Dear all, welcome to Vopak Capital Markets Day 2022. It is a great pleasure so to have you here with us, and thank you to all of you joining from the webcast. I am Fatjona, head of IR, and I'm very happy to present to you Capital Markets Day in shaping the future of Vopak. Before we start, I would like to briefly explain to you the safety and floor plan. In case of an emergency, please follow the green and white fire route located there, which will indicate the route to the nearest safest exit. I would like to move on to the forward-looking statement. As you might be already familiar with, we might make some certain forward-looking statement which might include some uncertainties and risks. Accordingly, this is applicable to the whole presentation, including the Q&A.
We have set up a full program for the day, mainly split in two part. Each of them will be followed by a Q&A. The first part will be the executive board with our CEO, Dick, with our COO, Fritz, with our CFO, Michiel , who will present like the strategic priorities of the company and our vision in shaping the future. We will have a quick refreshment break, which will be followed by an update by our division presidents in LNG, Europe and like Africa and the new energies. Well, without any further ado, I'm very pleased to invite our CEO, Dick, to further walk with us towards the strategic priorities. Dick, the floor is yours.
Thank you, Fatjona. Well, a very good morning to you all, and great to see you all. Great to see you in person. I saw already quite a few happy faces this morning that finally there's in-person meetings again, and we get to engage with each other in real life rather than doing that virtually. At the same time, a very warm welcome to everyone who's connecting with us virtually. Thank you for taking the effort. Thank you for all of you being here. Thank you for your flexibility in accommodating the change of date that we had to push through. Today we have an exciting program, as Fatjona put it.
I will start sharing with you the strategic priorities on shaping the future. First, I'd like to leave you with and start with the key messages of today's presentation and today's program. Those are five key messages. First and foremost, we as Vopak are a leading global platform. We are a leading global platform in terms of scale, in terms of locations, in terms of capabilities, and in terms of customer and partner base. Because of that global platform that we have, we have unparalleled access to growth opportunities. Growth opportunities in the markets that we serve, energy and manufacturing markets, because they will be subject to quite some change in the coming period. While we pursue those growth opportunities, we will improve on the performance of our portfolio.
We will commit to ESG and deliver on the execution of a disciplined capital framework, and deliver attractive free cash flows and attractive returns to our shareholders. Now, how do we do that? By focusing on three main elements. First, improve the performance of our portfolio. Second, grow our base in industrial and gas. And thirdly, accelerate towards new energies and sustainable feedstocks. Now that improvement of the portfolio, the target that we have set ourselves is to deliver a 10% operating cash return by 2025, a minimum 10%. We will allocate to the growth of industrial and gas terminals around EUR 1 billion of growth CapEx between now and 2030. For the acceleration of our move towards new energies and sustainable feedstocks, we will allocate another EUR 1 billion in terms of growth CapEx from now till 2030.
Now since the beginning of this year when I took over the role as CEO of Vopak, I've been working, obviously on setting the priorities together with my colleagues and the rest of the team, setting the strategic priorities for shaping Vopak's future. I've been engaging with quite a number of stakeholders, and I want to just share a few of the stories that I picked up over there. To start with on our customers. I spoke with my predecessor when we were doing the handover late last year, and we were in the U.S. and walked into the office, had a conversation with one of our big customers over there and one of their senior leaders.
It was during that discussion that she all of a sudden said, "Do you guys realize, do you realize that you as Vopak, you have earned the right to grow with us? You've earned that right to grow with us because of the fact that you deliver on your day-to-day performance, safety, service, efficiency. Because you invest in the right locations, and that's where we need you. Also because you've invested in the strategic relationship between Vopak and ourselves." She said, "It's not by coincidence, because we have taken a very deliberate decision and made a very deliberate choice to invest in the relationship and the strategic partnership that we have with Vopak, and that is important for us. The fact that you are growing is not by coincidence.
It is the consequence of a deliberate choice that we have made, and we encourage you very much to move forward and to continue investing in the relationship, deliver on a day-to-day basis, and continue to invest in the right locations, because then there's a lot of opportunities for further growth. It was only a few weeks later that I had a conversation with one of our leading customers in the Middle East, and one of their senior leaders who said more or less the same thing. He said, "Dick, do you realize how important strategically Vopak is for us? Because the supply chain will be the determining factor for us to be successful in the future. And the infrastructure that you guys invest in, that you guys successfully operate, is of key importance for us.
As long as you as Vopak continue to do so, continue to be present in the Middle East, continue to invest in new locations to support our manufacturing capabilities in Asia, specifically China, and continue to do so also in the U.S., there is the need, and there is the continuation of this relationship and opportunities for you to further grow. Let's make sure we stay connected as companies, so you are very well aware of where we would like to go." With those two conversations with customers, first of all, it made me feel very proud because it was senior people that really reemphasize and reiterate the importance that we as Vopak have for them. At the same time, it gave me a lot of confidence for the opportunities that we have to further grow.
Now, at the same moment, I've also had discussions with quite a number of shareholders and analysts and asked them for their feedback on how they look at the company. Their feedback was very clear. "Strategic direction we support. We see that you're moving in the right direction. Your financial performance, and especially the returns on the capital that has been spent, have been disappointing, and we don't like that, and we'd like to see change. And thirdly, the guidance that you as Vopak are giving in order for us to better value your company is not up to what we would like to see and is not up to our expectations." For me, that clearly indicated and reiterated the importance of focusing on the improvement of our financial performance.
I had discussions with quite a number of people internally, our employees, over the many years, but specifically in the beginning of this year. In those discussions it became very clear to me that all of them first and foremost are super proud to be working for Vopak. Super proud because they feel that sense of belonging. They're proud of what we do, they're proud of what we have achieved, and what we instill in them as part of our culture. At the same time, they've also been very clear in indicating it would help if the choices that we make as a company are very clear and if it's clear for us as an organization on what to focus on and what not to focus on. Those strategic choices for us are really important.
As a result, if you look at it, how I have taken it and my own assessment on it, I feel that there's an enormous momentum and an enormous opportunity for us to shape the future of Vopak. As a CEO, the priorities as I can see them, for me moving forward and what we will be presenting to you today are very much around the key themes. That is setting the right strategic priorities for the long term that have everything to do with how we change the portfolio of this company, while focusing at the same time on improving the financial performance and how and where we can pull the levers necessary to do so.
Also make sure that we, in a very disciplined manner, allocate the capital to a lot of growth opportunities that are there in industrial, in gas, and slowly building our capabilities into new energies. It's that fine line that we have to balance, that we will share with you in the presentations today and that we will act upon in the period that is ahead of us. Is it going to be an easy ride that we're gonna have? Is it going to be a ride in which we have all the answers to all the questions? No, it will not. It is my role, it is our role as executive board to make sure we set a very clear direction. What are the key priorities? What are we going to do and act upon them?
I have a lot of confidence in the team, in the capabilities of our team, of our organization with clear direction to achieve on that. Now, let's put Vopak into a bit of perspective. Independent infrastructure provider with a network of locations in which we store our customers' most difficult products. Over the years, we've been able to invest in locations, in geographies, in products together with customers to come to a diversified portfolio of assets. A diversified portfolio of assets that is serving the key markets that we serve, which is the energy market and the manufacturing market. Those markets are subject to quite some change.
Our strategy is focused on improving the performance of our portfolio, as I said, growing our base in gas and industrial, and accelerate the growth opportunities and our growth capital towards new energies and sustainable feedstocks, and therewith creating long-term value for our stakeholders. Now, let's take a look at that network of terminals. What is unique about it? First, if you look at it and look purely at the scale, 79 terminals, 23 countries, all continents. That's objectively the largest independent terminal network there is around the globe. We're active in the major industrial clusters around the world. If you look at the number of independent third-party terminals supporting those industrial clusters, the market share of Vopak is 90%, meaning 90% of those facilities are operated and partially owned by Vopak.
We store over 250 different products, have the largest gas network, LPG chemical gases network in all the continents, and are the number 1 LNG infrastructure provider with facilities in all continents and with a different degree and a different set of capabilities, land-based, FSRU-based, and with Hong Kong on the horizon, even owning an FSRU. We serve over 1,000 different customers in all those locations, long-standing relationships with all of them because we've been serving them for so many years. We have over 25 different joint ventures worldwide with a wide variety of joint venture partners that are all complementary to us as a company, and make sure that we, with them, can deliver on the success in the local markets and local ports where we are active in.
If you look at large growth markets like China and India, we have the largest independent network over there. We have 18 terminals in both countries, 7 in China and 11 with the recently completed joint venture in India, 11 locations in India. If you put that together, for me, that's at the core strength of this company. Our organization, our people that are capable of developing that network, of storing those products, and at the same time maintaining those relationships, partnerships with our customers and with our partners successfully. That makes us a unique company, and that makes us uniquely positioned for changes that are happening in the world around us. Those changes are happening primarily in the end markets that we serve, in the energy and manufacturing markets.
Now, there's different products that serve those end markets of our customers, and the composition of those products over time is changing. Where energy markets today are being served with gas and oil products, over time, that is shifting towards more new energy type products and sustainable feedstocks to supply and to serve those end markets and the end market of energy. Our services to those customers that are active in these end markets have a wide range and a wide variety from industrial to dedicated long-term contracts, very much dedicated to the individual plant or asset that our customer is operating, towards, on the other side, pure distribution facilities, breaking bulk, making bulk, to multifunctional locations where we are supporting trading, but also are supporting industrial activities and distribution activities.
The message that I want to leave with you on this particular slide is the end markets are changing. The end markets are changing in different paces in different parts of the world. With these changing end markets and our service offerings to our customers, we are together and standing together with our customers to support them in the change that they are going through, and making sure that we have the right services, the right customer offerings for the right products that serve their end markets. Those end markets are changing. Why are they changing? What are some of the key trends that we can see where those end markets will change in the coming decade? Three things I want to point out. First, the 4.5% CAGR in global manufacturing.
On the back of around 1 billion people more that will be added to this planet between now and 2030, global manufacturing is expected to continue to grow. Second, decarbonization and growth of the power sector will have an enormous effect on demand for LNG in the coming period. Thirdly, new low carbon fuels and products are being added to the market and are being higher in demand in the future from where we are today. The relevance of those key trends for us is, first of all, a continued increase in demand for energy and manufacturing. There's a shift to low carbon products, and there's a growing need for new types and different types of infrastructure in the future.
If you put these trends together and the relevance of those trends and add up what I was saying earlier on, the unique strengths that we have as a company with that network of terminals, the organization that is managing that network of terminals, the capability set, and our installed customer and partnership base, that makes me feel that we're really at the brink and at the opportunity to shape the future of Vopak. This is the moment to shape that future of Vopak. How will we do that? By strengthening the foundation and accelerate growth, improve the performance of our portfolio, grow our base in industrial and gas terminals, and accelerate the growth towards new energy and sustainable feedstocks.
Now let's zoom into each one of them, at least on a high level in my presentation, and you will hear a lot more about them in the subsequent presentations by my colleagues. First, improving the performance of our portfolio. I've spoken already about the target to deliver an operating cash return of at least 10% by 2025. Now, how will we do that? By repurposing our assets, by transforming our assets, and by rationalizing part of the portfolio. Michiel will share more detail about it, but the key element is to look at each and every asset that we have, 'cause it's hard to put labels on a few assets together and really look through the lens of what can we do to use that asset potentially in a different way. What can we do to transform the asset?
Looking at the individual levers of top line costs and operating CapEx, and how strategically attractive is this asset to still belong to the group, and whether somebody else sees different value, and therefore the rationalization of the portfolio is part of that view as well. Now, at the same time, if I talk about improving the performance of our portfolio, it's important to realize that the execution of our ambitious sustainability roadmap forms a part of that. That has to do with our greenhouse gas emissions ambition. That has to do with our safety performance. That has to do with our diversity targets. Those are critical elements to make sure that we deliver on, and we will deliver on them in the course of the period between now and 2030, with intermediate targets for the next three years.
