Author: admin

Saudi Aramco Eyes Hydrogen Deals in Japan

Saudi Aramco eyes hydrogen deals in Japan.

The Sixth “Saudi-Japan Vision 2030” Ministerial Meeting was held in Tokyo under the auspices of the Saudi Ministry of Investment and the Japanese Ministry of Economy, Trade and Industry. On the Japanese side, Nishimura Yasutoshi, Minister of Economy, Trade and Industry, and Yamada Kenji, State Minister for Foreign Affairs, participated in the meeting, with Nishimura making the opening speech.

On the Saudi side, Khalid Al-Falih, Minister of Investment, gave an opening address, and was joined at the meeting by the Saudi ambassador to Japan, Naif Al Fahadi. The minister said that Saudi Arabia is “very keen on promoting and strengthening this strategic partnership with Japan as a reliable partner.”

Al-Falih said that the Saudi-Japan Vision 2030 meeting came just before Saudi Arabia’s Crown Prince Mohammed Bin Salman’s state visit to Japan from Nov. 19-21. The minister said that 89 of the initiatives from the vision are “being materialized, with some already completed.” He added that it was important to not only to ensure the quantity of these initiatives, but to also emphasize their quality.

Al-Falih said Saudi Arabia aims to be one of the world’s fifteen largest economies by the end of this decade.

Khalid Al-Falih, Minister of Investment said:

The Saudi economy is already expanding at 10.2 percent in the first three quarters of 2022.

Al-Falih

“That is the fastest growing rate among the G20 economies.”

“We now have over 40 industrial cities, already developed and many of them are hosting Japanese who are doing very well in the industrial sector,” he said. Al-Falih added that Japanese companies can invest in virtually all sectors of Saudi Arabia.

When it comes to space exploration, the Saudi minister said that the Kingdom has developed a new space strategy to join the “top ten space nations by 2030 and become a global space champion.”

“We will prioritize commercial returns from our space program, and bolster your competitiveness and increase our share of the space market and we would love to see the Japanese aerospace exploration agency JAXA participate in our space program,” he added.

Al-Falih told the audience at the Saudi-Japan Vision 2030 meeting that Saudi Arabia plans to significantly increase gas production capacity including producing and exporting LPG, which is key to the Japanese economy.

“We are investing here in Japan with Showa Shell initially, now with Idemitsu, But we will also invest in Saudi Arabia,” he said.

Blue and green hydrogen are also important for Saudi Arabia’s agenda, Al-Falih said. “Blue and green hydrogen are being invested in in Saudi Arabia at a scale nobody else is doing, and we started the discussion with our Japanese counterparts more than ten years ago.” Al-Falih said he signed an MOU when he was last in Japan and helped join forces with the Japanese led hydrogen council to signify and ARAMCO.

“In NEOM, the world’s largest hydrogen project is being built and ARAMCO is investing to produce 11 million ton of blue hydrogen that is being done in coordination and consultation with Japanese companies,” he explained.

Al-Falih congratulated Japan on its progress made for Expo 2025 Osaka, Kansai, adding that Saudi Arabia is actively working on hosting Expo 2030 in Riyadh. Nishimura, who is also chairman of the Japan-Saudi Parliamentary Friendship League, welcomed the Saudi delegation and emphasized the importance of the two countries’ relationship.

Nishimura Yasutoshi, Minister of Economy, said:

For Japan, which imports approximately 40 percent of its crude oil from Saudi Arabia, Saudi Arabia is the most important partner in terms of energy security.

“I would like to once again express my gratitude for the stable supply of crude oil over the long term. I also expect Saudi Arabia to take a leadership role in stabilizing the international crude oil market as the situation in Ukraine makes the global energy supply and demand uncertain.”

“In addition, the socio-economic reforms and mega-projects promoted by Saudi Arabia’s leadership have become even more important as new growth drivers for the Middle East and for realizing the global trend toward carbon neutrality.”

