Category: Nieuws

The CEO of natural gas supplier Eesti Gaas, Margus Kaasik, says that while gas prices have started to fall, it is difficult for suppliers to retain market competitiveness without direct access to a Liquefied Natural Gas (LNG) terminal, such as that recently completed in Paldiski.

Appearing on ERR radio news show “Hommik” Tuesday, Kaasik said that while currently LNG from the US and Norway is reaching Estonia via the long-established floating LNG terminal in Klaipeda, Lithuania: “In October and November, weill bring two large shiploads of LNG; one large ship constitutes 1 TWh, while, to put it into context, Estonia’s current [annual] consumption is 3-4 TWh, or three or four such ships, meaning this way Estonia’s annual supply could be guaranteed.”

According to Kaasik, no decision has been made regarding the location of the floating terminal, a vessel specially fitted-out for the purpose and which could be located on either side of the Gulf of Finland, both because there are now the required facilities in both cases (in Paldiski, and in Inkoo, Finland) and because the Balticconnector pipeline links the two countries in any case, though: “At the moment, the signs are that it will go to Finland. This is my opinion, and there is no decision yet. It could also come here, but it is more likely that it will go to Finland.”

In any case, in the normal run of things, Kaasik said, this is immaterial whether the ship is located in Finland or Estonia, though we are not living in normal times. “We can always bear in mind that if we have a pipeline we have gas, and for the most part we do, but given the world we’re in today, that may not be the case indefinitely,” he said.

The uncertainty of the gas market through the summer led to market participants focusing mainly on selling gas domestically.

Kaasik said: “There were minimal sales in other countries. For Eesti Gaas it is the same. At present we are clearly feeling a greater responsibility for the Estonian consumer than for the customer in Finland, Latvia or Lithuania. We have almost never made supply offers elsewhere. The same is true elsewhere.”

“In other words, when the situation is good, the market works. But if problems arise, the market may not guarantee things, then it no longer matters who owns the gas, and so to speak, neither gas nor money have any ‘nationality’. Well, if trouble is at hand, that’s the case.”

At the Klaipeda terminal, the capacities were mainly taken on by Lithuanian and Polish companies, he said, despite attempts to do so on the part of Estonia.

“We also wanted to obtain long-term capacity from Klaipeda; six vessels were offered for 10 years, or 6TWh for six years. This would have been perfect, and we could also have signed longer-term contracts with suppliers. The option was made in such a way that Lithuanian companies were partly preferred, which is understandable. For the remainder, in terms of this, one parcel was given to [Lithuania’s] older brother, so to speak, the Poles, and the other to their Latvian neighbor, who has gas storage and gas-powered plants and who, unfortunately, was seen as being of a greater value than us,” Kaasik said.

In order to be competitive in an LNG-based gas market, access to an LNG terminal is required, he concluded.

He said: “In England, almost 30 energy companies have gone bankrupt because they simply haven’t been able to cope in today’s very difficult market today.”

“Our wish is that we will still get vessel at the beginning of the year, but the case can also be different. Of course, we still hope that we will get our share of this Finnish-Estonian terminal, but we will probably have to fight hard for it,” he said.

At the same time, the price of gas has started to fall, Kaasik noted. “The price rose steeply until the end of August, after that it actually started to fall. I would like to believe that the Russia’s ‘natural gas war’ will peter out, and the price will move towards normalcy. It is still relatively far from that, but the trend at the moment is quite okay,” he said.

By ERR News, October 11, 2022

LNG markets in 2023 may be tighter than this year as demand may rise in China, India and other parts of Asia, the head of the International Energy Agency (IEA) said on Thursday.

“We may well see that the LNG markets in 2023 will be rather tight, maybe tighter than this year,” said Fatih Birol in remarks at the LNG Producer-Consumer Conference in Japan.

Global gas prices have surged to record levels this year, as Russia’s gas supply cuts have placed enormous strain on the European and global market.

High wholesale gas prices in Europe has seen the bloc import record amounts of LNG cargoes, drawing in volumes from top importing region Asia.

Birol also added that Europe has received a substantial amount of LNG this year, with imports increasing “by a staggering 60%”.

“One of the reasons why Europe can draw so much LNG is that China … (saw) sluggish economic growth this year,” he said.