Frits will share much more about them in his presentation. That's about improving the performance of our portfolio. If we then look at growing our base in industrial and gas terminals, we come from a position of strength with our current network in gas and in LNG. We also come from a position of strength in industrial terminals, as I explained before. Therefore, looking at the opportunities that are arising that will continue to be there in those markets, we expect and we aim to allocate around EUR 1 billion of growth CapEx in those different segments between now and 2030.
Now, why do I think that we can be successful over there? First, if you look at that network of industrial terminals, told you about the 90% market share. With that installed base, there's an opportunity for organic growth in all those locations.
There's an opportunity for us to further grow in light of manufacturing growth that needs to happen in the coming decade in markets like India, China, the Middle East, but also in the US. Also a lot of decarbonization needs to physically take place at a lot of these industrial complexes. We are either partnering, present, or have our customers as a customer in those complexes, in those terminals. We feel that we are well-positioned as a market leader to develop and further grow the industrial terminal segment. If I look at gas and growing our base in gas terminals. First, LNG. 80% of the LNG growth will occur in the next 15 years, and Kees will share more about that in his presentation after the break.
Asia as being the largest growth market continues to be a very attractive segment for us as Vopak, because LNG, to me, offers a relatively sustainable, accessible, and affordable fuel for the coming period that bridges to a low carbon future that we all strive for. LNG still holds quite some attractive potential for us going forward. Now let's take a look at LPG. Seaborne trade in LPG is expected to continue to rise. Seaborne trade is specifically attractive for us because a lot of the products are being produced in places like North America and the Middle East, and need to find a home in either Europe or India or Southeast Asia and China. In all those locations, you need export facilities and you need import facilities.
With our current network and experience in that area, we foresee that also there on the LPG side, there continues to be attractive opportunities for us to further grow. Now let's take a look at the new energy side. We see, and I can clearly see if I compare where we are today to where we were 12 months ago or 24 months ago, that the momentum around new energies is building massively. I see that in terms of the type of projects that we are working on, the maturity of those projects, the geographical spread of where those projects are happening is slowly but surely increasing.
It's crucial for us as Vopak to invest in that today, to invest in the capabilities, to invest in the right partnerships, and to be ready to be present in the right projects that will be decided upon, that will be FIDed in the coming years. That's why the acceleration today is important. We need to be there, and we have a position of strength that we should leverage towards new energies and sustainable futures. Therefore, EUR 1 billion that we want to allocate towards growing in this particular segment, that will be slowly but gradually building up in the period between now and 2030. A large portion of that, and Michiel will share much more on the details, but a large portion of that will be, I would say, industrial gas type of investments.
Long-term dedicated infrastructure with long-term contracts and returns in the gas type of investments that we are doing. There's only a small portion that will be in earlier development phase projects, and that we plan to also allocate part of our capital to, also using the Vopak Ventures vehicle. Now, what areas will you see as active? Also there, Frits will say more about it, and Marcel later will share more details about what are the exact projects that we are looking at. We're excited about hydrogen and hydrogen carriers, ammonia, LOHC, and down the line, liquid hydrogen. Why are we excited about this? Because at the locations where it's being produced competitively and economically attractive, those are the locations where consumption is not taking place. You need supply chains.
When you need supply chains, you need to, in the end, have the right infrastructure at the demand centers, and that is where we have an existing location, or that is where we have access to the right location and can build the right consortia to be able to facilitate that part of the supply chain. CO2 infrastructure. CO2 infrastructure, not talking about CCS, but CO2 infrastructure as an extension of what I was talking about earlier in our Industrial Terminal segment, definitely is an area where we see attractive opportunities to help our customers with their decarbonization of the industrial complexes and help them with the setting up the supply chain before the CO2 gets injected in depleted gas fields.
You need pipelines, you need storage facilities, you need potential transport, and there's a very natural role that we as Vopak can play.
Low carbon fuels and feedstocks, probably closest to what we already do, where we can repurpose existing infrastructure for e-biofuels or biofuels next generation, and we are doing that already in some locations like Vlaardingen. Also plastics recycling as a future new feedstock for some of our customers' industrial complexes is something that you will see us active in, because we feel we have a role to play. Our customers are asking for our support and active involvement in it, and we see that there's room for us to play at the strengths of what we have as a company.
Last but not least, long-duration energy storage, a market that is not yet well defined, that we can all reason through why it is becoming much more important and why this will become a large market of attractive size in the future.
It's something that we as Vopak are investigating, are doing our first tests through our Vopak Ventures vehicle, but want to definitely define how we play a role in long-duration energy storage in the future. Because naturally, there's a lot for us to offer. The independence, the know-how of how to handle independent infrastructure, and also the capability to form the right partnerships and consortia over there. We feel there's a natural role for Vopak to play. Now summarizing and getting to the end of my presentation. While we navigate through these times of change in the coming decade, we are shaping Vopak into a different company in 2030, but still a very recognizable company in 2030.
While we improve the performance of the portfolio, allocate large sums of growth capital towards LNG, LPG and industrial terminals and accelerate to capture the opportunities in new energies and sustainable feedstocks. We will be handling the energy and materials that society needs in 2030. Those are different products that society needs today, but we will be gradually moving and changing the portfolio of products and services to support our customers. We will continue to be successful in existing and new value chains and partnerships. Those are different type of partnerships, and sometimes the same as what we have today. Also there, you will see a gradual movement from where we are today, using the strength that we have today to do that in the future. Continuously reducing our CO2 footprint.
A recognizable global brand with a global network, but specialized in the local expertise to be successful in the local markets in which we operate. We do that while generating attractive, sustainable, long-term free cash flow with attractive returns for our shareholders. Now, I'm very excited about the future of Vopak. I'm also very excited to do that together with my colleagues, with Michiel and with Frits, because the first part of our cooperation together has been extremely pleasant and positive, since the beginning of this year. We've all been with the company for quite a number of years, and I think that actually plays to our strength. That plays to our strength because we know the customers, we know the markets, we know our facilities, we know the partners, and we know the organization extremely well.
We know what it takes in Vopak to make the right adjustments at the right time, to make them successfully, and to make sure that we deliver Vopak successfully for the next phase. I'm excited and very confident that the three of us, together with the rest of the executive team of Vopak and the larger organization of Vopak, will navigate Vopak through this period and move and position Vopak in the way we plan to by 2030, but earlier delivering on our goals. Thank you a lot for your attention, and I'm happy to hand it over to Frits.
Thank you, Dick. Yes, good morning to you all in Rotterdam and also thank you very much for listening and watching this presentation online. I've been in this role now for 12 years, and I can tell you I'm still tremendously excited to be in this position because not only is Vopak a company that, as is more than 400 years old, it's also a company whose role is far from played, whose role is far from over. I think Dick has explained to you why that is, and let me try to get into some of the things that I think this strategy means for how the way we function as a company.
As a COO, what are my current priorities? I've basically put them along the same lines of our new strategy. Improve, grow, accelerate, and then underlying that, there's a general base that I would say that we need and that I strongly believe has been a key to our success in the past and will be a strong key in the future. If I just take them one by one here, and there will be some further examples in the rest of my story.
Obviously, the way we interact with customers, the quality of service that we lead and the safety that we have with that has been a tremendous positive differentiator for us in our industry, and we definitely treasure that and want to continue it. At the same time, and you have seen that from our financial results, we need to work very hard to continue to optimize our financial output from those facilities every day. That, frankly, we feel we have an exciting methodology to do that which effectively is something that we have learned from McKinsey, where we challenge our operations basically on a daily basis to say, "Okay, what's the best possible we could do?
If everything went superb, what would our performance look like? That's what we then put as a sort of stake in the ground, and we really ask our people on a daily basis to think, "Okay what is still my gap to being perfect, and how can I slowly but surely close that gap?" That is unleashing a tremendous amount of energy within our organization, and that energy obviously is what ultimately makes us better every day. We will have some examples later on in the presentations from, for instance, Patrick. sometimes when the market change, we need to repurpose or transform our assets.
Obviously, the trick of the game there is to do it in time and to do it wisely. We cannot sort of, in a capital intensive industry, completely erase the past and say, "Okay, let's start from a blank sheet of paper." The knowledge there is really very much in how do I manage, to, with minimal adjustment, make the new market be served by some of the assets that I have. Then also not unimportantly, and particularly not in some of the things you recently, for instance, read about our acquisition in India as an example. If we then acquire something internationally we wanna bring them up to our standards and share our knowledge. Obviously, likewise, we wanna learn from them.
On the one hand, we basically grow our corporate knowledge from this new acquisition. On the other side, we obviously wanna impart on them what we have gained from our network. This is really, I think, where a lot of the synergy of a large network comes to play. When we talk about growing our base, industrial and LNG, I think it's absolutely essential that we have one learning curve again globally. This knowledge that we have as a company, how do we deploy that locally? At the same time, if you get closer to these opportunities, none of them are the same. There is a tremendous need for local agility.
I mean, if you just look, for instance, at the gas industry between two very close by and close cooperating countries like the Netherlands and Germany, the local situation in that industry is completely different. Therefore, it requires this local agility as well. I think that is an essential thing for us to be able to mix those two elements in the, in the right sort of, manner. As we go on and we talk about accelerating to new energies and new feedstocks, I think it's fair to say that none of us know exactly how this is gonna go. We all know it's necessary, but none of us know exactly what the path is. I think as a company, we want to be agile and learning on what are the type of opportunities that we can get into.
We have some great starting points, yeah. Let's be very clear about that. We're in these industrial parks. All these industrial players need to do something in this area. We have a lot of knowledge. We can work with dangerous products, et cetera. We have a lot of partnerships worldwide. We have a good starting point, but yet, I think in the coming period, we need to find our way to what is the the most responsible way to get the significant role that we want in this new energies. Obviously, with that comes a disciplined capital allocation process. I think underlying it all and absolutely central is that we do have global standards.
We do have global processes, and that allows us to automate, and I'll come to that. At the same time, we need the people in the field who are our front face, who are the ones that are doing the deals with the customers, who are the ones who are actually every day working all the way from basically truck drivers that come to pick up cargos through ship captains that want to deliver cargo to our customers that ultimately at all levels have their interest. These are the people that need to do it, and they need to be the ones that are sensitive to the local priorities and the local ways of doing things.
I think this central element, therefore, on the one hand, having that corporate knowledge and on the other hand, deploying it in a way where you are very sensitive to the particular situation, that's the key of our success. Obviously, these days we realize that we need to have an ambitious sustainability roadmap, and that's actually something that we want to have because we do believe that that's for the good of the world. At the same time if you then look at where specifically or more specifically the key challenges for us, one of them is for sure the gender diversity in our industry, both the energy industry in general, but particularly also if you look at ports there is still a long way to go on gender diversity.
Unfortunately, it's pretty, I would say, universal around the world. It's not like some places this is already fixed. There are obviously some places better than others, but this is worldwide a challenge. Another key thing is, of course, the decarbonization of the entire industry, including ourselves. That's a sort of overview of what I wanted to discuss with you. Now in a bit more detail, I think, if you look at what we have done here, we have over the past years, as invested quite a bit in IT tools. These IT tools have given us a real good platform to share knowledge in the wide sense of the world. We have now deployment to individual employees possible through learning.
It also allows our key experts to come together. For instance, in things like tank turnarounds, where we have a few key experts in the bay, in the major hubs, they are now seamlessly working together in this area, and that is really proving to be very beneficial in basically just sharing what are practical good ways and best practices to get these things done. In our IT investment over the past years, we obviously needed and will continue to invest in cybersecurity. I think you all know what happens in case you get called out.
Now, there is no sort of full guarantee that you won't get called out, but you do need to keep your home as secure enough that at least you're not an attractive, easy target. That's what we're working on, and I think we're having success there. We've had to modernize the process support that we have within our company.
You talk about these, the major core systems of the company, both our HR system, our finance system, and particularly our order handling and operations insights system that eventually also allows us to give our customers real-time knowledge of what's happening to their cargo, what exactly is their stock position as of this second, as opposed to what it was at 12:00 last night or something like that. There's digital innovation, and that is connecting our assets better to that whole system, such that we also know the individual positions.