“Japan will contribute to the economic and social reforms of Saudi Arabia through the Japan-Saudi Vision. Together with the people of Saudi Arabia, we will further accelerate and further expand our efforts.”

Nishimura explained that since the Fifth Ministerial Meeting two years ago, “steady progress” has been made. He went through some of the representative initiatives which included cooperation in the field of clean energy. “[Clean energy] is important for the oil-free reform that Saudi Arabia is aiming for.

Last month, JOGMEC and Saudi Aramco signed a comprehensive cooperation agreement in the field of hydrogen and ammonia. We will accelerate cooperation toward the realization of a sustainable society,” he said.

Nishimura added that demand for housing construction is “strong in Saudi Arabia.” “A Japanese building materials company has started a project to manufacture and supply houses in Saudi Arabia using a concrete 3D printer in cooperation with a Saudi conglomerate,” he said.

The Japanese minister said they are proceeding with a plan to establish an R&D center in Namie Town, Fukushima Prefecture, to accept and train around 100 Saudi engineers annually. He added that they will “contribute to the realization of a digital society with Japanese technology in specific fields such as construction.”

Another representative initiative includes cooperation in new fields that capture the social reforms of Saudi Arabia.

In the entertainment field, e-sports competitions between the two countries were held in both Japan and Saudi Arabia. Also, at the 2nd Saudi Anime Expo held in Riyadh last month, many Saudi and Japanese cosplayers dressed as Japanese anime characters such as ‘Dragon Ball’ and ‘Kimetsu no Yaiba’.

“It is a great pleasure that Japan’s content industry is contributing to economic and social reform, and the Ministry of Economy, Trade and Industry will continue to support this field,” he said. “Finally, I would like to express my respect for the leadership of everyone in attendance and the efforts of all the organizations involved in supporting the project, ‘Shukran Jazeelan‘ (thank you very much)” Nishimura concluded by thanking his guests in Arabic.

The event was concluded by Minister Nishimura’s closing remarks, whereupon the delegations moved to another room for signing of agreements and the exchange of gifts.

Highlights:

  • Saudi Arabia is “very keen on promoting and strengthening this strategic partnership with Japan as a reliable partner,” said Khalid Al-Falih, Minister of Investment
  • He congratulated Japan on its progress made for Expo 2025 Osaka, Kansai, adding that Saudi Arabia is actively working on hosting Expo 2030 in Riyadh

Sixth ‘Saudi-Japan Vision 2030’ Ministerial Meeting takes place in Tokyo, Tokyo, November 8, 2022.

By Hydrogen Central, November 18, 2022

Here’s Why The U.S. Has Lost Oil Refining Capacity

One of the under-reported factors behind the ongoing diesel shortage is the loss of U.S. refining capacity since the start of the Covid-19 pandemic. Today I will discuss the factors that led to this loss.

According to the Energy Information Administration (EIA), at the beginning of the pandemic U.S. refiners had 19.0 million barrels per day (BPD) of operable refining capacity (Source). This was the highest number ever reported by the EIA.

By December 2021, that number had fallen to 17.9 million BPD — a loss of 1.1 million BPD of capacity in less than two years.

Here is the thing many do not understand about refining. It is a boom and bust business, and these refiners do not have crystal balls. It is widely reported when they make huge profits, but they also regularly endure huge losses.

U.S. energy policy has been clear about the intent to phase out fossil fuels. If you are a refiner forecasting billions in losses — and you require massive investments in order to keep your refinery operating safely and in compliance with the laws — you may very well simply make the decision to close down.

There are two excellent sources of information detailing which refineries closed, and why they closed. The first is the EIA.

During the summer, the EIA reported U.S. refinery capacity decreased during 2021 for second consecutive year, in which they discussed one of the major closures in 2021. They also showed this excellent graphic of how refinery capacity has evolved in recent years:

But I stumbled upon a more detailed look recently. In a Twitter thread, Laura Sanicola, an oil and energy reporter at Reuters, highlighted the individual refinery closures from the start of the pandemic through June 2022.