“If the Chinese economy recovers … it will be difficult for Europe to attract so much LNG.”

China’s imports of LNG are on track to post their first major decline this year, as high prices and weak manufacturing due to COVID-19 lockdowns crimp demand for the super-chilled fuel.

The country became the world’s top LNG buyer last year but surrendered the top spot back to Japan in the first four months of 2022.

Should Japan restart their nuclear power plants, it would free up about 10 billion cubic metres (bcm) of LNG and “help the global LNG market,” said Birol, without specifying a timeframe.

Birol had made similar remarks on Tuesday, saying that Japan’s restart of more nuclear power plants would help ease Europe’s energy supply fears during the winter as more LNG will become available to the global market.

By Reuters, October 4, 2022

The number of LNG carriers being used as floating storage globally has hit a record high as oil majors, commodity traders and other energy companies hold onto LNG cargoes and vessels ahead of peak winter season, according to shipping data and shipbrokers.

The accumulation of a large number of laden LNG carriers without a fixed destination is underpinned by several market fundamentals – the steep contango between November and January that could yield a profit, regions like Europe and North Asia entering early winter with strong inventories and the possibility of a surge in demand in the event of a spell of cold weather.

The Ukraine crisis has resulted in a tight LNG market, and along with some recent supply disruptions like the one at Freeport LNG in the US, LNG cargoes are likely to be heavily sought after in the coming weeks and months, both for energy security and to boost trading positions.

There were as many as 33 LNG carriers in floating storage in the week of Sept. 19, which eased towards the end of the month but rose again to around 31 LNG carriers at the start of October, according to data from S&P Global Commodity Insights.

This is higher than the last time LNG floating storage hit a record high, at almost 30 vessels in mid-2020, when a steep contango along the forward curve incentivized traders to float their ships and hold onto the cargoes ahead of early winter procurement.

In the winter of 2020-21 there were almost no LNG carriers in floating storage as demand had collapsed due to COVID-19 and maximum floating storage in the winter of 2021-22 was only in the mid-teens, S&P Global data showed.

The current contango, where prompt prices are lower than those further out on the curve prices, is steep.

In the first half of September, when Platts JKM — the northeast Asian LNG benchmark — was being assessed for October delivery, the market structure two months forward was still in a modest contango structure. But after the assessment moved into November delivery, the contango structure strengthened significantly, with the Nov-Jan contango as wide as $7/MMBtu, which strongly supported storage economics.

Vessel shortage

Energy companies and commodity traders have been accumulating LNG carriers for a storage play for several months. As early as mid-2022, market participants were indicating that 6-12 month charters for LNG carriers had become very popular, and by the third quarter spot LNG vessels were already hard to come by.

Strong demand for storage has also created a shortage of LNG vessels and contributed to the current surge in spot LNG freight rates, which have risen to around $300,000/day from under $50,000/day in a span of 45 days.

“Charterers still have a close eye on the contango into December and January, and hence interest on tonnage that can cover winter months remains strong, thereby elevating the forecast rates further,” shipping brokerage Fearnleys said in its latest weekly report.

The brokerage said that in the west shippers are focusing on demand for two-stroke LNG vessels, but that availability is almost non-existent, especially when market players are awaiting further updates on the outage at Freeport LNG and do not wish to reveal their market length.

“It is a very tight market. There are only some steam turbine LNG vessels available but they are not the ideal candidate for floating storage as such ships will have much more boil-off,” an LNG ship broker said. Boil-off refers to the LNG that is lost due to vaporization during storage.

The broker said there are no vessels available with ship owners and charterers have to rely on sublets, if any are available, and the freight rate is really up to the company that is controlling shipping assets.

“In the past seven to 10 days, due to scarcity of two-stroke vessels in the market, even the steam turbine ships have been considered by traders who really want to float the cargo,” another broker said, adding that with the market in contango, traders no longer care about the cost.

By Hellenic Shipping News, October 7, 2022

During the past Iranian calendar week (ended on Friday), 1,961,849 tons of commodities worth $394 million were traded at Iran Mercantile Exchange (IME).

As reported by the IME’s Public Relations and International Affairs Department, the exchange traded on its metals and minerals trading floor 1.627 million tons of commodities valued at almost $223 million.