I think ultimately, we wanna bring this information together with a lot of other information from the supply chain together onto platforms, which really give our customers the differential ability to really optimize their logistics chain. For instance, if you look at our industry, demurrage is still EUR 1 billion, well, tens of billions, if not hundreds of billions of basically waste that's happening in the industry. With better information coming together on platforms, that is something that you can can attack. Where are we on this, on these sort of core systems that we've got? I think, as of this weekend, I can say we're done with Oracle and Workday.
We've just done the last rollouts and that means that our finance and HR system are basically really up to par and giving us that platform for instance, distributed learning and things like that I talked about. MyService, we're 70% along the way, and I think what is particularly pleasing to see is that not only are the vast majority of our joint ventures very interested, particularly after studying what's available on the market and what are the capabilities of the systems to actually get onto the system, so that's been quite a success.
In fact, it goes as far as that even competitors are now approaching us whether we're willing to basically talk about commercially offering that system to them. This is something that has been a deep investment of the company, but we really believe that this is paying off very well in terms of benefits. Another enabler, and that particularly goes to the growth element, is that we have pooled our conceptual engineering globally. This allows us, together with some logistic support tools, to very, very quickly turn around various options for customers. If customers are thinking, "Okay, do I need one or two docks?
Do I need a small and a big dock?" Whatever, all of these sort of options we can really very fastly, very consistently and actually, so it talks here about cost and quality. We can deliver that. That I think has been something that has been very helpful, for instance, when we talk about being successful in industrial terminals. I think this is something that I also see play a very important role when we talk about accelerating into these new feedstocks, when obviously we want to learn on one learning curve and really deploy.
Recently, you may have read that we've opened an ammonia terminal in Houston, and we were able to basically deploy knowledge from Malaysia, from Singapore, onto that project in order to successfully do that. Our role in these in accelerating for these for the new world, basically. Dick already mentioned the four areas in which we believe we have a role to play, and these are fairly wide areas. Here I have a sort of small list of some actual early projects that we're working on. Later on, Marcel van der Kar will talk much more in depth about these projects.
For instance, one that is local here and very interesting is the H-vision project, which is a way to decarbonize the local refineries here in Rotterdam. Three major refiners are working together on wanting to get that done. One of the beauties of this is it is not just quick time help before the transition. It's not just a way to decarbonize some of their fossil fuel-based streams today, but it's actually a way that also if they are eventually able to go to fully bio-based or electrical-based feedstocks, you can still use this as a sink of carbon dioxide. You actually have the potential there with this machine that we are looking at to come to negative emissions for the industry.
A lot still to be done, but at least the key customer is extremely excited about making this happen to eventually help the entire industrial complex in this area. Another example is looking at green ammonia, for instance, from Morocco and Chile. Those are actual live discussions right now. I think we did not say that, but I think most of you will know if you're in this industry, as much as we like to be energy independent as Europe, with the renewables and the sort of efficiencies that we're having today, that does not look like a very feasible route.
We do expect that in the end, there will be import needed and these are some of the key ways along which this can be done. Marcel will talk more about this, let me move on. I go to what's underlying it all. I already talked about the culture. Now let's think a bit about where we stand on sustainability. Very proud of our ratings. I think these are important to investment funds, so the MSCI and the ISS ratings I think these are basically showing that obviously we have challenges, but they are quite doable. We really feel committed to these five United Nations Sustainable Development Goals that are listed here.
Obviously we try to achieve that by looking at people, planet, and profit. I think to those of you who've been following us for some time, this is all, I think, starting to become fairly familiar. We set ourselves some shorter-term targets. For greenhouse gases, we have said we want to be carbon neutral in 2050, but we wanna have a reduction of 30% by 2030. I'll get a little bit into how we do that. On safety, we really feel that we've got a good performance, but as you can see, we're aspiring to be even better because we believe that this is an area where continuous improvement is tremendously important.
On the PSER, which is basically safety for process, as you can see, we're already in the range that we aim to be, and we wanna maintain that. That is basically a sort of indicator that ultimately tells you how good you are in terms of avoiding process upsets, which ultimately, of course, things like catastrophes at the very end of that possible outcomes. Very important to us. Diversity, I already talked about.
We are making slow progress, but we realize that even with the 20% that we're aiming for, we're not yet done, but that is what we feel is an ambitious target, but still something that we will and can realize. If you look at our overall contribution to a climate neutral society, actually, and I'll show you that on the next view graph, the Vopak proper, our own contribution just in the storage part of the supply chain is extremely small. It is actually almost negligible. Yeah, we wanna do our bit, but the real issue is of course in the supply chain.
By far the most important thing that we can do is accelerate into new energies, providing infrastructure for the sustainable feedstocks and new energies. That is the thing that makes the by far, by a factor of a thousand more difference to the world than anything we do internally, which we also wanna do.
I think in the meantime, whether we like it or not, and I think the Ukraine-Russia war is a sort of near-term testimony to that we are sometimes forced to balance and maybe make a small step improvement on the carbon or carbon footprint, for instance, when we go from coal to gas-fired power generation, realizing that that's not the end game. We do feel that in parts of the world, that is still gonna be an important part, as Dick already explained, in relation to the LNG terminals.
Finally, we have our own much smaller footprint that obviously we wanna do our bit on. I think Marcel's gonna again give some examples of number one case. Later, we'll talk about what we are doing in LNG and LPG. Let me focus on what we do ourselves in our little footprint. This is all of Vopak worldwide compared to basically the Formula One without any visitors. This is not counting any of the footprint of the people that travel to these events. You can see we're about double the Formula One without any, so in the Corona year, without any visitors attending basically.
It is about a quarter of one coal-fired power plant. Well, it's just a tiny fraction, as you can see, of the Netherlands, and it's an even tinier fraction of the world. That's us. Still, we wanna obviously do our bit and reduce. Actually, I think we're already well on our way. What you often don't hear, yeah, people talk about further reduction targets, but they don't really talk about what's your starting point. Well, our starting point, actually, as of today, is that already 56% of our energy is renewable as we speak. It's not like we started from totally nonrenewable energy.
I don't think this gets a lot of credit in the debate, but it is obviously quite different whether you start from already being quite renewable to get to a further reduction. We believe that you also read a lot about Scope 3. That's emission of your product either upstream or downstream of your direct product. Well, our product is actually a service. It's a handling service. If we look at what are the key contributors to our Scope 3, it is mostly concrete and steel. We believe that those contributions are less than 40% of that total Vopak emission.
Therefore, they typically, under most protocols, are treated as a sort of smaller entity and not something that will generate a lot of interest as of its own. Obviously, if we can get renewable concrete or renewable steel, then that will help us for sure. We have obviously where we can we are buying renewable energy. There's still a lot to do about how renewable is that renewable energy. In the case of the Netherlands, as you may know, we have invested in a solar park in Eemshaven. We're buying some of that electricity, and then we're buying some with green certificates as well.
What options have we got, and that's my final slide, to reduce? We obviously wanna reduce our energy consumption, energy efficiency. That's win-win in every way. We're looking at producing renewables ourselves. Eemshaven is an example where that is suitable. Now, obviously, we're always in a high-risk environment, so we're not the easiest area to produce, but where we can, we will. If producing is not the best or is not available, then obviously we can procure renewable. We are looking to electrify our equipment because that basically means that with the transition we are well-positioned. For instance, if you take our China division there, I would say 95% plus is already electrified.
They obviously we are waiting for the Chinese grid to gradually become greener. But if that happens, we automatically basically have a lot solved there. Then, once available, obviously cleaner conventional fuels and new energies come into the mix for the final things that we cannot reduce through other ways. Then my final remark, obviously we realize that not all the technologies that we will need are already ready to be deployed.
Through our Vopak Ventures, we are both looking at possibly promising technologies near our fields, as well as companies that can make another contribution to sustainability, for instance, through water treatment or things like that. That's where we basically indirectly, I would say, work with the development of these technologies. I think one of the very nice things that we can offer these companies is the ability to try out and scale up at an industrial scale. I mean, we know what when something works in the lab, we have an idea of, okay, what would it take to make this work on an industrial scale. That's where we really often find that we can work quite productively with these companies.
I think that's the end of my story, and then it's my pleasure now to hand it over to our new CFO, and a very much liked colleague, Michiel.
Thanks. What a nice introduction, Frits. Good morning. Let me take you along the journey of financial performance and also, our financial ambitions. Well, first of all, I'm very happy that you took the time, to come here to Rotterdam to connect with us in person. It's good to see so many familiar faces here today. Also, very nice for those who are online that you joined us, and I hope you, have a very nice Capital Markets Day with us. I have to apologize for the delay in the Capital Markets Day, and I actually was the root cause because I fell off my bike, a few weeks ago. As a result, we had to postpone Capital Markets Day till today.
I really appreciate your patience, and it gave us a bit more time to prepare for today. There's one advice after this accident I took, I thought, a little bit of a calculated risk, but unfortunately, that didn't turn out very well. Please, on any bike you ride, wear a helmet. I know it's not very familiar in the Netherlands, but it's a good advice and, I learned my lesson, to be honest. For today, I'm 50 days into the new role as a CFO, so halfway through my first 100 days. Being longer with the company already mentioned by Dick, some people quoted as a Vopak veteran, but I've been for more than 17 years in different roles in the company.
I look forward together with Dick and Frits to bring the company into the next phase of its journey and to shape the future going forward. We have been working hard on the strategic priorities, and I will explain a bit more today on what it means for the financial framework and the financial performance you may expect from us. Obviously, people are asking me, "What are your priorities as a CFO? What are you gonna do?" Let me outline it in a very brief summary. First of all, you've seen that we have transformed our portfolio quite a bit already over the last years. We invested more in industrial terminals and gas terminals, creating more long-term sustainable cash flows. We will continue the journey of our portfolio transformation. We had some performance headwinds.
We report our return on capital employed, and you have seen that that has dropped quite significantly from above 12% to below 10%. That's driven by some of the existing assets, but also some of the growth projects where it takes a little bit more time to realize the projected returns. Given the growth program we have in place, EUR 1 billion for new energies, EUR 1 billion for LNG and industrial terminals, we need to create headroom for further growth.
Our leverage is at the higher end of our range. Although we still have a very healthy balance sheet, if you look from a debt to equity point of view, the headroom is critical to grow our company going forward. Last but not least, we also got a lot of feedback from investors, analysts, "Can you help us on more clear guidance going forward?
We think that your ROCE is very wide, 10%-15%. We think your dividend, 25%-75% is very wide, and please, can you help us on the EBITDA outlook going forward?" I will shine a bit more light during the presentation on these outlooks. What are we gonna focus on from a financial point of view? As Dick already mentioned, the first pillar of our strategic priorities is to improve the portfolio performance, and we have six key building blocks to do that.
First of all, and it might not be a surprise for you, is a stronger focus on free cash flow generation. Maybe for analysts or investors, this is a logical thing to do, but also to drive the company internally with a culture of free cash flow generation takes quite an effort. We're gonna strongly focus on cash flow generation.
We're gonna actively, as a second pillar, manage our portfolio to create headroom for growth, so you may expect certain divestments going forward. We will improve our Operating Cash Return going forward as a company, and I will explain a little bit later what it means to look at an Operating Cash Return. Over the last years, we had quite a significant cost efficiency focus, but we will continue that journey to focus on cost efficiency, and we will also carefully look at reducing our overhead cost as a company going forward. If you look at cash returns and you basically look at your capital employed, what kind of returns are you making? You need to have a very disciplined capital approach in order to deliver those returns.
That will be a critical pillar for us going forward to improve the portfolio performance. Last but not least, we aim for a progressive dividend policy, which I will explain a bit later. These building blocks should proactively create value for any shareholder in our company because it should improve the cash return on any capital we have invested in our business. Actively managing our portfolio. Well, maybe it's good to show first the trend, where are we coming from and where are we heading towards to? You see that on gas and new energies and industrial, we have increased our share quite significantly to almost 50% of the portfolio by 2021. Oil is shrinking and chemical distribution is also shrinking percentage-wise in our portfolio.