She reports on nine refinery closures, but the theme is consistent. Most of the refineries were closed due to demand loss as a result of the Covid-19 pandemic.

But, aren’t these companies earning billions of dollars? Isn’t that an argument for keeping these refineries open? There are two points to make on that argument.

First, it is possible to make billions of dollars as a company, but to lose money consistently in an individual refinery. We have seen this happen a lot with East Coast refiners that didn’t have access to cheaper oil from the U.S. shale boom. They had to continue to procure crude oil on the international markets, and that put them at a competitive disadvantage.

Second, current refiner profits are a snapshot in time. Today, U.S. demand for petroleum has largely recovered. In fact, distillate demand has recovered to pre-pandemic levels.

But, these companies are projecting the future. They are looking at long-term demand forecasts for petroleum products. Those projections indicate declining fuel demand over time. Thus, they do not want to invest billions of dollars that could take a decade or more to pay off.

Imagine that you are running a chain of stores. Overall, your company is highly profitable, but you have stores that are consistently unprofitable. Further, those stores are outdated, the outlook for demand in these areas is weak, and it will cost a lot of money to upgrade them. You would probably close those locations.

That, in a nutshell, is why we have lost refining capacity in the U.S. It’s going to take some changes in our energy policy to address this.

Forbes by Robert Rapier, November 18, 2022

Saudi Aramco To Pump $7 bln Into Biggest Petchem Investment In South Korea

Saudi Aramco (2222.SE) plans a $7-billion investment at a South Korean affiliate’s factory in the port city of Ulsan to turn out more high-value petrochemical products, the company said on Thursday.

The project, named Shaheen, is the Saudi firm’s biggest investment in the Asian nation to develop one of the world’s largest refinery-integrated petrochemical steam crackers, Aramco said in a statement.

Saudi Aramco owns more than 63% of South Korean refiner S-Oil Corp (010950.KS).

Construction of the new plant will begin in 2023 and be completed by 2026. It will have production capacity of up to 3.2 million tonnes a year, along with a facility to produce high-value polymers, Aramco said.

The steam cracker is expected to process by-products from crude processing, including naphtha and off-gas, to make ethylene, and is also expected to produce propylene, butadiene and other basic chemicals.

On completion of the project, S-Oil’s chemical yield, by volume, could almost double to 25%, Aramco said.

Global petrochemical demand growth is “anticipated to accelerate, driven in part by rising consumption from Asia’s emerging economies,” Chief Executive Amin Nasser said in the statement.

The project is well positioned to meet rising demand from Asia’s industries, he added.

The news came in conjunction with Saudi Arabian Crown Prince Mohammed bin Salman’s visit to South Korea on Thursday.

Reuters by Joyce Lee, November 18, 2022

India in Talks to Export Green Hydrogen

India is in initial talks with the governments of other countries to export green hydrogen made in the South Asian nation, an official of its foreign ministry said on Thursday, even as challenges remain in adapting the clean-burning fuel.

Green hydrogen, derived from renewable energy sources such as wind and solar, has the best environmental credentials since there are few or no carbon dioxide emissions.

It has been touted as key to decarbonising industries that rely on coal, gas and oil, but the costs of production have traditionally been much higher than other forms of hydrogen, while there are also uncertainties about the demand worldwide.

“We are in a position to make green hydrogen as our main source of energy in the future,” Prabhat Kumar, an additional secretary of the external affairs ministry, said at an industry event in New Delhi.

Kumar said India has plenty of sunshine which makes it viable for the country to produce green hydrogen, but did not specify a time frame for its export.

By Reuters, November 17, 2022

Gasoline Drives up ARA Oil Product Stocks (Week 46 – 2022)

A jump in independently-held gasoline inventories at the Amsterdam-Rotterdam-Antwerp (ARA) hub drove overall oil product stocks up in the week to 16 November.

