“Typically, we see elections as times of uncertainty. However, in the coming year we do not expect a huge impact on the business environment since our business relies on short or long-term positions for basic products.”
What are the extent of Vopak’s operations in Mexico and the advantages of its terminals’ locations?
CP: Our operations provide wide access to different chemical clusters in Mexico. We are based in the Port of Coatzacoalcos which supports the chemical cluster in the Port of Pajaritos. We have a facility in the Port of Veracruz, one of the most important ports in Mexico, and a terminal in Altamira. In Altamira and Coatzacoalcos we are located close to major consumption centers of raw materials, as well as production facilities where we can consolidate bulk volumes from exports.
RvdV: We primarily store and handle chemicals at Altamira and Coatzacoalcos, whilst Veracruz is a mixture of chemicals, vegoils and recently, diesel imports. Veracruz has a capacity of 735,278 barrels, Altamira of 692,816 barrels (plus 1,886,943 of LNG) and Coatzacoalcos 162,900 barrels. The majority of our products are imported from the United States, except for vegoils, which come from Latin America and Asia.
Vopak Mexico has obtained the first regulatory authorization for an independent party to store and handle petroleum liquids. What benefits will this bring to its business?
CP: We are very proud of being the first terminal operator with a permit to handle imported fuels. We have already started to facilitate the import of diesel into Veracruz through a commercial partnership with Koch Supply & Trading Mexico. This development provides benefits across the board and is one of the first concrete results of the energy reform that will lead to widening the sources of fuels imported to Mexico. It is a step-change in our product and customer portfolio. Since our entry to Mexico around 40 years ago, our sole focus has been the petrochemical, chemical and vegoil markets.
How do you see imports and exports of chemicals changing in Mexico going forward?
CP: There is some idle capacity in the Mexican market which is expected to become operational with either imported or domestically produced feedstock as a consequence of the energy reform. Therefore, we do see some growth in petrochemical exports in the coming years. At the same time, the United States is a natural supplier to Mexico due to the proximity of ports along the US Gulf Coast, and due to the increase in production of chemical and refined products in the US as a result of shale developments.
What further effects could the shale gas revolution have on the Mexican petrochemical industry?
RvdV: Mexico is different to other Latin American countries in terms of the feedstock issue for three reasons. First, Mexico’s proximity to the United States allows it to be part of the US system in a low-cost way via short marine imports of feedstock. Secondly, Mexico will be able to receive gas coming from the United States via pipeline. Finally, Mexico has similar geology to that of the United States. With Mexico accelerating offshore auctions and developing its onshore shale formations, over time, Mexico has an opportunity to become more like the United States in terms of oil and gas production and the associated effects on chemical production and refining. Of course, this is a long term projection. For the short and medium term, we foresee more imports coming into Mexico from both the oil and chemical sides.
How has the macroeconomic picture affected demand for different products in Mexico?
RvdV: The macroeconomic picture has a lower impact on our activities in comparison with the impact for Mexican producers and manufacturers like Pemex. Vopak sees a raise in demand for imports if they produce less chemicals or oils. With regards to oil, nowadays, more private companies are expecting to be importing refined fuels due to the implementation of the energy reform.
How concerned are you by the elections next year and the NAFTA renegotiations?
CP: Typically, we see elections as times of uncertainty. However, in the coming year we do not expect a huge impact on the business environment since our business relies on short or long-term positions for basic products. Based on our market intelligence, we expect the flows of the products we handle to continue and the fundamentals of the Mexican market not to change due to external factors. On the other hand, new flows may be affected by geopolitics. Additionally, Mexico now has the ability to source more products from other markets.
Sustainability and safety are core priorities for Vopak. How are they embedded in Vopak Mexico?
CP: Storing vital products with care is the purpose of our company. Therefore, care and sustainability are at the core of every decision each employee makes at Vopak. We have operational procedures that ensure everyone understands the importance of protecting our environment and that allow us to constantly improve our performance in terms of safety, emissions, and other potential environmental impacts. We have stringent processes that safeguard the products our customers entrust us with and we spend ample time ensuring our safety protocols comply with industry regulations and satisfy our customers’ needs.
What are Vopak Mexico’s key goals in the next three years?
CP: Vopak’s strategy is to consolidate and grow its footprint in the different types of terminals it operates, including gas, industrial, hub terminals, and import or distribution terminals. In Mexico we currently operate distribution and import terminals and we would like to develop an industrial terminal. We would also like to consolidate and expand our presence in the ports where we are already located in order to capitalize as much as possible on the opportunities that arise from the implementation of the energy reform.