That is a result of some of the divestments we made in oil over the last years, especially in Europe, we have reduced our footprint in oil quite significantly over the last years. There is also quite a significant difference in return for all these activities, and I will come back to that a little bit later. Looking forward, what may you expect from us? You will see that oil will shrink percentage-wise as part of the portfolio, will drop to 25%-30% in 2025. Chemicals distribution will get a smaller stake in our portfolio, and industrial and gas will grow from 50% to at least 60%.
On the return levels, and this is average returns on operating cash basis, if we split our portfolio into industrial, oil, gas, and chemicals, you see that the most attractive part for us is on the industrial side. That's obviously also a lot of chemicals, but these are chemicals coming from industrial complexes. Don't confuse it with the green bar of chemical distribution terminals, which are more related to logistical supply chains anywhere in the world. Oil and gas are sort of in the middle in terms of returns, and chemicals is at the lower end. Obviously in these different segments, there's quite a wide variety between the returns of each and every different terminal.
A lot of people are also asking us, "What is actually the impact of oil and the market structure of oil on your company?" We think that the overall impact of the market structure is limited and shrinking for us as a company, and let me try to explain that. If you look at oil and oil products, we come from 45-50% of our proportional revenues, and it has dropped to around 30%-35%. We have made quite some investments in distribution terminals, but less so in the hub locations, Singapore, Fujairah, and Rotterdam.
If you look at the split between hub and distribution, you see that hub is a little bit bigger than the distribution activities, but distribution activities are part of a logistical process, so really facilitating imports of fuels into markets and are less dependent on the market structure. Obviously, in hub locations, there is quite some dependency on the market structure. If you look at our hub locations, some of the business we have in hub locations are industrial type businesses, so backed by long-term contracts and are facilitating more industrial type activities. The products which are really exposed are the middle distillates, crude, and gasoline. As I said, the market structure impact is rather limited. It is there, but it's also shrinking over time.
Looking at growth investments supporting our long-term profile of cash flow. If you look at the growth investments we made over the last five years, we put EUR 1.8 billion at work. We also had certain divestments, close to EUR 900 million, especially in Europe, where we reduced our footprint. Some of the major growth investments are related to industrial terminals. We bought three terminals of Dow in the U.S. with around 700,000 cubic meters, and we developed a greenfield terminal in China, in Qinzhou, with close to 300,000 cubic meters. If you look at the gas terminals, also quite some activities. Two floating LNG facilities, one in Colombia, one in Pakistan, and expansion projects in Flushing for LPG and chemical gases.
Also, as already mentioned, we have increased our ammonia activities in Houston and have an LP-LPG export facility in Canada. We have given some guidance to the market on what should be the return levels of these growth projects. If you look at the lower graph, you see that we gave an ambition of 7 times EBITDA for our growth investments. We're currently running at 9 times EBITDA. As some of the projects still have to materialize over time and get more mature, we should be able to get close to the ambition we mentioned. Going forward, you may expect if you split it in brownfield, greenfield, and acquisitions, that our investment profile is somewhere between 4 and 11 times EBITDA.
11x EBITDA is most of the time also linked to an opportunity to further grow an activity. On the product side, as you have seen, we have quite a diversified portfolio, but also from a geographical point of view, the portfolio is well diversified. You see here that we grow on average 4% a year with a proportional EBITDA, where we take all the EBITDAs of our economic interests in any of the companies we own, has been growing from EUR 853 million to EUR 1 billion exactly in 2021. First of all, China and North Asia Division growing at around 11% a year and as I just said, supported by some of the expansion projects like Qinzhou, the industrial terminal I just mentioned. On the LNG side, growing with 13% a year.
You see that due to Pakistan and Colombia acquisitions, but also due to the organic growth we see here at the Gate terminal in Rotterdam, which is getting more active due to the energy security challenge we have in Europe as a result of the Russia-Ukraine war. Americas division growing 12% a year and close to 20% by now as part of our portfolio. Expansions delivered in Canada, but also expansions delivered in the U.S. Gulf Coast with the Dow acquisitions. Europe, due to investments but also softer market conditions, shrinking 3% a year, but still a relatively large part of our portfolio of 28% of the proportional EBITDA. Asia, Middle East, growing 3% over the last years.
Still some soft market conditions if you look at the Singapore Straits, but still growing as a division overall. You see that also from a geographical point of view, the portfolio is nicely diversified. I'm coming back to cash returns, which I mentioned in the beginning, and this is gonna be a little journey from accounting to value creation, because as we all know, IFRS is not a precursor for value creation. What you also see if you follow us as a company, that joint ventures are a larger share of us every year, and that journey is gonna continue because we're gonna invest more in LNG, industrial and new energies, which by nature are joint venture companies.
When we report our IFRS measurements, we report the EBITDA, and if you then break it up into subsidiaries and joint ventures, you see that the joint ventures are approximately 22% of our reported EBITDA. However, the joint ventures only are reflected by the net result. If we take the proportional EBITDA of our joint ventures versus the proportional EBITDA of our subsidiaries, you see that actually the joint ventures are 42% instead of 22%. In terms of our EBITDA, it's a much larger share than if you look at only the IFRS reported numbers. If you then look at cash flow, proportional operating cash flow, which is effectively the cash which is left to do any growth investments going forward, you see that our joint ventures grow to 70% and the subsidiaries to 30%.
I have to put this in a little bit of a perspective because all the global expenses, the global offices, global IT, have all been allocated to the subsidiaries. If we would only look at the terminals, then still the free cash flow of joint ventures versus subsidiaries would be 50/50. You see that from a free cash flow point of view versus what we have reported in our EBITDA from a free cash flow point of view, the joint ventures are much more important than you would see in our IFRS numbers. That is also why we would like to move away from ROCE. We would like to move to the operating cash return because we think that the operating cash return is a precursor of value creation. Let me explain that in a little bit more detail.
If you look at the operating cash return on a portfolio level, in 2019 we were at 12.8, 2021, 10.2. The expectation is that we will drop in 2022 to below 10%, and obviously we have an ambition to improve that going forward. What is the operating cash return? With the operating cash return, we look at everything in a proportional basis, so it effectively reflects the economic interest we have in any of the terminals we own. The operating cash flow we will define as the EBITDA minus the IFRS 16 leases minus proportional operating CapEx. An operating CapEx is anything we need to do to maintain our facility or to put in IT systems like Fritz just mentioned, but it doesn't include the growth CapEx. We compare it to our capital employed, our proportional capital employed.
How much money did we invest in any of the terminals we own? That gives us the Operating Cash Return and our ambition is to target at least 10% Operating Cash Return by 2025. We need to break the trend, but we also need to improve where we think that 2022 will end. At the same time, we need to deploy new capital and new activities like New Energies, LNG or industrial terminals. How we're gonna do that? We have three lines of action, rationalize, repurpose, and transform. Let me try to explain that a little bit more detailed. First, rationalize the portfolio. We will continuously look at the portfolio to see whether there's a strategic fit, for us, and if we think there is not a strategic fit, we may take a decision to divest.
Those proceeds we may use for further growth investments as already outlined. We're also actively looking at what is the future potential of any of the assets we know. Can we repurpose some of the assets towards new energies? We will allocate the EUR 1 billion already mentioned for new energies, industrial and gas. We will transform, like Fritz also mentioned, to go to the full potential of some of the sites. Patrick later on has a few examples on what we transformed in two facilities in the Netherlands, Vlaardingen and Vlissingen. That should lead to an improved performance of existing assets. To do that, we need a disciplined OpEx and CapEx approach, but sometimes we also need to adjust the market positioning of these assets. That should give us and bring us the additional cash return which is required.
People are asking us, "Okay, you will invest EUR 1 billion in new energy. What is it gonna bring? Can you give us some guidance?" Well, obviously there is still a lot of uncertainty about new energy and, as Dick already outlined, there's many lines, which we will work along, and it's very hard to predict what is gonna be the exact return. In order to give you a bit of guidance, we think that 80%-90% the way we look at new energy today is gonna be infrastructure-like investments, so we expect some gas-like returns, longer term contracts, but levels of returns which are in line with our gas portfolio. 10%-20% is probably gonna be more speculative.
Early stage projects, but also investments like we already announced in the plastics recycle, the company Xycle, and also on the hydrogen side with Hydrogenious. You may expect that 10%-20% of our money will flow into those kind of activities, which we think are gonna be very interesting going forward. Back to the third priority on creating the headroom and guidance on leverage. Senior net debt to reported EBITDA, that's our key covenant, for providing any opportunity for growth. The covenant level with the banks is around 3.75, and we aim for a limit around 3, and the range is 2.5-3 times. That's where we aim for in terms of leverage. We are quite close to 3. We need to create some headroom in order to grow the company going forward.
On the dividend policy, as said, we have shown already over the last year that we have a progressive dividend. Every year the dividend increase with five cents. The payout ratio fairly stable between 45%-55%. We will continue on the progressive dividend at least stable or rising every year. What we will take away is the payout guidance of 25%-75%. You can rely on us in terms of the annual dividend distributions. To summarize it all in a financial framework, we have a short-term outlook and a long-term outlook. Let me start with the short-term outlook. As I said in the beginning, a lot of demand for an EBITDA outlook on a yearly basis. We will announce during the H1 year 2022, not long from now.
A little bit of patience, please, because a lot of people ask us, "Can you do it today?" We will not. We will go through our process and we will announce an EBITDA outlook by the half-year figures. People ask us, "Will it be a range? Will it be a percentage?" We will take the freedom by then and look at the different scenarios, but you can expect that we will look at all options to give the right guidance going forward. On operating CapEx, we will continue to give our guidance. We gave a three-year guidance of EUR 750-EUR 850, and we will, by the year-end, give another guidance for the period 2023-2025, because this is obviously very critical in our free cash flow generation as a company.
We will give guidance on the growth CapEx. For this year it will be below EUR 300 million, but by the year-end results of 2022, we will announce the growth CapEx for 2023. On the long-term outlook, the non-IFRS measurement of operating cash return as a reflector of value creation at least 10% by 2025. On leverage, I said between 2.5 and 3 times EBITDA going forward. On the dividend policy, as just mentioned, a progressive dividend policy. Going forward, we will have a disciplined capital allocation and the priorities are threefold. First of all, we will focus on a very solid balance sheet, maintain our healthy leverage ratio, because that provides us with the license to invest for growth opportunities. We return value to shareholders in line with the dividend policy I just mentioned.
Last but not least, any remaining capital will be spent on growth investments with attractive operating cash returns. With these three priorities, we aim to generate an attractive total shareholder return. That brings me to the end of the financial journey for today. Very much look forward to work with Frits and Dick going forward, but also with all the executives and the total organization to make Shaping the Future a success. I'm personally convinced that we as a company, more than 400 years old, are able to reinvent ourselves every decade. This decade we will be able to reinvent ourselves again, and we have shown that many times before. It's really in our DNA, and that gives me the confidence that also this journey can be a very successful journey.
Let me quickly, before Frits and Dick come back on stage for the question and answers, recap what you have heard today, Shaping the Future. As Dick mentioned, we have a leading global platform in many aspects. We have a very significant footprint in the world. We have an unparalleled access to growth opportunities in the ranges we mentioned. We need to improve the performance of our existing portfolio. That's what we realize. We have a strong commitment to ESG. Although we are maybe small in terms of emissions, we are very committed to also reduce those emissions going forward, and we hope that in that way, we also have a very attractive profile for investors. We have a very disciplined financial and capital framework going forward.
The three lines are improve, grow our base in industrial and gas terminals, and accelerate towards new energies and sustainable feedstocks. With a target of creating at least 10% operating cash return and investing EUR 2 billion in growing and accelerating the business going forward. Yeah, last but not least, many words, but as we say here in Rotterdam, in a stadium not very far from here, no words but act, and I hope you will see sufficient acts from us going forward in line with the words we presented today. Many thanks for your attention. Dick and Frits, please join me on stage.