Gasoline inventories increased, drawing support from oversupply and lacklustre US demand with the economics firmly closed for transatlantic shipments.

Cargoes departed ARA for west Africa, the Mediterranean region and Puerto Rico and arrived from France, Italy and Latvia.

The US EIA said there was a rise in gasoline stocks in the week to 11 November, and implied US demand faltered.

Gasoil stocks at ARA dropped in the week. Inventories are probably being cut as the French market looks to replenish following several weeks of industrial action at five out of six of the country’s refineries.

Cargoes bound for the Mediterranean region, the UK and the US departed ARA in the week.

Inventories of naphtha rose for a third consecutive week to the highest since 21 September. Stocks increased. Naphtha continues to face pressure from weak demand from the petrochemical sector, and weakening blending demand into the gasoline pool.

No cargoes carrying naphtha departed the ARA hub, while shipments arrived from Algeria, Italy, Norway and Russia.

Fuel oil stocks declined in the week to 16 November. Fuel oil demand is strong from the bunkering sector, with cargoes leaving ARA for west Africa and the Mediterranean region.

Reporter:Georgina McCartney

Pertamina, ExxonMobil Sign HOA to Develop Carbon Capture Storage Technology

Pertamina oil and gas fields have 1 bil mt CO2 storage capacity to prepare commercial model for CCS hub in upstream assets.

Indonesia’s state-owned PT Pertamina and ExxonMobil signed a heads of agreement to develop carbon capture and storage, or CCS, technology in line with a joint study that found up to 1 billion mt of CO2 storage capacity in the national oil company’s oil and gas fields, according to a joint statement Nov. 12.

“This large CO2 capacity can permanently store CO2 emissions throughout Indonesia at the current average, up to the next 16 years,” the statement said.

The HOA was signed by Pertamina President and Director Nicke Widyawati and ExxonMobil Low Carbon Solutions Vice President and Indonesia President Irtiza Sayyed in Bali over the weekend.

The signing of the HOA follows a joint study agreement signed in the US May 13. By strengthening the collaboration, Pertamina and ExxonMobil will finalize and prepare a commercial model design for the development of a regional CCS hub in the working area of PT Pertamina Hulu Energi, which is tasked with managing Pertamina’s upstream oil and gas assets in the Kalimantan region.

Widyawati said the cooperation to develop CCS technology and decarbonization was in line with Pertamina’s efforts to support the government’s program to accelerate energy transition and reduce emissions by 29% by 2030.

She said the fastest way to transition to new, renewable energy, and decarbonization in Indonesia is through partnerships that will help meet three global challenges at once — technology, finance, and human capital.

The application of CCS technology, she said, is expected to play an important role in reducing greenhouse gases in the atmosphere that contribute to global warming, climate change, ocean acidification, and loss of biodiversity.

“The development of CCS technology has a double impact, besides reducing emissions, while increasing national oil and gas production,” Widyawati said.

Pertamina is working on six CCS/CCUS projects by selecting fields that can be used as CO2 injection sites. The six potential lands are in various offshore areas of Sumatra, Java, Kalimantan, and Sulawesi.

“The development of CCS technology is in line with Pertamina’s commitment to implementing environmental, social and governance in all the company’s business lines to encourage business sustainability in the future,” Widyawati said.

Energy transition

Pertamina’s subsidiary Pertamina Power Indonesia and subsidiaries of Singapore’s Keppel and oil major Chevron Nov. 11 signed a joint agreement to explore green hydrogen and green ammonia development projects, using renewable energy from the island of Sumatra.

The joint study agreement intends to explore the feasibility of developing a green hydrogen facility, with a production capacity of at least 40,000 mt per year supported by at least 250-400 MW of geothermal energy at an early stage. The hydrogen production facility will have the potential to scale up to 80,000 mt and 160,000 mt annually, depending on the availability of geothermal energy and market demand.

