INDUSTRY INSIGHTThought Leadership

Playing to their strength

Dick Richelle, Chairman of the Executive Board and CEO, Royal Vopak, discusses the company’s role in the energy transition and why Vopak is uniquely positioned to support the industry’s decarbonization drive

Considering the current challenges facing chemical supply chains, with high logistics cost being a key factor for chemical players, how do you expect chemical supply chains to evolve in the coming year and will they ever return to their more stable level prior to the pandemic?

The current market dynamics is characterized by supply chain disruptions and uncertainties. These circumstances are forcing companies to rethink their supply chains. Security of supply and supply chain redundancy are key elements in this respect. Supporting our customers with critical infrastructure at key locations continues to be our core contribution to this. We believe in dialogue and cooperation to find optimal solutions. This can also relate to onsite logistic infrastructure, such as our partnership with Blackrock to service Dow in the US. It gives chemical companies the option to free up capital from non-producing assets, and companies like Vopak to optimize the logistics.

What trends are you seeing on the market in terms of green/blue ammonia production and export and how do you expect this growing trend to transform the industry?

There continue to be many developments in ammonia export and import projects. It is widely expected that low carbon and renewable ammonia will play an important role as a hydrogen carrier, a shipping fuel and/or a feedstock. Vopak has safely stored ammonia for more than 20 years across the different continents in multiple locations. We are currently preparing to facilitate the new green and blue flows, both at our existing ammonia locations like Singapore, Houston and Caojing as well as new locations like Rotterdam and Flushing. In Rotterdam and Flushing our locations will be connected to the planned hydrogen pipeline network into Europe. One of our partners here is pipeline network operator Gasunie.

Can you tell us more about your green hydrogen project with Shell New Energies and partners? What were some of the drivers for this initiative and what are your future plans?

Shell New Energies, ENGIE, Vopak and Anthony Veder have signed an agreement to study the feasibility of producing, liquifying and transporting green hydrogen from Portugal to the Netherlands, where it would then be stored and distributed for sale. The consortium envisions that hydrogen is produced by electrolysis from renewable power in the industrial zone of the Sines port. Then the hydrogen is liquified and shipped via a liquid hydrogen carrier to the port of Rotterdam for distribution and sale. The aim is to deliver a first shipment of liquid hydrogen from Sines to Rotterdam by 2027. Within the consortium, Shell and ENGIE will collaborate across the full value chain and Anthony Veder’s and Vopak’s involvement will focus on shipping, storage, and distribution. The governments of Portugal and the Netherlands have strengthened their joint ambition for the production and transport of hydrogen. Key sector players in heavy duty, marine and aviation support this development, as it fits well with their intention to decarbonize operations.

Supply chain sustainability is becoming increasingly important in today’s ESG-conscious world. What more can the industry do to improve their supply chain’s emissions footprint in this decade and beyond? What is Royal Vopak doing in this regard?

We have adopted three lines of parallel action:

  1. We are developing infrastructure solutions to accelerate a switch to cleaner conventional fuels and feedstocks.
  2. We are developing infrastructure solutions for zero- and low-carbon new energies and sustainable feedstocks such as renewable hydrogen and ammonia, CO2, and long duration energy storage.
  3. We are also reducing our own environmental and carbon footprint. To reduce our own footprint, we are taking several measures. We are further improving our energy efficiency; we are switching to renewable electricity, where possible; we are seeking to electrify our operations and generate our own renewable electricity where possible; and aiming to use new energies in our own operations.

Out of these action lines, our biggest impact is the development of new infrastructure which will help our customers to reduce their environmental and carbon footprint in the energy and feedstock transitions around the world. Vopak will accelerate its portfolio investments towards new energies and sustainable feedstocks by allocating EUR 1 billion in growth capital to these activities by 2030. This will not only shape the future of Vopak, but it will also positively contribute to the transition within key industrial clusters and shape the energy hubs of the future. The share of zero-carbon and low-carbon energy and sustainable feedstocks at Vopak’s existing locations will be increased and new infrastructure for the introduction of the vital products of the future will be developed. Here Vopak’s focus is on infrastructure solutions for low-carbon and renewable hydrogen, ammonia, CO2, long duration energy storage and sustainable feedstocks. Those terminals within the Vopak network that store traditional fuels and feedstocks will be well positioned to handle low carbon substitutes.

What is the role of digitalization in making chemical supply chains more resilient to future disruptions and more agile at the same time? Are there any initiatives at Royal Vopak or examples you can share of successful technology adoption that have made a difference to your supply chain operations?

Digitalization is for sure a critical success factor. In recent years, we embarked on a journey of digital transformation. Embracing new tools, defining new interfaces with our customers and better systems for operations are critical for our long-term success in delivering safe, clean and efficient storage. This is why we have been making significant investments in digital modernization and innovation. The execution of our digital strategy is progressing well. The terminal management system for operations and customer services, a software program that we developed in house, will be live at all terminals within project scope at the end of 2023.

Is there anything else that you would like to add?

One extra thing I want to point out here specifically is the recycling of plastics. We foresee a high demand for this and see a role for us to play. As we are part of the supply chains of the plastic industry today, we are well positioned and are willing to play a role in the future of those supply chains and the new supply chain. This includes the recycling of plastics, the treatment of plastics, the pyrolysis plants that need to be developed and then the blending of those pyrolysis oils in the different end markets. Our customers are asking for our support and active involvement in it. And we see that there’s room for us to play to the strength of what we have as a company.