Yeah.
Thank you very much. Thanks, Michiel. Thanks, Frits. Thanks for listening. It's time now for us to listen to you a bit. Question and answers for the three of us. If you have a question, please raise your hand. There's mics over here. You grab a mic, please stand up and introduce yourself, and then we'll look at the question who is best suited to answer. For the people online, on the bottom right of your screen you have an orange icon, and if you click on that and key in your question, then Fatjona will get them and will pass them on to us. Thank you. Who is the first? I saw one person over there, so he was first. David?
Hi. Lambros Smyrlaios from Kempen & Co. I have two questions if that's okay. First one is: How will this transformation be financed? That's number one. Number two is if you can tell us about the product mix post 2025.
Sorry, your first question. What will be-
The transformation that you are showing us today be financed?
How will the transformation be financed?
Yeah.
That's a question for Michiel. On the product mix beyond 2025, I can say maybe a few things. We indicated very clearly on the slide the expectation of where we are in terms of capital employed in 2025, so there you see oil and chemicals together in that percentage below what was it? 40% or around the 40%, depending a bit on the range of where you look at it. What we expect is a gradual decline of that towards the period 2025-2030. We do not specifically target that we only want to have a certain percentage.
What we do see is by the acceleration in the investment in new energies and sustainable feedstocks, as well as growth in LNG and industrial terminals, but also the repurposing and the rationalization of the existing portfolio, there's a gradual shift, and that shift will continue to develop in the later part of this decade. Just, I mean, assume that that will gradually reduce in the same way it will reduce between now and 2025, if that makes sense.
Thank you.
Yeah. Michiel, on the financing?
On the financing side, well, we have a lot of joint ventures already in place. In going forward, we invest in LNG, industrial and new energies. It will be done via joint ventures as well. Most of these joint ventures, almost all, are financed on a joint venture level in a non-recourse way to Vopak as a holding company. The remainder which we need to invest into those companies is equity contributions, or sometimes we have a temporary shareholder loan will be funded from the holding, of course, in line with the leverage guidance. There is no aim to go to the market anytime soon. We need to create sufficient internal cash flow from our existing activities to fund that growth. We may have to create some additional headroom by certain divestments in order to facilitate that growth going forward.
That's the idea. Some people may not be completely related to this question, but I still wanna address the topic of share buybacks. A lot of people ask us, "When are you gonna buy back shares?" I don't expect any share buyback very soon as a company going forward because we will need the funds to grow our company going forward. We will use those funds to invest it in attractive projects.
Understood. Thank you.
David.
Good morning. It's David Kerstens from Jefferies. Thank you for the presentation. I've got a question on LNG and on oil. First of all, on LNG, what initiatives are you currently undertaking from the energy security point of view? We've seen some initiatives from Gasunie in Eemshaven. Gasunie is also your partner here in Rotterdam. What's happening in that perspective? How do you see midterm LNG development demand developing given the fact that gas for heating is being reduced, but you talked about gas-fired power plants taking over instead, which means you're still using gas for heating effectively, right? What if you're successful longer term in new energies, which are renewable and with a lower carbon footprint, how do you see LNG demand developing then?
Can LNG terminals potentially be repurposed for new energies? That's the first question on LNG. Then maybe secondly on oil-
I counted at least three, but.
On oil, I heard you say, Michiel, about the impacted part of the portfolio representing 5% of proportionate revenue, but I was wondering if you can please talk about what's happening here in Rotterdam in terms of your oil storage business at the moment. Thank you very much.
Very good. Michiel, you wanna say something about oil, and then Frits take the one on LNG?
Yeah, sure. Well, if you look at the oil development here in Rotterdam at the moment, there's obviously two things in the market. First, it's the Russia-Ukraine crisis, which is impacting flows, but also the market structure is very much a backwardated market, so it's a combination of two factors. If you look at the impact of flows, we expect most significant impact on the fuel oil going forward if the sanctions are really gonna materialize like it looks now, because obviously a lot of fuel oil comes out of Russia. Although, there is also some replacement fuel oil already coming into the market, so parties are actively looking. What you may expect for products like middle distillates diesel, Europe is still in demand of diesel, so it has to come from other places.
Maybe more longer haul cargos will enter into the Rotterdam market. It's unclear what kind of capacity that will require, but definitely it will require capacity going forward. There is some impact, of course, but it's, we think so far relatively limited for us, but the future is hard to predict, but we are optimistic that some of the products definitely need to be replaced going forward.
Okay.
Yeah. On the LNG side, David, thanks. Excellent questions, obviously and key considerations. First question was on the energy security and what are we doing to address it in particular, the Netherlands situation. Well, as you've probably heard, the Dutch government is very keen to basically maximize import possibilities to decrease, if not to totally avoid, Russian gas as of preferably already this winter. We're working very hard on our Gate terminal to see how much more throughput we could facilitate there. There may be some opportunities there that we're working on.
As you've indeed read in the press, our longstanding partner, Gasunie, is working on Eemshaven as a second import opportunity here. I think we've always worked very, very constructively and productively with Gasunie and we are right now already contributing with our knowledge to that project, but nothing in terms of a final, I would say, commercial agreement has been signed in that regard. But we definitely have expectations that, one way or another, Vopak will play a role there as well.
On the medium term, I think, there I would say there's quite a distinction between these FSRU-based projects where basically you have onshore pipeline and distribution infrastructure, which indeed could very easily be repurposed versus land-based tanks, which in the case of LNG are not directly suitable for later on storing hydrogen. They would be suitable, but they would be an overkill for ammonia. Also there yeah could be done, but it's probably not the most economic way. Repurposing, I would say, I very much see in the context of LPG tanks. Those are economically and technically generally speaking fairly suitable and adaptable to towards ammonia. That is certainly happening.
For LNG, we have to be mindful of the times. As Dick already said as well, I think we expect the energy transition itself to take shape at different paces in different parts of the world, with obviously, income per capita also being a key consideration there for governments. As we look at the future of LNG, we still think on the worldwide side there is still plenty of running room for now. In the more, I would say, the richer part of the world, I think LNG is definitely needed in the short term, for sure. I also anticipate that the
As soon as that short-term need is being taken care of, straight away, the carbon footprint debate will be back on the table. We keep that in mind as we invest. I think I answered your questions therewith, but if not, please.
Yeah. Thank you very much. Just a quick follow-up. What's your view on the debate about, yeah, reducing gas for heating purposes and then instead using LNG for gas-fired power plants?
Yeah. I think, obviously, these days where possible, you'd like to use as much renewable electricity. Renewable electricity is economically available, so where you can use renewable electricity, decently.
Mm-hmm
That for sure is the preferred solution. However, unfortunately it's not yet available in sufficient quantities to take care of all of our energy needs. Secondly, it's not yet suitable for all types of energy needs, even if you were to have it available. I do think that in the short term you will see, I would say a compromise on the ideal world, which would be we don't need this. Keep in mind that we still are lacking proper large scale storage facilities to basically moderate between the generating capability of renewables and the demand. There's a lot of work there too, still to be done. We're active as we said, for instance, with Elestor looking at battery storage in that regard on an industrial scale.
All of those things still need to happen before we can totally say, "Okay, this is realistic." I think in terms of some of the plans to take gas infrastructure out of the system, I think we have to keep in mind that it is not unlikely that for a lot of high energy applications, actually in future we want to use hydrogen. If I was an industrial complex and somebody were to tell me, "Okay, I only give you an electrical connection and no gas connection," I actually would consider myself a little bit handicapped going forward. Because I do think there's every reason to believe that also high energy intensity that you can deliver through hydrogen will actually become very important in the future.
Thank you very much.
Okay. Thank you. André, then we go to Fatjona online.
Hi. André Mulder, Kepler Cheuvreux. Two questions. Looking at the columns that you gave, a target of 10% plus for the operating cash flow doesn't seem to be ambitious. According to the column, it's already pretty close to the 13% you're making from 2019. Why not setting a more ambitious target there? Or do you expect that some negative things will happen which will drive down the returns in time? Second question is on a bit the same. You were talking about gas-like returns. Seems that they're a bit below the average, so should we expect something like 10, 11%?
Maybe one comment from my side on your first question, I hand it over to Michiel. André, on the 10%, what for us is very important, we break the trend. It's clearly indicated the 10% that we realized on Operating Cash Return in 2021 is expected to drop below 10% in 2022. For us, it's important with all the levers that we have to reverse the trend. That's why we put out the target of at least 10% in 2025. We're looking at doing that by improving the existing portfolio, but by at the same time allocating growth capital in that same period to new opportunities in gas, industrial and new energy. We hope you're right and that it's not ambitious that we can achieve that target earlier.
For us, it's the most important thing to break the trend and show trajectory going forward, and perspective around how to reach that at least 10% cash return. That's on the first question. I think on the gas-like returns, Michiel, if you wanna say something.
Yeah, sure. No, I can understand where you're coming from, André, also on the first question, but as Dick already explained, the at least is very important to highlight that and breaking the trend. If you look at gas and industrial obviously is the more attractive part of our portfolio. If you look at the gas side of the business, it is above the 10%, where we are today. We should be able to continue that journey, although we also have to realize that some of these investments sometimes take time to mature. Take, for example, the Dow acquisition. It takes time to get to the right cash returns, yeah, because some of the projects entail growth or efficiency improvements, and that takes a bit of time to materialize it.
In order to do a quick turnaround, and breaking the trend is not so easy. We aim for at least a 10% cash return.
Thank you for taking my question. Rachel Fletcher from Morgan Stanley. I actually have three questions, if I may. The first is coming back to the cash returns question. The guidance, as mentioned, is more than 10%, but on slide 40, I think it is, it looks like it's closer to 12%, by 2024. Is that how we should be reading into the chart that you've put on that slide?
On your growth CapEx guidance, you have EUR 1 billion in gas and industrials, and also EUR 1 billion in new energies out towards the end of the decade. How should we be thinking about the split over years out to 2030? And in each kind of segment, when should we expect a CapEx hump, if there is one? And then finally on your progressive dividend policy, what indicators will the board be looking at to kind of determine whether there will be dividend growth every year? And that's it from me. Thank you.
Thank you, thanks a lot, Rachel, for your questions. I'll take the one on the growth investments and Michiel, you can say something-
Yeah
On the cash returns and the progressive dividend policy and the triggers that we look at. On the growth, the EUR 1 billion and EUR 1 billion, Rachel, the best way to look at it, a few considerations. First, as you've seen, sometimes with these capital allocations, whether they shift in one calendar year or another calendar year because of certain closing or just a spread of capital expenditures, don't pin it down on every individual year. We try to guide the specific year as well as we can, but sometimes, as you can see this year and last year, it's slightly above the EUR 300 million, and then this year it's slightly below the EUR 300 million because of the spread and the planning of the execution of the actual expenditure. That's one.
Second, gas, industrial expect a continuation of where we have been spending and investing in that particular segment over the past period. On the new energies and sustainable feedstocks, you will see that towards the H2 of this decade, so beyond 25, that will be picking up pace in terms of the investments. So on your question, is there a certain hump? We don't foresee at the moment that there's a very particular hump that will come by in this period, so we expect it to be gradually expensed in these eight years that lie ahead of us.
If we expect that there will be one, we will be indicating and guiding the market, but then it has much more to do with either a certain opportunity that might be there that always may arise, or with the decent planning of the capital expenditures over a period of time. That's probably the best way to look at it. Back-end loaded for the EUR 1 billion on new energies, the EUR 1 billion on gas and oil, industrial terminals, gradually over the years spread. Yeah?
Yeah, the first question, thanks very much for the two good questions. The first question was really on the graph of the cash return, so the left-hand side really shows the actual performance. The right-hand side is more for impression purposes, so it doesn't give you the exact number. That's also a little bit vague in terms of the bars. That don't take that as guidance going forward. At least should show that we have an ambition to be beyond the 10% as indicated. On your progressive dividend policy, what is gonna determine the increase of dividend? Yeah, every year, like we have done that over the last years as well. We look at the available cash flow of the company.
