The below is an excerpt of an article in Tradewinds, published May 29, 2019.
Written by Michael Juliano and Andy Pierce.
The US is the Oslo-listed chemical tanker and terminal owner's 'most important hub' for exports and imports, the company says. Odfjell's largest terminal in Houston — a key hub for its chemical tanker fleet — will soon be even bigger as the Oslo-listed company adjusts to meet growing demand from the US shale-gas boom.
At any given time Odfjell has three or four vessels on berths in Houston, which chief executive Kristian Mørch describes as the most important port in the world for the company. (...)
"We are going to be focusing our investments on growing our terminal in Houston. The US is our single most important market”
Kristian Mørch, CEO
Cheaper to produce
He says an abundance of shale gas allows the US to produce chemicals at a fraction of the cost compared to most other countries.
“If you are a US-based chemical producer, you have structural access to very cheap and abundant feedstock. I’m simplifying it but, if you are a US producer, you just turn on the tap and you have shale oil and gas coming in and you can produce these chemicals in a much cheaper way.”
Odfjell has a second, much smaller US terminal in Charleston, South Carolina, that holds 79,243 cbm in nine tanks.
Analysts have predicted that Odfjell would most likely start its Houston expansion in earnest after it completely squares away ownership of its terminals in the US and the Netherlands.
Last year, Odfjell sold its Rotterdam terminals to Koole after joint venture partner Lindsay Goldberg withdrew, generating cash proceeds of $100m.
Lindsay Goldberg has also agreed to sell its 49% stake in another joint venture with Odfjell that owns the two US terminals, having held it since 2011. The buyer is Northleaf Capital Partners.
“The Houston terminal is a likely candidate when it comes to terminal expansions. However, the timing, magnitude and scale of a potential expansion remains uncertain as Lindsay Goldberg’s transaction with the new partner, Northleaf Capital Partners, has not yet closed.”
Analyst Jorgen Hannevik, TradeWinds
But it is certainly a matter of when and not if, according to Danske Bank analyst Anders Karlsen.
“There are a lot of chemical producers in the US Gulf. It will create demand for storage, and some may be exported.”
Analyst Anders Karlsen, Danske Bank
New US terminals CEO
Houston’s expansion plans will be under the watchful eye of John Blanchard, the new chief executive of Odfjell Terminals US. Blanchard, a former president of Arc Logistics Partners, joined Odfjell in May to replace Frank Erkelens. (...)
Odfjell expects North America's and South America's economies, which accounted for 49% of group revenue of $851m in 2018, to grow 2.5% this year, further propelling success in the Americas.
Ongoing prosperity in the Middle East and Asia — Odfjell's second-largest market combined with $268.3m in revenue last year — is also helping. (...)