"As momentum for new energies, hydrogen, ammonia, and sustainable feedstocks grows, we see a bigger interest in infrastructure for storing these products – this will be a big part of our growth."

Ignacio Gonzalez Crende

PRESIDENT, VOPAK BRAZIL

September 15, 2023

Could you give an overview of Vopak’s presence and capabilities in Brazil?

In Brazil, we operate two terminals: the Alemoa Terminal in the Port of Santos, in the São Paulo state, and the Aratu Terminal, in Bahia. By early 2024, Vopak will operate a total capacity of 300,000 cubic meters after commissioning an expansion of 105,000 m3 in 2020 and an additional 20,000 m3 currently under construction at Santos. The Santos terminal supports customers with fuels, ethanol, chemicals, base oils, vegetable oils, and renewable feedstocks. Meanwhile, in Aratu we have a total capacity of 108,000 m3, serving an inbound and outbound facility for chemical feedstocks for the Camaçari petrochemical complex. Aratu also stores other products distributed locally like fuels, ethanol, caustic soda, and other chemicals.

What motivated the successive expansions at the Alemoa terminal?

The Alemoa terminal is a major distribution center for various liquid products, where we hold a dominant market share (80%) in heated capacity to handle bio-based feedstocks like animal fat, used cooking oil, vegetable oil, among others. The Port of Santos is the largest in Latin America, traversed by more 50% of Brazil’s GDP.

What has driven Vopak’s strong performance in the first half of 2023?

Vopak saw a 14% EBITDA increase compared to the same period last year, as well as high occupancy rates of 91%. In the traditional oil markets, the flow of crude remains uncertain due to international sanctions resulting in longer transport distances; though there is a rise in demand, OPEC cuts caused the market to fluctuate, driving demand for storage across our network. In the manufacturing industries, activity has slowed down due to higher production costs and a slower-than-expected Chinese recovery. This bearish consumption market also led to favorable demand for our infrastructure services, including stable throughput flows at our industrial terminals, though these may be impacted in the second part of this year. Most of our revenue determiners come from what we call take-or-pay agreements, which protect us from losses should the buyer refuse to complete a purchase. Looking at Brazil, specifically, certain segments like chemicals have seen a decline compared to 2022, but fuel, ethanol, and feedstocks have been on an upward trend, with very high occupancy levels. As momentum for new energies, hydrogen, ammonia, and sustainable feedstocks grows, we see a bigger interest in infrastructure for storing these products – this will be a big part of our growth.

Could you elaborate on how is Vopak positioning in new energies and feedstocks?

Vopak has more than 20 years of experience in storing ammonia at six global locations, but we want to establish new supply chains through long-term investments in industrial infrastructure solutions for net-zero and low-carbon, green hydrogen and green ammonia, liquid CO2, biofuels, long-duration electricity storage, and chemical recycling. Vopak allocated 1 billion euros CAPEX in new energies and sustainable feedstocks by 2030. In Brazil, we note a higher demand for biobased feedstocks like animal fat and used cooking oil, markets that we currently serve, so we are looking out for project development opportunities in hydrogen and ammonia infrastructure. We want to be an essential part and a frontrunner of the renewable feedstock supply chain in Brazil, where 80% of the grid is green.

Could you comment on the ESG projects you are running in Brazil under the Vopak WeConnect Foundation?

Through the “Vopak WeConnect Foundation” we have empowered young people in our local communities; for example, in Vila Alemoa, a poor neighborhood close to our terminal in Santos, we have organized 28 activities in sports, culture, and education, involving 3,600 individuals. The “Go Alemoa Go” is designed to support young people between 10 and 24 years old, improving their future opportunities in a socially vulnerable district. Started in 2018, the project is here to stay.

What is Vopak’s growth strategy going forward?

We want to improve the performance of our terminal portfolio, focusing on both sustainability and financial results. We want to grow the business by investing in new terminals, including LPG, LNG, and ammonia, and we want to accelerate our efforts toward new energy and sustainable feedstocks.

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