Are there very significant growth projects going forward? What can we afford ourselves in terms of leverage? Obviously, we wanna be as consistent as possible with the progressive dividend policy, but it will be a bit fine-tuning during the year-end to really determine the final dividend policy. That's the guidance I can give additionally to the progressive dividend policy.
Thanks, Rachel, for your question. Maybe because I know online, probably one of your colleagues is asking the question.
Yes.
I wanna give him or her also the opportunity. Fatjona?
Yes. We have the first question from Thijs Berkelder for ABN AMRO ODDO. He's asking, looking at the improvement of the portfolio, can you explain what your divestment strategy is? Is there any multiples that we could look for, like in EBITDA or free cash flow basis? And then his second question is, why are you targeting only a 30% rate reduction in greenhouse gases and not more? And how would you reach such a strong decline in total injury rates? What are the actions that you will take there? Thank you.
Great questions. Thanks a lot, Thijs, for asking them. Sorry for changing the date on you because I know the previous date you were supposed to be here, and you're not in a position to do so now. On the divestment, I will shed a light on it, but maybe first, Frits, if you wanna say a few things on the 30% reduction and the TIR.
Yeah, definitely.
Yeah?
Let's start with why only 30% when you hear people talk about much larger percentages. I think, as you have seen from us and also in our strategy, we are actually aiming to grow in things like refrigerated things like LPG, LNG, and also eventually ammonia and hydrogen. Those are all things which for the energy storage industry that we are, they are more energy intensive than say a regular oil that you can just put in a container and nothing needs to be done. While we are making this transformation to enable the world to make the shift to newer products, the energy intensity of our operation actually grows.
That means that with the intended growth path that we have in mind, if we would do nothing, our emissions would not stay flat, but they would actually increase quite significantly. The 30% overall reduction is actually in a way to think about it, made up of a say 45%-60% reduction of our existing base, plus growth from these more energy intensive products for us to store like ammonia. That's the background to the 30%. On the TIR question, what we are showing here is the three-year running average of our total injury rate. Yes, that needs to come down significantly.
Now, I'm very happy to report that if I look at just the last year, which is gonna be one of those three years that is gonna weigh for the three-year average, we achieved quite a reduction already last year to 0.25. That means that of these, of this average of 0.2 that we're aiming for, 1.25 is already in the bag. The other two years, obviously we are waiting for. I think, yes, it's a very challenging target. Our performance is leading within the industry, so we have really pushed ourselves here. Since it is so important, safety, we definitely do wanna push.
I cannot guarantee that we will get there, but we will certainly do our utmost to be as close to it as possible.
Maybe your question, Thijs, on the divestment target multiples. What is good to mention here is on the divestments, the way we look and the way we define the divestments or the rationalization, is first to look at our own valuation. How do we look strategically at the value that a certain asset in the portfolio can generate over a long period of time? That's the first step to look at, and then we compare and test and sound the market based on the attractiveness of the asset for us. What opportunities do we have to repurpose potentially? How do we look at the strategic value of that asset? We test that in the market towards what other potential owners look at and how they would value that particular asset.
Obviously we're interested to transact on it if we feel that that somebody else is valuing those assets in a more attractive way than we do ourselves. You've seen that in the Canada example, where we've been able to generate an attractive cash multiple. In the case of Australia, we've done the same exercise and we came to the conclusion that it's much better for us to keep the asset at this moment in time. That's what we will continue to do. A specific guidance to say, at a minimum, you will always find us transact at an EBITDA multiple of X, Y, Z. It's not there because you have to look at it on an individual basis and compare it again to how we look at the future value of that particular asset.
That's probably the best guidance I can give you at this point. For Fatjona, one more or a few more online.
Yes.
We go to you. Yeah? Okay.
Two more questions online from Quirijn Mulder from ING. He's asking, with regard to the new projects, how will you decide on them, on free cash flows or on the returns? And the second question is, regarding like the Rotterdam, you are mentioning that the impact on the numbers is not large. However, if we look at the EBIT and the occupancy levels, they are quite low. And given the market structure, what could we foresee for the next quarters on this? Thank you.
Maybe the second question first. I'll say a few things and then maybe Michiel on the-
Yeah.
On the free cash flow and the new project. Quirijn, thanks for your questions. On the Rotterdam situation, we obviously. This is not an earnings moment. We'll get to you with the earnings update at the end of July for the H1 year. You've clearly seen the development in the Q1 , especially in Europe and Africa. We've indicated the impact that market structure, but also weak supplies from Russia have on the situation in European ports. As Michiel already clearly indicated, we do expect actually the effect of Russia for the remainder of this year to be relatively limited and modest for all the reasons that we've already indicated before.
As of 2023, then the full sanction package will potentially come in, and that will then have the impact that Michiel has talked about. For the interim period, I think what is important to realize, it's the last comment I want to make, it's about the diversified portfolio. One thing to look at Europe and Africa is to say, well, if the occupancy is very low, and you're making these type of earnings, there's opportunity when the occupancy goes up again, what it can do to the earnings. The balancing effect of what's happening in Americas, what's happening in Asia, what's happening in LNG, what's happening in China, it still made us set a good performance, good financial performance from an earnings perspective in the Q1 .
Again, we'll give you more guidance on that in Q2 update at the end of July.
Yeah. Maybe to add to that, I think, Quirijn, I mentioned that the impact on the numbers was probably limited from a Russia point of view, but I also said that there is quite a significant disadvantage because of the market structure which is in place for the storage business. Yes, there is lower occupancy also in Rotterdam as a result of those two main factors. Maybe it's also good to mention because I didn't maybe clearly mention that during the presentation, is that we obviously will, with the new strategy in place, but also the most recent developments, every half year we look at the valuation.
Of our assets, we will do that again during the half year to look at the valuation of assets also in line with the new strategy and maybe some of the repurposing which will take place going forward. On the new projects, we obviously always look at return. Yes, free cash flow is important, but free cash flow always has to be looked at in relation to the capital we put into any business because this is a capital-intensive industry. I don't need to explain it.
Yes, free cash flow is important, but more important is what kind of return can we make, and that's why we also wanna have this very clear, I hope, and we will clear it going forward in more detail in press releases, have a clear ambition on the Operating Cash Return as a company going forward.
Last question before we go for the break. I think, Ramon, you had one.
Yeah. Thanks.
Yeah.
Ramon van der Zwan, ING. Question on industrial decarbonization and carbon capture and storage and the link between the two. I think, Frits, you mentioned that with the industrial terminals, you're well positioned as Vopak to help decarbonize. One of the examples you gave is CO2 transport and temporary storage. But then you said we will not be involved in CCS, at least not in that example. I know Vopak is also looking together with Gate terminal at the CO2next terminal, so I was wondering what the strategy is in CCS and until what point in the value chain Vopak aims to be involved.
Mm.
Yeah.
To be precise, thanks, Dick, and thanks for your question, Ramon. I don't think I said we will not be involved in CCS, because indeed we are part of that value chain. I certainly didn't mean. I don't think I said-
I misunderstood. That's good to clarify.
Okay. I think where we feel we are very much at ease is when it comes to basically storing the carbon dioxide and transporting it through pipelines and treating it and loading it or offloading it from ships. That's very much our home turf. I think if we were to be really asked to do a little bit more upstream of that value chain, i.e., the active capture of the carbon dioxide, I think we could consider to be a small part of that. But we are not a company that has leading technologies in that regard. But we could play. J ust to integrate the supply chain, we would be more than willing to look at it.
When you talk about the downstream injection and in the case of the North Sea area, that's mostly targeted to be in old gas fields, that's certainly not something that we would feel is a natural strength of ours. We would be looking primarily at other players to take the lead there. Does that clarify our role better, Ramon?
Yes. Thank you. Thanks.
Right.
Good. Well, thank you for your questions. Thanks for your attention. Time to take a break. We go to the room next door, and we're gonna be back here in exactly 10 minutes. For the people online, that's, 10 past the hour. No, 5 past the hour. Thank you. We'll see you next door.
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Great. Thank you everyone for coming back, and thank you to the ones who are joining us from the webcast. We start our second part of the Capital Markets Day, and I am pleased to invite Patrick, Division President of Europe and Africa. Patrick, please.
Thank you. Good afternoon, everyone here in the room in Rotterdam, and good afternoon to the viewers online. Standing here in front of you, quite excited to share a few things with you about two facilities within our Europe network. Before I do that, let me introduce myself to you. My name is Patrick van der Voort. I've been with the company since 2008 in different roles, and currently heading our Europe and Africa division, and a very proud employee of the company.
As I mentioned, the focus of this presentation is on two facilities in our European network here in the Netherlands, Vopak Vlaardingen and Vopak Vlissingen, Flushing. Before I go there, let's first zoom out and look at our total network here in the Europe and Africa region. As you can see, 16 terminals in our region, predominantly in the Netherlands, Belgium, but also in Spain, we have a joint venture, a nice industrial terminal and chemical distribution terminal. We have an inland fuel distribution terminal in two locations, actually in South Africa. A nice diversified portfolio here in the Netherlands. Gas transportation fuels, chemical distribution, edible oils, vegetable oils in different locations.
Strategic storage in Eemshaven. In Belgium, we have three chemical distribution terminals at those locations. Today, the focus is going to be on the terminals marked by the red dot and the black dot. That's Vlaardingen and Vlissingen, Flushing. Why focus on these two terminals in this presentation? Going back to the presentation from our executive board, you will have seen that the strategic priorities on reshaping, on shaping the future are about improving growth and acceleration. Vlaardingen and Vlissingen are two facilities where we believe that over time, we've been able to show a very nice improvement of our performance in these locations. That's why we have the focus on that.
Let's first have a look at our facility in Vlaardingen. That's a 550,000 cubic meter facility offering rail, truck, and marine services for ocean-going vessels and barges. Serving four key markets in those locations. Key markets being veg oils, sunflower oil, rapeseed oil, coconut oil, tropical oils. Base oil, which is a material which is used to fabricate lubricants. Oleochemicals, chemical compounds derived from vegetable oil and animal oils and fats used in cosmetics, personal care products. Waste-based feedstock and bio-based feedstock that are used for biodiesel and renewable diesel.
If we take a look at the journey in Vlaardingen and the improvement journey in Vlaardingen, we actually have to go back to, in this sheet, to 2013 to explain what we have done there. There's three things that we have done that contribute to the improvement journey, which is we have rejuvenated a large part of our assets in Vlaardingen. We have diversified our product portfolio, and we have been able to grow our capacity in this particular location. In this slide, we will focus on the diversification of the markets that we serve and on the growth.
What we have done, you can see in 2013, a large part of our focus was actually on the vegetable oil market. This is a market that is quite dependent on seasonalities. It's also a relatively volatile market with large fluctuations. Over time, we have made some decisions to add in a new segment in Vlaardingen. One of the segment is the base oil segment. We've added a certain capacity dedicated to base oil storage. We have a long-term contract with a nearby customer. There, that was our first step in diversifying the portfolio.
In the biodiesel segment, we've seen a considerable growth in that area, very much driven by the Renewable Energy Directive in Europe and the increased mandates there. The big change that we are now seeing is that in terms of biodiesel, renewable diesel, in terms of the components that go into that, we see a change from crop-based bio components to waste-based bio components. That's, I think, the main change and the main development that we're seeing there, which we also actively are trying to materialize. Vegetable oil and oleochemicals is a pretty stable element, growing but not too fast, fast-growing in line with population development.
The result of those few choices is now that we actually have a very nicely diversified portfolio, as you can see in the bars represented in 2022. That, I think, has been one of the major objectives or major contributors to our improved performance. Secondly, you also see, if you look at the bars, you see some growth that has taken place over the years. 100,000 cubic meters over the past decade, and another 63,000 cubic meters that we are adding as we speak, which is under construction.