On this floor the IME sold 924,013 tons of cement, 293,000 tons of iron ore, 256,070 tons of steel, 152,000 tons of sponge iron, 355 tons of zinc, 5,575 tons of aluminum, 1,200 tons of copper, 200 tons of molybdenum concentrate, 7 kg of gold bars and 143 automobiles.

Furthermore, the IME witnessed on both domestic and export rings of its oil and petrochemical trading floor 328,480 tons of commodities worth more than $167 million.

Commodities traded on this floor included 83,893 tons of polymeric products, 103,000 tons of vacuum bottom, 34,000 tons of lube cut, 27,160 tons of chemicals, 36,000 tons of sulfur, 3,135 tons of base oil, 540 tons of insulation and 71,802 tons of bitumen.

The IME also traded within the same week 5,756 tons of commodities on its side market.

As previously reported, 9,857,062 tons of commodities worth more than $2.4 billion were traded at Iran Mercantile Exchange during the past Iranian calendar month (ended on September 22).

As reported, the exchange saw on both domestic and export pits of its oil and petrochemical trading floor, trade of 1.616 million tons of commodities valued at more than $882 million.

The IME’s customers purchased on this floor 428,010 tons of vacuum bottom, 437,720 tons of bitumen, 424,602 tons of polymeric products, 142,900 tons of lube cut, 138,754 tons of chemicals, 25,900 tons of sulfur, 18,692 tons of oil and 1,980 tons of insulation.

Furthermore, the exchange saw trade of more than 8.187 million tons of commodities worth more than $1.5 billion on its metals and minerals trading floor.

Items traded on this floor included 4,362,000 tons of cement, 1,727,000 tons of steel, 1,541,000 tons of iron ore, 458,500 tons of sponge iron, 36,000 tons of aluminum, 74,400 tons of zinc, 24,980 tons of copper, 790 tons of molybdenum concentrate, 200 tons of coke, 72 tons of precious metals concentrate and 92 kg of gold bars.

Last was the IME’s side market on which the exchange traded 52,986 tons commodities.

The value of trades at Iran Mercantile Exchange rose 102 percent, and the volume of trades at the exchange increased 128 percent in the past Iranian calendar year 1400 (ended on March 20), which was the highest level of growth in the history of the exchange since its establishment.

Statistical data show that in the past year, in addition to new records in the volume and value of trades of different products, 10 major records in total value and physical market trades were registered. In a way that besides the total value of trades, the volume and value of physical market trades, the volume, and value of industrial products and petrochemicals trades, the value of oil products trades and the volume and value of side market trades all hit records.

IME is one of the four major stock markets of Iran, the other three markets are Tehran Stock Exchange (TSE), Iran’s over-the-counter (OTC) market known also as Iran Fara Bourse (IFB), and Iran Energy Exchange (IRENEX).

By Tehran Times, October 6, 2022

U.S. refiners are expected to buy more Canadian oil after the Biden administration ends releases from the Strategic Petroleum Reserve (SPR) this fall, traders said, adding this should boost the price of Canadian barrels at a time of tight global supply.

The coming end of SPR releases could shift market dynamics again in a year of high volatility following Russia’s invasion of Ukraine in February. In March the White House announced it would release 180 million barrels from the U.S. strategic reserve to help quell high prices.

The releases have weighed on the price of Western Canada Select (WCS), the benchmark Canadian heavy grade. That oil, because it has similar qualities to the sour crude that dominates U.S. reserves, has traded at around $20 a barrel below U.S. West Texas Intermediate (WTI) crude for much of the summer. In 2021 the average WCS discount was $12.78 a barrel, according to the Alberta Energy Regulator.

The WCS discount to WTI is expected to narrow as the SPR supply dwindles, market sources said.

“Once that overhang goes through, and it may not be in Q4 or Q1 but in Q2 and beyond, we should see a much stronger differential than where we are right now,” one trader said. He added that he expected WCS traded in Alberta to be around $14 or $15 a barrel under WTI next year, compared with about $21 now.

However, increased medium sour crude production from OPEC countries such as Saudi Arabia, as well as discounted Russian Urals, could keep that differential wider, according to RBN Energy.

