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Challenges and adaptation ahead

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Meenal Datar

Membership specialist

As the world faces the energy transition and ever-more stringent climate targets, agents in the bulk liquid logistics chain came together at V Med Hub Day to discuss the future

Med Hub Day, a conference organised by Port Tarragona in Spain with ChemMed Tarragona, an industrial, logistical, academic and scientific chemical cluster located in the greater Tarragona area, is now in its fifth edition. After a digital event in 2020, the 2021 V Med Hub Day was a hybrid event, with people attending in person and online.

The aim of V Med Hub Day, on 18-19 November 2021, was ‘to promote, debate and exchange some information about the strengths and opportunities that the Mediterranean Sea offers us as a logistics platform for chemical and petrochemical products.’ It involved storage terminal operators, ports, consignees, forwarders, market analysts and chemical and petrochemical companies.

The event was moderated by Patrick Kulsen, the managing direction of Insights Global, an independent market research company focussed on the international petroleum and petrochemical industries. Josep M Cruset i Domènech, the president of Port Tarragona, gave the welcome address. He said that the Port’s work is based on the principle that ‘periods of change are full of opportunities’, and that it is the fasted growing port in Spain, with traffic up by 22% since 2020. Investment has continued despite the pandemic, including in new tanks for Tepsa and Terquimsa and the ongoing development of the Mediterranean rail corridor.




Bulk liquid flows in the Mediterranean and their relationships with chemical parks

The first presentation in the session was given by Jordi Anglès Jové, commercial coordinator at Port Tarragona, based on a study analysing bulk liquid flows in the West Mediterranean.

At the IV Med Hub Day in 2020, Anglès discussed the traffic and ports section of the study; this time he looked at the relationship between the analysed traffic in 2020 and the industrial parks in Europe. He first reiterated the conclusions from the previous presentation, including the significant consumption of bulk liquids in West Mediterranean ports. 48% of bulk liquid movements are crude oil, with only 4% being chemicals, which could indicate a growth niche. The ports of Tarragona and Algeciras are leading the growth in storage capacity.

The first part of his new analysis looked at the effect of petrochemicals in the West Mediterranean. The region is highly dependent in crude oil, and 82% of total liquids are petroleum products, which is interesting in the context of the energy transition. Ports need to be aware of the strategic plans of oil companies for the 2030s and 2050s. Spanish ports are stronger than other ports in the region, being generally more diversified with more local and regional vision.

The second part of Anglès’ presentation looked at petrochemical trading and chemical synergies. He showed on a map the locations of the main petrochemical companies on the Iberian Peninsula, the Mediterranean region and the ARA and Central Europe areas. Anglès pointed out that there is important infrastructure in the Mediterranean for use by traders, and that chemicals have much potential. Tarragona itself accounts for 15% of total chemical traffic in the West Mediterranean. The emerging biofuels sector also offers good growth potential, while bunkering could open up new opportunities. Anglès said that Tarragona’s first class facilities and new storage capacity positions it as a leading port.

The Port’s talk: Hub strategies
in the ‘new normality’

In the second slot, Genoveva Climent Dewit, the commercial director at Port Tarragona, and Ronald Backers, advisor business at the Port of Rotterdam in the Netherlands discussed new strategies for chemical hubs, in a session moderated by Kulsen, and began with a bit of background.

Tarragona began in the 1960s with the growth of the chemical industry in the area, which wanted to get raw materials in and products out quickly. It was originally Spanish only but then became an export port. Its hub strategy began in 2014, and it has since doubled the capacity of the chemical wharf.

Rotterdam, meanwhile, was run by the city council, which wanted to attract industry and improve employment, so decided on a hub strategy. In 1992 the first dedicated marketing to the chemical industry began. It is now a hub for fuels, chemicals and biofuels.

Climent said that one measure to reinforce the hub strategy is tax reductions, but the most important thing is top class facilities in a good condition. Tarragona is one of the deepest ports in the Mediterranean, with two jetties and two wharves. Congestion is minimised and the right information is passed on at the right time to avoid delays. It is also vital t work with the port community. Backers said that there are price benchmarks in Rotterdam. Certain products attract certain operators, for example, terminal companies handling biodiesel and feedstock such as Koole and Vopak have attracted two biodiesel plants, such as Neste’s, helping to create the hub.