The part that was not reflected on the previous sheet is actually the rejuvenation of the facility, and that's something that has started already a long time ago. Vopak Vlaardingen is a facility that goes back quite some time. Over the last few years, we've had a few what we call terminal master planning exercises. Terminal master planning exercise is what we do every five years to basically take a critical look again to see whether the assets that we have still fit with what the market requires. Over here in this slide, you can see a few examples of the rejuvenation that took place. You see a few pictures before and after. We used to have steam pumps. Those are replaced right now.
We still used to have riveted tanks. Those are replaced right now. This is the infrastructure that is catering towards those four markets that we serve, and we feel that that is a very good and very nice fit. Like I mentioned, the last addition to the asset is an additional 63,000 cubic meters completely catered towards the waste-based feedstock market, and that is under construction as we speak. Okay. When we are looking at our short-term performance or our performance in general, there's always the question that we ask ourselves is: how do we win? How do we win from our competitors?
In our view, how do we win from our competitors is by making sure that we are better than our competitors when it comes to our safety statistics, we are better than our competitors when it comes to our service performance measured through our Net Promoter Score, and we are better than our competitors in terms of efficiency and ultimately our financial result. On this slide, you see a few indications of those elements. On the safety side, you'll see that over time we've seen a significant improvement on process safety. Personal safety is improving, but there's still work to do, still requires a lot of attention.
On the Net Promoter Score, you see a massive improvement there, and that goes hand in hand again with the fact that we've modernized our asset and got that up to speed. You can see our customers are rewarding us for that in terms of our Net Promoter Score. You see a high performance consistently above 10% in terms of Operating Cash Return over the years, very much driven by very high occupancy levels, again, because the assets actually fit very well with what the market requires. Strict cost control and obviously with the high service levels also our ability to push for a premium in the market.
Looking forward, looking ahead, how do we keep winning? How do we make sure that we keep beating our competition? We look at a few elements on this slide that form part of our strategic plan in 2025. These are critical elements that our customers want and our customers value. First and foremost, of course, our service delivery performance. When we look at service, it's always defined in a combination of the assets that we actually employ. Do they actually provide what our customers are asking for? The operational performance on these assets, the truck turnaround times, the waiting times for ships and vessels.
Of course, overall, the interaction with our customers when our customer service reps are on the phone with our customers and how do we service them. That will continue to be our main focus. If you take a look at the ultimate potential plan of Vlaardingen, something that Fritz alluded to, and how can we actually maximize the value out of this facility? At this stage, the sea jetties, but also the truck loading base, they are at this stage the limiting factor. Now we can do two things. We can, of course, add other jetty capacity or truck loading capacity.
What we feel is our first job is to make sure that we really take out all the possible waste out of the process and debottleneck the facilities that we have there so that we are able to serve higher throughputs on our existing assets. That's what we will continue to look at. Efficiency obviously to keep our costs under control. A lot of effort on innovation. One of the things that is currently very actual is of course our energy cost in these locations.
We are connecting our assets with smart sensing to allow us to really read out what our actual consumption levels are of the assets that we have out there. By knowing that, trying to optimize the settings and lower our consumption levels. We also have other innovative applications at our terminal, again, to improve the efficiency and to automate certain jobs that are still done in a manual way today. Over to our facility in Vlissingen. Slightly different story. Vlissingen is a gas terminal. 2 refrigerated tanks, 6 spheres and 8 mounted bullets.
One of the unique selling points of our facility in Vlissingen is our rail connection to the hinterland. We're serving four different markets in Vlissingen, starting off with LPG for household purposes, but also serving the LPG market with LPG being a feedstock for the crackers in the hinterland. Crackers we can run on naphtha, can run on LPG, independent of the economies of that feedstock. There's an interesting case to be made for using LPG as a feedstock, and that is currently going very well. Also, storing chemical gases, such as propylene, butadiene, as key building blocks in the chemical process.
Butadiene is a material which is currently long in the European setting. From that aspect, we are facilitating the export out of Europe to the U.S. and Asia. Propylene, there's a big short in Europe. There's a PDH plant being developed, but for the time being, that is still generating a big short. We are offering import opportunities and storage for propylene in this area. Last but not least, Vlissingen is actually a very nice location for the development of the new energies. I'll come back to that a little bit later. The story here is slightly different.
The improvement story is slightly different, where you see that in Vlaardingen this was a rejuvenation of the assets. Vlissingen has been much more a story of organic growth and in that way, actually, growing into the full potential of that facility. The organic growth took place in a few areas. We have been adding bullets. 6 bullets in the period, 2015 to 2018. Recently we've added another 2 bullets in 2021. Like I said, a part of our unique service offering in Vlissingen is our rail connection.
Our competitors are actually in Antwerp, in the Port of Antwerp, and in that location, the rail connection is actually very poor or non-existent. This is one of the unique selling points. Therefore, next to the investment in storage capacity, we've been investing quite heavily as well in the rail distribution capacity. First, by investing in larger shunting areas in the Vlaardingen terminal. Sorry, in the Vlissingen terminal. Secondly, also by adding additional loading base so that we could facilitate and help our customers maximizing their throughput from the tanks that they're using towards the hinterland. That has been going and functioning very, very well.
Like I mentioned, there's also a really nice opportunity in the new energies arena. Why is that? That's because Vlissingen is part of an industrial cluster, which is called Vlissingen Gent-Terneuzen, where there is quite a bit of manufacturing and refineries available. There's a refinery there. There's a large petrochemical complex there. There's the steel industry there. The fertilizer industry is there. Obviously, all these parties are having the same objective, which is to decarbonize their process.
We are actually in close discussion with all of these parties to see in what way, from an infrastructure point of view, we could help and help the industrial cluster there in that exercise. The opportunities that we see over there is actually first in providing CCS CO2 storage infrastructure in Vlissingen. That is, I think, the most obvious step. Secondly, this could also be a very good import location for hydrogen in the form of ammonia, green ammonia.
As a matter of fact, we do have two refrigerated tanks in Vlissingen today storing propane and butane, but they could be repurposed to actually store green ammonia. In that sense, I think there's from that optionality that could create value for the industry around us. Next to that, also given the fact that this is a location where there's a lot of wind energy being developed, electrolyzers are being developed. Also, the potential application for flow batteries in that location is a very interesting subject. Similarly here, compared to Vlaardingen, what do we focus on?
How do we keep winning from, or how do we win from our competitors? Focusing on safety performance. You can see also there an improving performance over the last few years, but there is still, also in the area of personal safety, there's lots of work to do. The Net Promoter Score, you see actually, an empty bar in 2019. That's not an oversight. That's a zero that we got in that year. In that year, we were actually punished for the fact that we actually lacked the real capacity that our customers were asking for. That was then also a trigger for us to actually start investing in additional real distribution capacity.
As you can see, our customers have been rewarding us for that in the last couple of years. Operating Cash Return well above 10%. You see a slight dip over there. That is because in the last few years we have been investing heavily, again, in this real capacity that's part of our service and sustaining CapEx or operating CapEx. Therefore, you see a slight dip. I'm quite sure that with the infrastructure that we have in place, with the service offering that we have in place, you will see a growing Operating Cash Return in the years to come. Also, there the main drivers are, again, high occupancy.
We are at very high occupancy levels at our Vlissingen terminal. Cost control and pushing for a premium rate level on the basis of the service offerings that we have compared to our competitors. Similarly, how do we keep winning? First and foremost, fully capitalize on our real distribution capacity that we have there. The capacity that we have today, we're not yet fully maximizing that. Our customers are not fully maximizing that. Obviously with the growth of these markets, we could still get some more value out of the facility. We continue to focus obviously on safety and service.
As I mentioned, I think Vlissingen is an excellent location with great opportunities for new energies and helping industry around us to decarbonize. We'll continue to focus on the efficiency side through innovation and automation in the ways that I've mentioned before. That's actually the story from my side. I would like to hand it over to Kees van Seventer.
Okay. Good afternoon, everyone, also online. Happy to be here. Let me introduce myself first. My name is Kees van Seventer. I started to work for this company 31 years ago, in many different roles. Since about six years, I'm responsible for LNG. Since the beginning of this year, that also includes new energy. I'll explain a little bit why that is later on. How did we get here? I think, on the long journey that Vopak is at, more than 400 years, only 10 years ago, a little over that, we started with LNG. It's our youngest cash-generating business, in fact. We started with Gate and TLA. We will visit Gate this afternoon for those who will be joining. TLA is in Mexico. That was all both in 2011.
Since 2018, we managed to really start accelerating on that growth path. We added our terminal in Pakistan, and we added our terminal in Colombia in 2018 and 2019. We were happy to renew the big contract we had for 10 years in Mexico last year, and also to sign the deal for Hong Kong, which will be commissioned in the coming months. That will be our fifth terminal on this map. Hopefully also, as Frits was explaining elegantly, I think, we expect to join Gasunie, our partner in Gate, in the second terminal in the Netherlands, in Eemshaven, in the northern part of the Netherlands. The scope of what we have been doing has changed a little bit over time.
From land-based terminals only in the beginning, we opened up to floating terminals because that seemed to be the preference of our customers. We are open to both right now. I think in the Hong Kong project, we took an extra step also investing into the FSRU itself. LNG is an exciting business, and I think especially now, anyone who has a gas connection at home, many people in the Netherlands have that, knows that the prices have been rather volatile in the past few months. Extremely high, I would almost say. I think fundamentally, the market for LNG has still a long future ahead of it.
We think that it will reach its maximum capacity close to 2050, and that is supported by most of the market consultants. That's maybe not the typical reference that you have if you live in Western Europe. I think the ability to replace coal-fired power plants around the world, but also to replace the burning of wood, for example, to generate cooking heat, is one that is quite relevant in many places in the world. Obviously, there's always a little bit of a challenge between what you want to do on a sustainable basis, what the affordability of the products is, and what is quite relevant now, what the security of supply of that energy especially entails.
They call that the energy triangle. Sustainability, security of supply, and affordability are competing with each other in a way. You see that right now, super high LNG prices on the spot market maybe now tenfold the level of a year ago. It makes it very difficult for countries where we have a strong focus on that one to get their first LNG import terminal up and running to buy LNG at affordable rates. Some of these countries are struggling to get that up and running. Europe is again quite hot. I think from a sustainability perspective, I think in Europe we were advancing quite fast into the new energy area, into ammonia and other products. Marcel will talk about it a little bit later.
Now we currently just adding a lot of extra LNG capacity in Europe. New LNG terminals in Europe are added as we speak. I already mentioned Eemshaven, but I think it's all around us. It's in Greece, it's in Italy, France, Germany, anywhere. I think what we are doing there is trying to add as much capacity as we can in Gate. Current production of gas in Gate is already double of the level of a year ago. We're increasing the regas capacity as we speak. We are considering to start an open season for fourth tank in the course of this year as well. Gate is hot, so for anyone who's joining this afternoon, you will have a good time.
I think the high LNG prices also accelerate the idea for new investments into the supply side of LNG. Qatar, the United States, Australia, as the three biggest producers in the world, are taking more FIDs to add capacity to their existing liquefaction plants, but also to add new liquefaction to the equation. That will generate more import opportunities. That's what we focus on mostly. You see a few of the countries that are in this space or in this focus areas that we are focusing on. We expect more locations to be added to the six that I mentioned on the previous slide, both via acquisitions and greenfield, by the way.
We're also looking to extend our scope to do more in the supply chain, but we are careful with that. I think our business model proves over time that a strong focus on what we are strong at is paying off in the end. Again, I think the pricing element is here the big uncertainty. The war in Ukraine has generated a lot of turbulence in the energy markets globally, and we are benefiting from that in some locations, but we might also suffer from that in certain projects that we were focusing on, or maybe even in some of the other locations. That's the reality of today. Quite a lot of turbulence, but I think the portfolio that we have is pretty unique.
