decisions quickly and remaining agile at what it does. If market opportunities come, the company will move quickly whenever it is required to do so.
When we met with Vopak’s chairman Mr. John Paul Broeders, he mentioned LNG being key to the future of Vopak. The company is looking for possibilities of new LNG terminals in parts of the world. What opportunities do you see for LNG in Asia?
Vopak is the largest independent storage company for the storage of bulk liquids including liquid gasses. The expertise within Vopak has given the company the opportunity to look at different types of projects on a global scale. What is crucial is what the customers ultimately decide on their desired locations to store gas. Whenever an opportunity occurs in Asia with a growing LPG and LNG market, Vopak will consider taking advantage of this potential. For Asia in particular, the company will not exclude any opportunity in the businesses it has globally. If a customer asks Vopak to go into a particular area, Vopak will not hesitate to do so.
As Vopak relies on long-term contracts, it particularly focuses on strategic partnerships. What do you look for in a strategic partner?
Vopak looks for partners with shared values. This not only relates to the business values in itself, but also the fact that safety, health and environment is paramount for conducting business. Vopak needs partners that can contribute to its particular business model for the storage of independent liquids in any geographical location. Nevertheless, there are many variables in any individual situation. Vopak can also profile itself as an attractive partner for the same reasons. The company has the capability to execute independent storage in any given location in the most professional manner. At the same time, Vopak embraces strong values that include high levels of integrity and safety.
In Asian cultures, it is important for companies to contribute to society. How can Vopak contribute to Singapore’s image as a so-called Houston of the East?
In a broader sense, Vopak has many different programs in place to give back to the societies in which it is active. It is very important for the company to take care of the immediate communities around terminals. There are many examples of Vopak introducing initiatives together with joint-venture partners, to assist in education and support local communities. In Malaysia for example, together with a joint-venture partner, Vopak supports a program to provide financial support to around 80 needy families in a specific area. These families are given a cash card which they can only use for certain basic products such as rice and cooking oil.
Do you see a difference between regions, for example compared to your previous experience in Latin America?
No, at Vopak we have different programs in different continents. In Latin America, Europe and Asia, in all those places I have seen some fantastic projects.
You have previously lead Vopak in the UAE and Latin America, how did you manage to adapt your management style to the local work ethics in Singapore?
I have not adapted my style at all I think. In the three different locations I have worked with Vopak, I had the privilege of working together with fantastic management teams. It was thus relatively easy to maintain a similar management style. I have been very lucky with the people whom I have worked with.
What are your personal ambitions here in Singapore for the coming 3 to 5 years?
My personal ambitions are very closely related to the next years I will be here in Asia. I am very focused on making Vopak Asia a much safer company than it is today. While all the trends and the numbers are moving in the right direction today, there is always room for improvement for the safety record. Vopak Asia also has strong growth aspirations fuelled by opportunities in greenfield and brownfield development as well as external acquisitions. Lastly, it is important to have an organization in play that people really feel like working for. Instead of being asked to, people should feel like coming in to contribute to the success of Vopak.
If you were to send out a final message to the readers of Oil and Gas Financial Journal on behalf of Vopak in Asia, what kind of message would it be?
Related to the aforementioned ambitions, there is a committed group in Vopak Asia that has the potential to reach these ambitions.