Indonesia, which has the world’s fourth largest population, plans to achieve net zero emissions by 2060 and hydrogen and ammonia have been identified as low-carbon fuels as part of this plan. Ammonia can also be used to transport hydrogen and has the potential to replace bunker fuel as a low-carbon solution in the global maritime industry.

Indonesia has about 40% of the world’s geothermal resource potential and the opportunity to utilize this energy source to produce green ammonia or green hydrogen, according to a report from the International Energy Agency.

“The development of green hydrogen and green ammonia has an important role in Indonesia’s net-zero emissions roadmap. With this potential, we believe that Indonesia will also play a key role in green hydrogen production in Asia,” Pertamina NRE CEO Dannif Danusaputro said.

Pertamina Power & New Renewable Energy Subholding, or Pertamina NRE, has been mandated to oversee Pertamina’s energy transition, and develop decarbonization solutions, such as electric vehicles ecosystem, green hydrogen, and energy efficiency to achieve Pertamina group’s emissions reduction target.

By S&P Gobal, November 17, 2022

Oil Prices Dip On China Demand Worries

Oil prices slipped on Tuesday as recession concerns and worsening COVID-19 outbreaks in top crude importer China heightened fears of lower fuel demand.

Brent crude was down 93 cents, or 1%, at $96.99 a barrel by 1129 GMT, while U.S. West Texas Intermediate (WTI) crude was $1.16, or 1.3%, lower at $90.63.

Both benchmarks hit their highest since August on Monday amid reports that leaders in China were weighing an exit from the country’s strict COVID-19 restrictions.

However, new coronavirus cases have surged in Guangzhou and other Chinese cities, dimming the outlook for fewer restrictions.

“It is worth recalling that China’s zero tolerance towards flare-ups of COVID infections was the main reason behind last month’s sizeable downward revision in the world’s oil demand (by the International Energy Agency),” said PVM analyst Tamas Varga.

Meanwhile, the ICE exchange, home to the Brent benchmark, has increased the initial margin rates for front-month Brent crude futures by 4.92%, making maintaining a futures position more expensive from the close of business on Tuesday.

Market participants will also be eyeing U.S. CPI data on Friday, given high inflation and rising interest rates highlight the possibility of a global economic recession.

U.S. crude oil stocks were expected to have risen by about 1.1 million barrels last week, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute due at 2130 GMT on Tuesday and the Energy Information Administration at 1530 GMT on Wednesday.

On the supply side, bullish signals remain in the near term.

The European Union ban on Russian oil, imposed in retaliation for Russia’s invasion of Ukraine, is set to start on Dec. 5 and will be followed by a halt on oil product imports in February. Moscow calls its actions in Ukraine “a special operation”.

By Reuters, November 16, 2022

Market Intelligence in its 5 Stages of Maturity

For owners of terminals Market Intelligence (MI) can be the key factor to unlock pathways to cost reductions, smarter investments and growth. If the management team succeeds in predominantly making well-informed choices based on easily digestible structured information the whole outlook for the company could change. With strong MI it is also possible to zoom in on currently underperforming terminals where market adjustment and optimization will lead to better performance and profitability.

In the world of Market Intelligence there is a best practice developed by the Global Intelligence Alliance or GIA (currently active under the new company name M-Brain). It’s widely known as the GIA Framework for developing World Class Market Intelligence. The company published it in 2009 in a whitepaper titled World Class Market Intelligence – From Firefighters to Futurists.

Basically, it thoroughly explains a matrix with on the vertical axis 6 Key Success Factors (KSF) and on the horizontal axis 5 Stages of Market Maturity.

The 5 Stages of Market Intelligence Maturity

GIA gave the 5 stages frivolous yet insightful names like firefighters for the poorest, informal, last minute, ad hoc intelligence gathering and futurists for the world class MI of truly visionary companies.

