The oil and oil products storage industry has a reputation for taking a conservative approach to developing and building its terminal network. VTTI seeks to become a major player in its industry by pursuing a decidedly different course.
Having embarked on an aggressive expansion plan to double its storage capacity by 2012, Vitol Terminals Group (VTTI) seeks to become a major player in its industry by pursuing a decidedly different course.
VTTI, a unit of the Swiss/ Dutch physical oil trading conglomerate Vitol Group, owns approximately 4 million cubic meters (m3) of storage capacity for oil and oil products. VTTI operates major trading terminals in Amsterdam and Europoort in the Port of Rotterdam, and it owns a 49% stake in the Ventspils terminal in Latvia. Other VTTI terminals are located in the UAE, Argentina, Pakistan, and Russia. Rob Nijst, Chief Executive Officer of VTTI, joined the company in October 2006 after working in various financial and sales capacities for 14 years with terminal operators in Europe and the Asia Pacific region. He has a degree in economics from Erasmus University in Rotterdam and an MBA from IMD Lausanne in Switzerland.
"Our objective is to become one of the top three players in oil infrastructure," said Nijst. According to Nijst, VTTI departs from the more traditional role of a terminal operator because it also offers trading infrastructure. The design of the terminals and the manner in which VTTI is organized reflect this change, he explained.
"In addition to safety, the design focuses on flexibility and handling capacity, both critical for our main customer group, the oil trading community, in order to have a very efficient process for loading and blending their products," said Nijst. "Examples are the investments that we make in jetties that are geared towards minimizing demurrage (the additional cost of chartering a vessel outside a contracted period) and the blending capabilities at the terminals, which allow our customers to make their products on specification, in the most efficient way."
More Capacity, Multiple Products
Nijst is leading VTTI through a growth phase that will propel the company's storage capacity to more than 8 million m3. In May of this year, the company opened the Phase II expansion of its Euro Tank Terminal (ETT) in Rotterdam. The expansion increased the facility's gasoil and fuel oil storage capacity from 286,000 to 356,000 m3. Yet another expansion, set to conclude in 2011, will add 465,000 m3 of capacity.
According to Nijst, the second- and third-phase expansions of ETT will transform the facility into a true multi-product terminal. "The recent terminal expansion has been geared towards the gasoil and fuel oil market, whereas the next development will also target the kerosene and naphtha markets," he explained.
"On completion we envisage a terminal that will have a capacity of over 1 million cubic meters, with plenty of jetty capacity," Nijst continued. "In addition we are really proud of a pipeline link that we are building from ETT to the port of Antwerp, again increasing the flexibility for our customers and providing access to a wider pipeline and distribution network."
VTTI aims to carve out a position in the terminal market that will allow the company to support the trading activities of Vitol Group and other similar trading companies. "We will always invest in primary trading locations and invest more in specific assets that cater to the needs of the traders and the trading community," said Nijst. "We see this as our niche/competitive advantage."
In addition to the ongoing growth in Rotterdam, VTTI is building a new terminal in Port Canaveral, Fla., and a liquefied petroleum gas (LPG) facility in Lagos, Nigeria. Also, VTTI is in the early stages of erecting a greenfield terminal in Tanjung Bin, Malaysia; the company is particularly intent on creating a major position in Southeast Asia.
Although VTTI is expanding on a grand scale to increase its share of the oil terminal and trading market, the company acknowledges that staying competitive in the context of the global contracting market is a challenge. "Although there appears to be a more realistic outlook in the current economic downturn, most engineering and contracting companies in this industry are still less able to revamp their organizations and become more cost-efficient in their operations," said Nijst.
Nijst is confident, however, that his company's approach -- expanding in a manner that pays close attention to cost and organizational efficiencies -- will pay dividends long-term. "Ten years from now I see VTTI as a company that is made up of people that have the inspiration to make a difference in this industry," he concluded. "For me it is less important whether or not we have either 15 or 20 terminals. More important is that our customers recognize us as a different kind of company, not only being safe, reliable, flexible and efficient, but also having 'terminals with more energy.' And for us, it is the great team of people that we have that create this energy -- but donít lose sight of our ambition to be a top-three player in the storage and terminal business."
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