Canadian crude exports from the U.S. Gulf have dropped in the last two months, falling to around 130,000 barrels per day (bpd) in July and August, below last year’s pace of 200,000 bpd, said Matt Smith, lead oil analyst for the Americas at Kpler. Foreign buyers have turned to discounted Russian barrels, tempering Canadian crude exports.

“It’s a bit of a game of musical chairs,” Smith said. “When the SPR releases finish, these refiners will look to lean harder again on Canadian barrels or seaborne imports.”

Some market participants worry that limited pipeline capacity from Canada to the United States could cause bottlenecks. This could cause a glut in the Alberta hub, which could in turn drive down prices there.

Canada hit record production of 5.5 million barrels a day of oil in 2021, according to the U.S. Energy Information Administration, and is forecast to reach 5.7 million bpd this year.

Enbridge Inc (ENB.TO) is once again rationing pipeline capacity, in a practice known as apportionment, on its Mainline system as Canadian output has risen. That system ships the bulk of Canadian crude exports to the United States.

Apportionment fell steeply last year when the Line 3 pipeline expansion opened and stopped entirely from March until July, but Enbridge has since started rationing capacity on its Mainline again. Crude deliveries into the Kerrobert, Saskatchewan, hub were apportioned by 2% in August and 6% in September, Enbridge said.

Reuters by Stephanie Kelly, October 7, 2022

The U.S. oil industry is imploring the Biden administration to stop considering limits on exports of gasoline, diesel and other refined petroleum products as a way to increase regional fuel inventories and bring down pump prices.

Bloomberg reported Tuesday that White House officials have asked the Department of Energy to analyze the possible impacts of an export ban.

Reports say U.S. Energy Secretary Jennifer Granholm and other White House officials last Friday repeated an earlier warning to refining companies urging them to focus more on building domestic inventories of gasoline and diesel and less on exports, or the administration could consider “emergency measures.”

Last week’s discussions “raise significant concerns that the administration might pursue a ban or limits on refined petroleum products,” which would disrupt energy markets, discourage investment in the oil sector, cut off European allies in a time of need, boost Russia’s strength as an energy exporter, and raise fuel prices domestically, said a joint letter by the American Petroleum Institute and the American Fuel and Petrochemical Manufactures.

The letter also noted limits on pipeline capacity and U.S.-flagged tankers capable of carrying gasoline and diesel from the Gulf Coast to the northeastern U.S. mean the area depends on imported fuels, whose prices could rise with fewer U.S. fuels on the world market.

Seeking Alpha by Carl Surran, October 7, 2022

Saudi Arabia’s average oil production increased since the beginning of 2022 until the end of August by 20 percent, a government document seen by Saudi Gazette showed.

The Kingdom’s production reached around 10.5 million barrels per day, higher by 1.8 million barrels per day compared to the same period last year.

The increase is due to the efforts by the OPEC+ agreement to support market stability and the performance efficiency for the benefit of the participants in the market and the petroleum industry.

Saudi Arabia expects the real GDP growth to reach 8 percent in 2022, driven by real GDP growth in oil activities and the sustained levels of growth in the non-oil activities, which is expected to record growth of 5.9 percent in 2022.

According to the OPEC monthly report on oil markets in August of 2022, global demand for oil is expected to register a growth of 3.1 million barrels per day compared to last year, to reach 100.03 million barrels per day.

Global demand for oil in 2023 is expected to grow by around 2.7 million barrels per day, to reach 102.72 million barrels per day.

It is worth noting that the share of the non-OECD countries constitutes the largest percentage of the growth in 2023, which is around 2.1 million barrels per day.

The report attributes this increase to the economic recovery in these countries and the increase in demand for fuel in the transport, industry, and petrochemicals sectors.

The average price of Brent crude futures increased, since the beginning of 2022 until the end of August, by 55 percent to record around $104.04 per barrel, compared to $67.06 per barrel during the same period last year.

The average prices of Brent crude futures have recorded their highest levels since 2008, with the closing price reaching $127.98 per barrel on March.8, 2022.

Despite uncertainty in the global markets during this year in the midst of the geopolitical events, the severe economic concerns and the tightening of the monetary policies to curb inflation around the world, the oil market has been characterized with stability compared to other energy markets such as natural gas, coal, and electricity.