Kulsen pointed out that things are changing with refinery rationalisation and companies moving away from
crude. Climent said that Tarragona is looking at how to adapt. Backers believes that hub locations will have the best
chance of surviving in future. Large chemical plants will still be needed to produce large volumes of chemicals from other feedstocks, and where better than somewhere with an existing industrial area?


Storage terminals panel

The final discussion of the first day was between Anastasiya Mozgovoy, business development /deputy director at Euroenergo, Josep Forcadell, commercial and business development director at Vopak Terquimsa, and Leandro Crespo Ariza, corporate operations manager and Tarragona Terminal manager at TEPSA.

Kulsen asked the panellists what they thought the Mediterranean region’s position is in terms of liquid bulk in the new normal. All panellists agreed that strategies are changing, with Mozgovoy saying that supply chains have become more local since the COVID-19 pandemic, and much greater demand for small volume products, with existing tanks designed for hydrocarbons simply too big. Crespo said that demand for chemicals has risen but an increase in the cost of freight is changing logistics and terminals must be adaptive. Forcadell added that terminals will play an important role as companies prepare for a more sustainable future away from petrochemicals.

The panellists then discussed how ports can keep up with rapid change, and again, were largely in agreement. Good waterfront services and bunkering, flexibility and intermodal capabilities, alongside sustainable/ESG strategies such as shore power. Connectivity with manufacturing sites is important and digitalisation is increasingly important for the exchange of information.

Kulsen also asked about the energy transition. Crespo said that terminals have two different approaches – either in terms of energy efficiency and reducing CO2 emissions, or by moving to more sustainable products. At Rubis Tepsa, they are working to put in measurable targets. Forcadell said that Vopak Terquimsa is looking at greener feedstocks, hydrogen and carrier technology, and new energy projects such as biofuels and green ammonia, as well as other measures like using electric vehicles to move around terminals. Mozgovoy said that Euroenergo is looking at installing smaller tanks in place of large tanks and discussing options with customers.

When asked to describe objectives for tank storage in 2022, the panellists’ suggestions included flexibility, specialisation, sustainability, adaptivity and innovation.




Bunkering in hubs: Strengths
and opportunities

Daniel de Miguel, trading, shipping and bunker operations manager at CEPSA, kicked off his talk with some facts and figures. Did you know, that 6% of the world’s hydrocarbon trading activity is in fact bunkering? In Spain, 60 ports offer bunkering services, with CEPSA responsible for 40% of the market. Of the demand, 27% comes from dry bulk carriers, 22% from tankers, and 28% from container ships. The projected total demand for bunker fuels worldwide in 2021 is expected to reach 7.6 million tonnes.

While the world’s biggest bunkering hub is Singapore, the largest in Spain are Algeciras and Las Palmas. 2021 has seen some recovery in bunkering demand, by 17.5% compared to 2020 levels, but as levels fell 18.5% in 2020 compared to 2019, there is still a little way to go.

The biggest change in the bunkering market came with the introduction of IMO 2020, which saw the maximum sulphur content in bunker fuels lowered to 0.5% unless scrubbing technology was used for the exhaust. Very low sulphur fuel oil (VLSFO) was expected to become the fuel of choice, but this is not necessarily the case. In 2019, 80% of bunker fuel was high sulphur fuel oil (HSFO). In 2021, it still makes up 20% of the market as scrubbing technology is cheap and convenient. VLSFO makes up 55% of the market, with other fuels like LNG gaining in popularity, although high costs are curbing this. HSFO is expected to grow again by 2030.

The Mediterranean is an important bunkering with major maritime routes through the Suez Canal linking Europe and Asia, so opportunities abound. With decarbonisation and COP26 climate targets, as well as the EU’s Fit for 55 guidelines including shipping in the emissions trading scheme, shippers must start looking at alternatives to petroleum bunker fuels. The greenhouse gas impact of bunker fuels in Europe must fall by 75% by 2050 compared to 2020.

