Vopak (49%) and JV partner State Development Investment Corporation of China (51%) have taken the final investment decision to build and operate a bulk liquid storage terminal in Yangpu, Hainan, China. Approval from the NDRS (National Development and Reform Commission) has been obtained and the JV is completing the final preparation phase to start the construction of the terminal.
The initial storage capacity is set at 1.35m cbm with two jetties. One of the jetties accommodates VLCC’s. The JV plans to commission the terminal by the end of 2013 and it is possible to expand the facility in the future up to 5.2m cbm. The terminal will serve as an oil transhipment hub at the crossroads of major shipping lanes for vessels from the Middle East and Africa to the Far East.
Our View:
The terminal will be the first independent third party oil storage terminal in South China that can receive and handle crude tankers up to 375,000 DWT. Hainan is strategically located along important shipping lanes for crude oil that connect the Middle East, South America and Africa to the Far East as well as to the West Coast of the US.
With this new terminal the storage capacity of Vopak’s Chinese terminal network increases from 1.2m cbm today to well over 3m cbm in 2013. On a global scale Vopak will add > 6m cbm to its total storage capacity for bulk liquids including the announced projects in China leading to a total storage capacity of 31.4m cbm at the end of 2013.
Conclusion:
This terminal was known as a “project under study” and hence the final decision does not come as a big surprise. Still, this is a large extension and will positively impact our numbers when the project becomes operational. Although the company never reveals capex per terminal, we believe it costs on average €200 per cbm. We believe profitability to be in-line with similar projects and this at a top location, with a decent part of the capacity (>70%?) already pre-rented (in-line with Vopak’s strategy).
Since the terminal is only expected to be completed by end 2013 we see no material impact on our numbers over the period 2011-2013.