The OPEC+ agreement contributed to supporting stability of the oil market in particular, and balancing supply with the gradual recovery in global demand for oil after the Coronavirus pandemic has faded.

ZAWYA BY Saudi Gazette, October 4, 2022

The gold Global Tank Storage Award for Environmental Performance is awarded ‘to the product or technology that serves to protect the environment and/or reduce emissions at the terminal.’ In 2022, this award went to the GST membrane full containment system dedicated to onshore cryogenic storage developed by Gaztransport & Technigaz (GTT).

‘It is a great honour for GTT and GST membrane full containment technology to be recognised and accepted by prestigious judges from the likes of Shell, BP, Vopak and Ineos in the LNG industry. Winning the gold also encourages GTT to continue optimisation of our technology offering industry a more environmentally friendly, competitive and attractive solution in terms of cryogenic storage tanks,’ says GTT’s business development manager Edward Chen.

WHAT IS GST?

GTT developed GST technology for onshore cryogenic storage. The GST membrane full containment system consists of a corrugated stainless steel membrane (304L) with a thickness of 1.2 mm, which serves as the primary membrane. The double network of corrugation absorbs the thermal contractions in both directions from the low temperature LNG, making it resistant to thermal loads. This primary membrane is made from prefabricated membrane sheets, which are welded onto the insulating panels and lap-welded over each other. The insulating panels can be tailored to a customer’s needs for boil-off rates, which is typically 0.05% per day.

The insulation panels are load bearing and can transfer internal loads to the outer concrete container, which provides the structural resistance to internal and external loads. On its inner side, the concrete container has a moisture barrier to prevent moisture from entering the tank. The GST system also includes thermal corner protection, as required by industrial standards, consisting of a composite material bonded on and in between the insulation panels to prevent liquid getting into the insulation (membrane failure).

GST tanks are designed to be liquid- and gas-tight in the case of a leak, and have continuous methane detection to monitor even the smallest of leakages from the primary barrier into the insulation space. This ensures high reliability and safe operation in service.

‘Onshore LNG tanks are being planned with increasing storage capacity to benefit storage demand and investment cost while GST membrane technology can be safely applied with no theoretical restrictions on the volume and is cost effective,’ Chen says.

THE ADVANTAGES OF MEMBRANES

As far as safety goes, both 9% nickel steel full containment tanks and membrane full containment tanks are considered equal in industry, forming the gold standard. Both contain both liquid and vapour under ordinary operating conditions. However, Chen explains that GST membrane technology specifically has a number of other benefits over 9% nickel steel tanks.

The design is flexible as it is based on standard modular components, so can be adapted for every structure without any major changes in design. The membrane represents an inherently safe system to prevent LNG leakage. It is not highly stressed, unlike the inner tanks of nickel steel tanks, so a failure of the membrane will result only in a slow leakage of LNG into the insulation space, which will be detected in the nitrogen purge stream.

The robust technology is suitable for seismic areas, as the forces created by seismic activity are transferred to the outer concrete shell, preventing sliding. The thin wall of the inner tank of a nickel steel tank is prone to uplift, increasing compressive buckling stresses. The concrete outer tank of the GST system is also more resistant to tsunami waves.

Construction of GST membrane tanks is also simpler, with must less specialised labour required on site, due to the use of prefabricated components. These components need to be placed onsite and only the stainless steel liner must be welded. Much of the welding has been automated. Welding thick nickel steel plates onsite, on the other hand, requires a specialist welding qualification.

‘Offsite manufacture of insulation panels and membrane fabrication can significantly reduce on-site manhours, resulting in higher productivities, higher quality, and reduced labour rates, leading to an overall reduction in unit costs. The simplified modular technology, the industrial prefabrication of the containment elements, and the easiness of the erection make the GST membrane system cost-competitive and schedule effective, compared to 9% nickel full containment,’ says Chen.

He adds: ‘Membrane technology also offers operators the possibility to decommission, open and inspect tank inside with no risk if needed, due to unlimited thermal cycle performance.’