In the short- to medium-term, fuel oils, LNG and marine gasoil (MGO) are the only options available, but other fuels like second generation biofuels will need to be introduced, although a question mark remains over availability and price. Shippers can also look at improving the efficiency of their ships, including through vessel design, engine efficiency, hull friction, propeller design and voyage optimisation which can reduce fuel needs by 20%. In the long-term, green hydrogen, green ammonia and renewable electricity will need to be introduced, but at the moment this is not possible.


Petrochemical companies panel

Javier Azagra Del Campo, operations manager at Repsol Petróleo Ci Tarragona, Fran Sánchez, hydrocarbons logistics leader at Dow Chemical Iberica and Albert García Ribera, head of site logistics & infrastructure at BASF, contributed to a panel discussion on petrochemicals led by Kulsen.

Kulsen first asked about the logistical challenges faced by petrochemical companies. All the panellists agreed that being flexible enough is something they are all looking at, whether to meet customer expectations on delivery dates, flexibility on raw materials, or flexibility on products for the approaching energy transition. To mitigate the challenge, Sánchez said that the most important thing posts can do is ensure quick, safe and smooth port calls. Azagra agreed and again emphasised the importance of flexibility in the ports themselves, while García said that multimodal capabilities are essential.

Hubs such as Tarragona offer easy access to European markets with good connectivity, while the Mediterranean itself has favourable sea conditions compared to other locations, Azagra said. García added that the partnership with the port and its experts was of crucial importance.

Kulsen also asked about the logistics vision of the future for petrochemical companies. The panellists agreed that the focus is on recovery following COVID-19 in the short-term. In the longer term, digitalisation and automation, both in manufacturing and port operations will become vital, while sustainability
and the drive to net-zero is also going to be a focus.

The state of the chemical industry

Olivier Maronneaud, director, chemical consulting at IHS Markit, a data, analytics and information company, gave the third talk of the session. He looked at the general global economy, pointing out that the world is dealing with the worst recession in 30 years as a result of COVID, then discussed its effects on the chemical industry. While industries driving demand in the chemical industry, such as the automotive industry, have suffered, new consumer habits and the need for masks, packaging, detergents and sanitisers has helped. However, spending on new projects and
capacity has been delayed, with some projects scrapped.

Maronneaud also looked at the transition to a greener future, including the possible impact of plastics recycling growth and the need to decarbonise e.g. through the use of biofeedstocks and renewable energy.

Maronneaud has written up his talk in detail for Tank Storage Magazine, which can be read on p50.




The energy transition
& the role of hubs

In his presentation, Paul Hickin, director at S&P Global Platts, looked at the alternative fuels which may be available to shippers during and following the energy transition. He pointed out, as had several speakers before him, that at the moment the technology to meet the energy transition target, which is a moving target due to constantly changing government and international policies. This makes it difficult to plan what infrastructure and storage might be necessary. Many shipping companies are looking at duel- or multifuel ships in the medium term, with an eye on clean methanol or green ammonia in future.

Hickin has written up his talk in detail for Tank Storage Magazine, which can be read on p46.


The Mediterranean Corridor:
Getting closer to Europe

Martijn Elbers, sales director at Lineas, the largest private rail freight operator in Europe, gave the final presentation. The company has 250 locomotives and 7,000 wagons, connecting major hubs in Europe. The major benefit of rail transport is avoiding road traffic, but there are limitations. Spain has a different gauge from the rest of Europe so products must be transhipped at the border. One route from Lyon to Barcelona has the same gauge, but here there are weight and length restrictions. Lineas’ Green Express Network nevertheless remains a good option.



Anglès summed up the two main conclusions from the event: –

  1. There are big challenges ahead for petrochemical companies, and there is a need to see companies’ strategic plans as to how they plan to handle the energy transition
  2. Ports will also need to adapt to the energy transition.


For more information:

The next Med Hub Day will take place on 17-18 November 2022 in Tarragona, Spain.


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