  1. Informal Market Intelligence – “Firefighters”
  2. Basic Market Intelligence – “Beginners”
  3. Intermediate Market Intelligence – “Coordinators”
  4. Advanced Market Intelligence – “Directors”
  5. Word Class Market Intelligence – “Futurists”

Let’s look at each stage individually:

Informal Market Intelligence:

Any tank terminal operation, and any company for that matter, handles various sources and streams of information of course. At this stage of maturity companies will probably not even use the label “market intelligence” for their information gathering and sharing activities. There is no predefined scope to these activities that will typically be done ad hoc when needed with little coordination and with little or no tools and resources.

Basic Market Intelligence:

Companies that have at least heard about Market Intelligence and its benefits may also be on a path with some “basic” first steps toward an actual MI program. Such a tank terminal operation might already engage an external service provider for some of their information needs. The activities are still mostly done ad hoc, like while preparing for a merger or an acquisition. There is however already some structure to how the intelligence is gathered, stored and shared.

Intermediate Market Intelligence:

At the intermediate stage a company is well aware of the benefits of market intelligence, has maybe seen some good case studies and is motivated to do better themselves. It is likely such a company will allocate some budget for services of external providers and a first set of software tools. At this stage the scope and the level of analysis of the MI remains rather limited, partly because the intelligence operation is only loosely integrated to business processes, if at all.

Advanced Market Intelligence:

Once a company has really internalized the need for the most insightful intelligence for its business processes, once it has assigned a network of employees who can spend a certain percentage of their time on MI and once it has established an external network of information sources and vendors such a company reaches the advanced stage of MI. A tank terminal operation in this stage will have defined concrete deliverables of the MI process that actually match the needs articulated by decision-makers. True and obvious benefits ensue, further deepening the commitment of the management to treat MI as a vital part of the organization.

World-Class Market Intelligence:

Beyond the advanced stage and benefits clearly translate into growth and profitability there is a route to move on to the “World-Class” level, where Market Intelligence will be established as an integral part of all corporate business processes and there is a deep focus on future topics and issues. The market leader in the tank terminal business has gone this route starting the implementation already back in 2007. The case study in the Handbook of Market Intelligence (describing the status in 2009) demonstrates that there is always room for improvement. But exactly that is where the greatness lies: once a true MI culture permeates an organization, remaining humble and continuing to improve becomes a second nature.

Let’s now look at the 6 Key Success Factors of Market Intelligence one by one.

The 6 Key Success Factors of Market Intelligence

Scope

In order to not drown in an ocean of information, it is important to limit the MI by clearly defining the scope of the intelligence. In principle a deep and wide scope is desirable, but in the beginning, you can juggle only so many balls. Scope then limits the specific intelligence topics that will be researched at all.

Process

So, with the defined scope, that may become ever wider and deeper, a tank terminal operation knows what information to dig for and who to deliver it to. The process aspect of the information flow looks at how information is gathered and delivered.

Deliverables

Market intelligence projects need to determine at the outset how the output of the information gathered will be delivered and shared. Think of deliverables like internal newsletters, documents, spreadsheets and presentations. They can also include workshops and seminars.

Tools

A corporate intranet is typically the first big company-wide tool that companies implement, and that allows for a basic level of MI in their organization. With that a tank terminal operation has at least moved away from the informal spaghetti of email threads. Beyond the basic level, there are more advanced generic or custom-built MI software tools that thoroughly and specifically embed the MI in the organization.

Organization

Putting someone at the helm of the MI operation is the logical starting point of allocating people and their time to the intelligence activity. Without that the MI naturally stays informal and ad hoc. With that first person appointed the MI can start to grow and internal and external networks can be built.