STANDING OUT

Chen believes that the Awards judges noted the lower environmental impact of a GST tank compared to a conventional 9% nickel steel full containment LNG tank. GTT uses a unit defined by the European Commission’s Joint Research Centre (JRC) know as the ‘Average World Citizen Equivalent Unit’. This unit takes into account various aspects including carbon emissions, fossil resources used, particulate matter emissions, water used, and mineral and metal resource depletion. A 220,000 m3 GST LNG onshore tank scores 2029 Average World Citizen Equivalent Units. The same tank in 9% nickel steel scores 2636 Average World Citizen Equivalent Units, 23% higher.

Overall, this makes GST a more sustainable LNG land storage system than other systems available.

Not only that, but the technology has recently been chosen for a number of major projects, including eight 220,000 m3 above-ground LNG tanks for Beijing Gas Tianjin South Port LNG Terminal in China, three 229,000 m3 tanks at Novatek Arctic LNG-2 GBS in Russia, and one 29,000 m3 above-ground LNG tank for Huagang Gas Hejian Peak-shaving Station in China.

‘As the state-of-art membrane technology has been accepted by most oil and gas majors and large utility companies, it is likely to reshape the cryogenic tank market – volume and technology wise – thereby driving further innovation and optimisation, which can lead to reductions in unit costs and schedules for LNG storage tanks and also to lower carbon footprint,’ says Chen.

BUILDING PROJECTS AND DEVELOPMENT

GST technology was derived from GTT’s Mark III system for LNG carriers and GTT built its first onshore membrane-based tanks for ethylene in the 1970s in France. The tanks are still operating commercially. The company developed membrane technology for LNG in the 1980s, when it built two 120,000 m³ onshore membrane tanks for Montoir (France) LNG Receiving Terminal. These have been in commercial operation for more than 40 years and are expected to be in service until 2035.

GTT developed the GST system in 2007, to comply with the EN 14620 standard, which was updated in 2006 to include the need for a thermal protection system. Currently. 37 GTT-built membrane tanks are in operation, mainly in France, Japan, South Korea and China.

The technology is obviously proven and well-used and 20 more GST tanks are currently under construction, in larger sizes than many of the current tanks.

One of the biggest construction projects is in China, where GTT is building tanks at Beijing Gas Tianjin South Port LNG Terminal.

‘GTT and Beijing Enterprises Group (the parent company of Beijing Gas Group) signed a collaboration memorandum of understanding (MoU) in December 2019 witnessed by two presidents; then officially launched a cooperation to build two large membrane onshore tanks (220,000 m3 per tank) for Beijing Gas Tianjin South Port LNG Terminal in 2020,’ says Chen. ‘Thereafter in March 2021, GTT and Beijing Gas Group strengthened collaboration by extending cooperation agreement to build another six large membrane tanks.’

The first two tanks are expected to be commercial operational by the end of 2022.

GTT is now looking at commercialising even larger scale tanks with capacities in excess of 300,000 m3 in the near future.

‘GTT is also developing a mid-scale modular membrane tank which can be constructed in the fabrication yard and transported to job site for installation and pre-commissioning. This concept can significantly reduce cost and schedule compared to traditional stick-built LNG tanks,’ says Chen.

The current GST technology is ammonia-ready, making it ideal for the energy transition.

GOOD EXPOSURE

Chen says that GTT entered the Awards due to the reputation of Tank Storage Magazine within the LNG industry. The company saw its entry as a way to more widely announce the state-of-the-art GST technology and the recent projects in which it has been used.

‘The Tank Storage Awards have indeed linked GTT and GST technology to the industry more closely,’ he says.

By Tank Storage Mag, September 30, 2022

When Loh Wei first set foot on Jurong Island, two days into a graduate role in chemical engineering, the landfill had yet to be placed. The only way to access the planned industrial zone, rising out of seven reclaimed islands off the coast of Singapore, was by boat.

My boss at the time wanted me to go to the site and have a look,” the now CEO of Jurong Port Universal Terminal (JPUT) tells The CEO Magazine. “It took me about two-and-a-half hours from where our office was to get to the site, and another two-and-a-half hours back home.”

More than 20 years later and Loh can reflect on how this now globally renowned energy chemicals hub has been the constant across his career.

“I’ve built my career around Jurong Island,” he says. “Petrochemicals, infrastructure, energy, oil, gas. I’ve been through the whole cycle of it.”

For the first decade or so, while working for SembCorp, he was more “an operations and hands-on guy”, he explains, before making his way into business development. As General Manager (Development) at the Singapore Liquefied Natural Gas terminal on the island, he spent five years developing the terminal, driving an expansion project to double capacity.

It was in early 2021, while working for the government-owned Jurong Port as General Manager for Jurong Port Tank Terminal (JPTT), that the opportunity arose for Jurong Port to acquire the Universal Terminal oil storage facility.

I’ve built my career around Jurong Island. Petrochemicals, infrastructure, energy, oil, gas. I’ve been through the whole cycle of it.

While the COVID-19 pandemic was a difficult time for all, Loh is also aware that the pandemic is what triggered “a string of coincidental” events that enabled Jurong Port to acquire a stake in the Universal Terminal. “Due to COVID-19, Hin Leong put this asset up for sale. And we were in the right place at the right time to be able to put in a winning bid,” he admits.

In buying the 41 per cent share previously owned by oil trader Hin Leong, Jurong Port became the single largest shareholder of the oil storage terminal alongside other owners MAIF (part of Australia’s Macquarie Group) and PetroChina International (Singapore).

Necessary infrastructure

Prior to working with JPUT, Loh had spent five years building up JPTT from scratch. “As General Manager of the joint venture with tank storage company Oiltanking, I was tasked with not only the project approval but also lobbying the shareholders and the banks to put up the cash in the form of the equity and loan we needed to build the terminal,” he reveals.

Once the final investment decision was made, Loh turned his efforts towards the operational aspect of the facility. “From a three-person office, we became a 40-person business in the course of 18 months,” he says with a smile. “Then we secured our first customer.”

“JPUT is a port, but not in the traditional sense,” Loh explains. “We’re an oil terminal and oil hub. Traders use us to physically store or warehouse their oil so they can then trade or blend this important energy commodity.”

Efficiency on a Large Scale

The JPUT facility boasts a storage capacity of 2.33 million cubic metres; 78 custom-built storage tanks (in 13 tank farms); the ability to accommodate tankers up to 320,000 deadweight tonnage; 15 deepwater berths (nine for barges and six for tankers); a 1,000-metre-cubed to 3,000-metre-cubed average product loading rate; and a 23-metre berth draft, with the scale to accommodate two fully laden, very large crude carriers simultaneously.

Situated on 56 hectares of land (the equivalent to 60 football fields) at the southern edge of Jurong Island, the terminal is one of the largest petroleum storage facilities in Asia–Pacific.

And in the biggest bunkering port in the world – Singapore sells nearly 50 million tonnes of bunker fuel annually – nearly one-third of that total volume flows through JPUT. “We are actually a cornerstone, a necessary infrastructure to keep oil flowing,” Loh says. “Container ships need it so there’s no delay to your deliveries, your sofas, your TVs, your online purchases. We play a vital role in that sense.”

Look back to look forward

Nine months into running the terminal, Loh called a meeting with his entire team of 120 people. The reason? To start sketching out a five-year plan. “But in order to look forward to the next five years, we had to look back at what had been done in the previous five years,” he notes. “Because you must understand your past before you know where your future is.”

Especially when, for the best part of that time, the terminal was under other management. Loh brought a way of running the business that was considerably different. “Amid the changes to the market due to IMO2020, followed by COVID-19 and the war in Ukraine, I had to implement new strategies,” he reflects.

The terminal, as Jurong Port had inherited it, was a trader’s terminal. “The trader, Hin Leong, traded its own oil and had its own logistics chain, so its own shipping, oil vessels and distribution network. It was essentially a vertically integrated business,” Loh explains.

In order to look forward to the next five years, we had to look back at what had been done in the previous five years. Because you must understand your past before you know where your future is.

Self-sufficient, the terminal was operated as a critical piece of the overall company. “The remaining clients who used the storage facilities at the terminal were just additional icing on the cake,” he adds, and it was just a select few who were welcome to make use of the facilities.

“The DNA of Jurong Port, and the remaining two shareholders, MAIF and PetroChina, is very different. We are now a purely independent terminal, much like the OPEC Systems and Oiltankings of the world.”

This independence is a selling point. “We can assure clients that when they put oil in our terminal, we will take good care of it and that their competitors won’t know how much oil they have in our tanks. Everybody competes on a level playing field.”