Culture

At the low end of MI maturity, a tank terminal operator has no “Intelligence culture”. There may be some intelligence gathering and sharing activity, but if the management or the employees don’t really cherish it, it will probably not go very far. Towards an advanced maturity level more and more employees are engaged via courses and training and see the benefits of strong MI. What may still be lacking then is the support of senior management or even the CEO. The high mark is when the CEO becomes the biggest internal promoter of MI.

The important thing to remember when trying to reach the next MI level is to assess what you need and what you want to accomplish. You have to assess your current level of Market Intelligence Maturity first and set a timeframe of progress towards the advanced stage. It is probably worthwhile to focus on some quick fixes and wins first if one or more of the 6 KSF’s are dramatically worse than others. Yet it’s also valuable to further strengthen the ones that are already at a high level. 

World class MI might be out of reach for many smaller tank terminal operations, yet it is still a good idea to know about it. At the world class maturity level, a company has a broad, deep focus on future topics and a systematic process that continuously produces insights into the company’s operating environment. That company will also have a dedicated Chief Data Officer who’s in charge of structuring all intelligence activities across the company. This manager would typically be responsible for the annual “Intelligence plan” that is updated year by year with vision and metrics on dimensions such as sales, business development, operations and finance and management.

Advanced or world class MI for tank terminal operators specifically entails:

  • A profound knowledge of the market of liquid bulk shipping and storage
  • An in-depth knowledge of the current and future competitive environment
  • Essential knowledge of regional and global trade flows and trends 

In an ideal situation MI will not remain an isolated function in the company but may rather inspire the whole company to become a learning organization open to and embracing new trends and ideas. In the end management can make better decisions at a quicker pace which increases revenue and reduces costs. Valuable new customers will be attracted and facilities will be built that are future proof.

This blog post is a shortened version of a chapter in the whitepaper “Market Intelligence for tank terminal operators” that can be downloaded via the banner below.

Whitepaper: Market Intelligence for Tank Terminal Operators Explained

Optimizing sales and growth with Market Intelligence

What is the key factor, the bottom-line that determines the success of a terminal operator? Of course it is the percentage of tanks that are rented out over a given period of time and the fee or rate that these tanks generate. The people realizing this bottom-line day in day out are your sales and account managers. What can Market Intelligence do to help them reach their targets? And what can Market Intelligence do to secure future growth?

Market Intelligence helps establish three pillars of your success, by:

1: Continuously investigating market trends and price movements

2: Investigating what mix of customer sizes and their desires and what mix of liquid bulk products will make the terminal operation run most smoothly over time

3: Via competitive intelligence giving each sales and account manager the right information at his or her fingertips when entering price negotiations

The first pillar lays the groundwork for all strategic decision making. It will guide your commercial team to where growth and value can be found. The second means that a company will not let sales managers just blindly hunt for any customer. It will guide them towards the right deals that will strengthen the terminal’s position and competitiveness and at the same time will guard against having a portfolio of clients that does not match with logistical capabilities and constraints. For instance part of the terminal can be reserved for customers who need strategic storage, like governments. The staff responsible for Market Intelligence can make calculations and show exactly why it could be beneficial to reserve a given percentage of the terminal for such a customer who pays a somewhat lower price but signs a long term contract and does not require a lot of throughput capacity.

Price negotiations

The third pillar with which Market Intelligence helps sales and account management is literally hands-on as a staff department giving the sales or account manager all key numbers, prices, competitor intelligence and other metrics needed to negotiate good contracts. A sales manager can only make good deals when they have superior market and customer information at their fingertips. A customer will notice when their negotiating partner is well informed and be more likely to accept an offer.

Logistics

When making such optimal sales strategy plans, a big consideration is the effective use of terminal installations like jetty’s and pipelines. It makes no sense to do a lot of sales for a certain product in certain volumes only then to note that logistically it’s impossible to service these customers without long and expensive waiting times. On the other hand with proper market intelligence it becomes possible to even plan investments in new installations when for instance it is known that a new customer, or a new product, will very likely grow strongly in the years to come.    

Avoid chaos

Market Intelligence can “design” an optimal mix of good (i.e. growing) customers where you have enough diversity to respond to short term demand fluctuations, but still create a stable business with a hub function for certain preferred liquid bulk products and a number of larger dedicated customers. In this way day to day chaos at the jetties, caused by a multitude of hyper-active customers, can be avoided. And the customer benefits too from this smart planning since they hate to pay demurrage. Market Intelligence is there to make sure that everything in the terminal operation happens in the smartest way possible with the largest economies of scale!

Counter-intuitive

Sometimes good market intelligence can help a business spot counter-intuitive opportunities. For instance when globally investments in oil facilities go down, at the terminal level the effect might be contrary. Decreasing funding may lead to the phasing out of local refineries which in turn increases global shipping of refined products. So less investment in fossil fuels can in certain cases lead to increased demand for tank capacity. Without good Market Intelligence it is practically impossible to instruct sales and account management to look into such changing opportunities.

Competitive edge

To conclude we can say that, starting from current awareness, through strategy and business development, it is crucial that Market Intelligence extends deeply into the sales and account management. Only then the benefits of all the labor in the prior stages can be reaped. Only in this way a terminal operator will get the competitive edge over the competition, that will lead to sustained excellence, growth and profitability.

Whitepaper: Market Intelligence for Tank Terminal Operators Explained

How to move from a strategy to business development using market intelligence?

Business development is what comes next in line from current awareness and strategic planning. It is basically the moment when a company says: “Let’s do it!” One would almost assume that all necessary research for this execution of the strategic plan has already been done and that now it’s just a matter pushing ahead come hell or high water. In reality Market Intelligence remains important in this phase too!

If we recap quickly we have seen that without market intelligence there can be no current awareness. Then we have seen that this current awareness can be expanded upon by applying further market intelligence to create well-founded scenarios and predictions. Only with those scenarios and predictions at hand strategic planning starts to make sense. In this blog post we will look at the next phase when the strategic plan needs to be decided upon and get executed.

Let’s look at an example. Currently, the terminal world experiences a shift towards sustainable fuel sources. Many terminal operators want to get clout in new fuels such as hydrogen (at minus 250 degrees Celsius), ammonia (transporting hydrogen chemically bound to nitrogen at temperatures and pressures comparable to LPG), and also SAF (sustainable aviation fuel). Lastly there is a growing demand for LNG due to the war in Ukraine and other geopolitical factors. Current awareness means to at least be aware of these trends and having current data at hand. Strategy means having a plan on how to capitalize on these trends under various scenarios. Business development then, is the stage where a desired position in these fuel supply chains is going to be built up.

In this new phase a good and constant intelligence flow remains critical for success. Market intelligence will now provide detailed knowledge and information about which concrete players would need what amounts of storage capacity. There can be absolutely no surprises regarding rules and regulations for these new fuels. Price movements need to be current at all times. These factors will then be taken into consideration when constructing of new tanks, jetties or pipelines. As in any construction project, these stages are feasibility study, design, licensing and permits and (preliminary) contract negotiations.

Investments in terminals are huge and therefore go hand in hand with long term contracts. Time spans of such contracts are usually between 5 and 15 years. So obviously most terminals and installations will not be built without a signed contract to cover a part of the lifespan of the asset. However, it is rarely the case that a client will be prepared to sign a deal for the whole lifespan of an asset. So there will always be a risk associated with such a project and market intelligence will enable you to estimate this risk and factor that into your decision. If the risk is acceptable you can go ahead, if too large then either you walk away from the deal or try to negotiate better terms. We can conclude that Market Intelligence continues to play a large role all the way into the  business development phase.

And as we will see in another blog post it remains important up until the final stage of the asset’s lifecycle: the operational phase. In this phase the objective is to get a good return on investment by attracting and retaining valuable customers that pay premium rates for your terminal. With excellent market intelligence for marketing, sales and account management you can achieve these results.