Working the assets

Now, as he looks towards the next five years, Loh is building out from the framework he has inherited. “Currently, we are purely an asset infrastructure terminal operator,” he explains. “I have no oil to trade or ships to lease.”

He’s had to tell the shareholder base that the time has come for a different approach.

“Since we no longer have access to the underlying oil to trade, we have to sweat our assets, to work them harder,” he says. It’s around this strategy that he’s built a long-term plan. “It’s all centred around increasing and developing new revenue lines through logistics chain integration, pipeline connectivity and data.”

Under the strategy, storage will no longer be the sole contributor to the business. Instead, to integrate the logistics chain, new pipeline networks are planned, which will connect the terminal to refineries and petrochemical facilities on Jurong Island. Once operational, trade will flow freely, something Loh notes “used to be frowned upon because rival terminals wanted to protect their client base”.

However, Loh can see the bigger picture and the advantages such a network would bring to all parties. “In the oil business, traders need to physically exchange their oil,” he points out. Currently, they can do this by chartering a vessel or exchanging it among the terminal’s customers. Not only does this proposed pipeline optimise the process, but it is also a way to enlarge JPUT’s trading community.

Additional logistics services are also planned that will deliver improved efficiency and effectiveness to customers, such as mass flow meters, bunker barges and lighterage services.

And Loh has also pinpointed another potential revenue stream as he looks to diversify business activities: financial and data integration. “We are an active participant in the Singapore Trade Data Exchange with SGTraDex because we believe our digital transformation will help Singapore’s oil trading ecosystem.”

Since we no longer have access to the underlying oil to trade, we have to sweat our assets, to work them harder.

For JPUT’s customers, the data it sends to SGTraDex – a digital infrastructure designed to securely share data between oil trading and supply chain ecosystem partners – is potentially valuable as it enhances efficiency as well as transparency, which may lead to better financing terms.

“We’re going to help our customers transform their treasure trove of data that they store with JPUT by digitalisation. This digital transformation will allow our customers to improve their business whether it is to their customers or to their financiers,” he says.

JPUT will have to invest in new hardware and software, improve its business processes and upskill its workforce to enable such digital transformation, but Loh believes this is an important step in the overall strategy for the future of the company.

A delicate balance

With more than a decade of executive leadership behind him, Loh now talks confidently about the leadership values that he holds onto as he drives JPUT towards new business avenues. “It’s so important to constantly make yourself available to your people and to listen to them,” he insists.

That means everyone from the ground staff to the operations team, or “the people who hold the tools”, as he describes them. “Similar to going to war with your lieutenants and your colonels, being present and there to listen to them makes them a cohesive group,” he says.

I don’t want to be too aggressive and destroy the winning formula I have, yet I can’t be too tentative if I want to go ahead and implement the changes.

Then there’s the immediate leadership team, who he says he also stands alongside in battle. “Many times I let their opinion become my decision – this empowers them and puts them in a position to deliver because it’s their recommendation,” he says. “Because I’ve listened to them, they listen to me.”

Yet he’s also not afraid of telling them, “It’s the Loh Wei, not the highway”.

As he steers a team made up, in part, of people grown accustomed to the old management regime, Loh knows change management is inherently challenging. “I do have a few major material changes that I want to implement to this organisation, including introducing new blood, a new way of thinking to help propel the change,” he hints.

Auto Pilot

There’s one very successful concept that Loh is thankful the terminal’s previous owners implemented. “We are the only terminal in Singapore to have our own pilots to guide the vessels when they arrive,” he says. “The customers love it because there is a pilot on demand, rather than having to join a queue.”

He says that JPUT is in talks to develop the concept further – to start training its pilots to receive big oil tanker vessels. “This will allow our customers to optimise as they’ll save a lot of anchorage time for their vessel.”

It’s a fine balance he’s playing with. “I don’t want to be too aggressive and destroy the winning formula I have, yet I can’t be too tentative if I want to go ahead and implement the changes. Maybe next year, we’ll have another interview and I’ll tell you whether or not I’ve been successful,” he says with a grin.

Given the direction he’s leading JPUT, there’s little doubt Loh will be.

By The CEO Magazine, September 30, 2022