We also are capitalizing on the portfolio that that Vopak has in a wider sense, so the countries that Vopak is active in, we are using that to generate more LNG opportunities for that. All in all, I think a very strong and long future ahead of us when it comes to growing the base where LNG can support. Now up to my last slide, I think we merged new energy and LNG in the beginning of this year, as I said, for a number of reasons. We wanna accelerate growth in new energies, and that's doable I think because it requires similar competencies to execute those projects. The contract structures, the capital structures, the financing structures are similar. Technical capabilities are not that far off, so they are pretty close.
What we also see is that a lot of our customers are also doing the same and asking us to join them in the new energy side of their business and their future. That's easy for us. We have a long-standing relationship with many of them, as well as with our existing joint venture partners in LNG. That makes perfect sense to do that together. Lastly, on the locations, very important element of our business in general, but specifically also in this case, we think that many locations will be quite critical, also in the new energy landscape. A good example again, for the third time now, for anyone who will join us in Gate this afternoon, and if you don't, maybe reconsider.
Gate is expanding itself, as I explained, but is also, and it was already mentioned, adding the CO2 project for liquid CO2 will be added to Gate. The injection point of the subsea gas field of Aramis in the North Sea will be tied into the Gate terminal. We will ship in CO2 from other locations, bring it there and add that to the Gate terminal. Similarly, we are considering an H2 project for liquid hydrogen at the Gate terminal as well. For those who will be joining, our managing director will explain that this afternoon. Thank you very much. Let me introduce Marcel van der Kar now to focus a bit more on the new energy side.
Thank you, Kees. Great to be here and to stand in front of you and talk about new energies, about the vital products of the future, and to make the link to the acceleration we want to achieve in taking those opportunities going forward. A few words on myself. I have a technical background, and after my studies, I started as a trainee with INEOS Olefins, 26 years ago. Moved from operational technical safety roles, more in general management, and from general management more into the commercial side and the strategic side. Actually that all nicely comes together if I talk about new energies and the things we can do and we want to do, together with our customers and also with other parties that we work together with.
I think you've seen the four elements or four focus areas already a few times this morning. We look at hydrogen, at CO2 infrastructure, about the changing feedstocks and about long-duration energy storage. Those are the four elements we work on within the industrial clusters, and we work on between the clusters, where we want to make sure that the local demands that are there in the different areas can be supplied from other regions. Let me take you through the different four elements and give you a bit more examples as well. We see that the hydrogen market will play an important role going forward. The hydrogen will play an important role in decarbonizing the energy systems.
The energy systems of today are already complex, and they will be even more complex going forward. I think it was Frits already explained the H-vision project, where we set up an infrastructure in the port of Rotterdam together with key partners like the refineries, to make sure that the infrastructure is there to support the transformation of those sites. That is really what's happening inside of the clusters, and we see that we can copy that towards other clusters as well. We also want to make sure that the local demand, which is bigger here than the local supply, will come from the right areas. That transport of hydrogen is not as easy as it sounds.
It's not as straightforward as we see that with a lot of other products that we store. We can do it by cooling it down, but you need to go to minus 253 degrees. That's extremely cold. LNG is 160, minus 160, so it's another about 100 degrees cooler, and it takes a lot of energy. It is possible. We think it can happen in the future, but for now it is still further away. We have a project that we're working on. Kees already referred to it.
We're looking at it to build two tanks at our Gate terminal with parties that are strong in that field that we can work together with to find out how that works and how that really can develop. It's more pilot type of project. The second way we look at transporting hydrogen is LOHC, liquid organic hydrogen carriers. What you do then, actually, you have the hydrogen, let's say, somewhere in the north of Africa. You connect it there to a carrier. It's an oil type of product. You ship that towards here, and then you disconnect it again from the carrier, and you ship the carrier back to where you have the hydrogen.
You really use the carrier, you use another molecule to transport the hydrogen. Very interesting way to do it. It's very safe way to transport hydrogen. It's a very good way to use the existing assets. A lot of the assets that are now today in use for oil products can then be reused in transporting that hydrogen. The only thing that really needs to be scaled up is the disconnection again of that hydrogen from the molecule, so the so-called dehydrogenation step. We are now working on a project together with one of the companies we've invested in via Vopak Ventures, called Hydrogenious, to develop a project here in the port of Rotterdam to make the disconnection happen and to make that bigger and scale it up.
Further on, we see that scaling up step by step continuing, and we see that as one of the ways that, in, let's say, five, eight, maybe 10 years from now, really can large scale contribute to the import of green molecules in those demand center that are there. Last but not least, I think you've heard the name ammonia already a few times this morning, we see that, ammonia is a good way as well to transport hydrogen. By connecting hydrogen to nitrogen, you create ammonia. You transport it, store it as a product that we already know. As well, Vopak, we have 6 locations in the world already where we have storage of ammonia, so we know how to store it.
It is a product like many of other products we store. It is toxic. You have to be careful. There are limitations, but we are a company that are well-positioned to further develop that. If you transport that ammonia into a region, then in that region, you can disconnect the hydrogen again, and there you can use the hydrogen directly. You can also use the ammonia as a feedstock and use it directly in the chemical industry and the fertilizer industry.
It makes it a very attractive demand area, and that's why you also see here that 80% growth in the next years in that market is interesting to step into, and we wanna play a role. One of the places where we want to play that role is here in the port of Rotterdam. I think you've seen probably this announcement already, but let me explain a little bit what we are doing here. We're doing it with three partners. We're doing it with Gasunie, we're doing it together with HES International and ourselves. The three parties, we've joined up to develop this terminal here in the port of Rotterdam.
By using our knowledge of the handling of ammonia, as we already doing it in Singapore, in Houston, in China, in the Middle East, we also would like to develop it over here. The knowledge of handling the product, we bring to the table. Gasunie has two tanks for LNG that you see here in the middle that they are, well, using, but not at a high intensity as we speak, so that those tanks could be converted to ammonia. We're looking at that. We're studying that. That's not the way we expect that will happen in many places around the world because most of LNG tanks will be needed for LNG going forward.
In this case, they are very well suited to look at them and see if we can transform them. We're also looking at two new tanks, so really building new build facility, but two extra tanks, so a total of, let's say, 200,000 cubic meters of ammonia storage we could develop there. Another thing we are looking at here is a cracking facility, so the cracking of ammonia back to hydrogen. Really splitting the hydrogen and the nitrogen. Again, that is a technology that exists but only at small scale, and many companies are looking at the development. It's really more research and development. There are companies that are specialized in that. We do think that it's a critical element of our service offering.
We do see that as part of our terminal. Whether we invest in it as a consortium, whether we do it with other partners, that's still all open, but we see that there's an interesting role for here as well. Of course, the hydrogen, when it's cracked out of ammonia, it can go into the pipeline and go into the backbone system, going to the different industrial clusters, but also to Germany and other countries even. Loading of ammonia directly, for example, on barges to those areas that are in need of green molecules is also a possibility. The second area of focus is the CO2 infrastructure. Already mentioned a few times where we want to play the role in between the capturing.
There are specialized companies to do that. There's the injection in the depleted gas fields, and in between, there's a lot of logistics needed. That is inside of the industrial clusters, that's in between industrial clusters. The CO2next project that we have together with Gasunie at the Gate terminal is a good example of where we can import CO2 and then push it into the pipeline system of the Aramis consortium. Also the fact that we are creating the tanks at our Flushing terminal is a good example where we can then support the export of CO2, and that CO2 transport helps then to decarbonize the industry in that region, and then bring it all together to Rotterdam.
In this setup, you see whole new ecosystems being developed, and that is really something that is happening already over here in this part of the world. We see this also as a good opportunity in Asia, and also in the Americas, also there to take action in the different areas, in the different industrial clusters where we are already present. If I look at the changing of the feedstocks, we see that there are different elements. Ammonia already explained. We also see different feedstocks, cleaner feedstocks being developed in methanol, in biofuels. But one thing I want to point out here specifically is the recycling of plastics. We see a role for us as we are part of the supply chains of the plastic industry today.
We also see that we can play a role in the future of those supply chains and the new supply chains. Really the recycling of plastics, the treatment of the plastics, the pyrolysis plants that need to be developed, and then the blending of those pyrolysis oils in the different end markets, that's where we definitely see that we can play a role. Also there with the one of the investments we did in one of our ventures, Xycle, we are looking at those opportunities together. Long-duration energy storage. For us, that's mainly electricity storage as we speak, so large scale batteries, so turning our tanks, traditional tanks, where we can store different electrolytes into large scale batteries.
We think that is a good role that we can play there, an important part where we really see that the industry is needing that, the society is needing that, there is a lot of green electricity being produced, being developed, and that needs to be balanced out more and more, and large scale batteries will play a big role. Also there, we have several projects. We're working on several different technologies to make that happen. Still small scale, and also there we want to scale it up and pilot different types of projects. With those different elements that I've touched on just now, and this is my last slide as well, is that we do see that we can play an important role in decarbonizing of the different industrial clusters. That clusters need to decarbonize very fast.
They need to make sure that their CO2 emissions reduce quickly in the next couple of years.
Take that forward into the next steps going to 2050. I know that if I say 2050, that a lot of people think, "Well, that's still very far away," but in these large-scale transitions, it is important to start now, and important to start now with those technologies that are large scale, like the CO2 projects, like ammonia projects. They are large scale. They can be developed very quickly in the next years. Think about operation, starting operation in 2026, maybe end of 2025 even already. Also at the same time, developing new technologies with pilot projects, with scaling up projects, and that's what we also want to do and need to do in also the next five years.
We will do investments in that side, on the large scale and on the pilot scale side as well. I hope I give you an idea and that we really can play an important role in the decarbonization of around us and that we can then accelerate that in our own strategy and we'll focus on that more and more. Thank you very much and I want to hand it over to Dick.
Well, I wanna ask you to stay, and maybe Patrick and
Yeah
Kees to join me over here. We have a little bit more time left. I know we are taking a bit more than we planned for, but I'll promise you, we end at the hour. Just a little bit more time on the question and answers for Marcel, Kees and Patrick after their presentations, and then I'll close it off and we'll finish this part of the program. Any questions, anyone? If not, I'm sure there's a few online.
Yes.
Petrona?
Yes, indeed. We have one question from Quirijn from ING. He's asking that the LNG is only 6-7% of the total EBITDA. Are you going to change your reporting with gas being LNG and LPG? And how confident are you about LNG, given that so many projects for LNG haven't taken up yet? Thank you.
Kees, you want to say something about.
Yeah. On the reporting, I think that's a matter of choice. I don't think that's something that I can really address. Yeah, I think on the number of projects, it's clear that we have lots of opportunities in LNG that are complicated to materialize. It's not easy to develop greenfield projects. It's something that takes a lot of time and a lot of effort, a lot of money. Sometimes because the government in the specific country is not completely ready for it. I already talked a little bit about affordability versus security of supply. Many new LNG terminals are developed in a security of supply crisis, I would almost say. Not all of them, but many of them do.
In a crisis, many governments want to have full control over that specific terminal. If you look at the statistics, the vast majority of LNG terminals around the world is government-owned. I think that limits our ability to just go and buy and or build a lot of LNG terminals in various places. It's a regulated business. It's important for the security of supply, as I just mentioned. I think we are going at a tremendous speed. I think Michiel already explained this morning that we are now the largest independent LNG infrastructure provider, and we expect to stay ahead of that game in many projects. We want to remain also critical on the per project itself.
To have to select the right projects that work for us. Maybe as a bit of a cover to that.
Thanks. Yeah. Thanks a lot, Kees.
Yes. Our next question it is: Could you please share how the energy transition in Northwest Europe is already changing your business in Vlaardingen and Vlissingen?
Patrick?
Yeah.
Yeah.
Yeah. I think from two angles. One, obviously our own footprint, yeah. That's what we're working on, as well as Frits has mentioned. We see that wherever, whenever possible, we'll switch to the usage of green electricity, and that's exactly what we have done in the Netherlands. Also in various locations where we are still making use of gas, we're going down electrification routes. For instance, Vlaardingen, where we use a lot of energy for heating of the products. There we are now actually investigating whether we can go to e-boilers. That's what we are doing ourselves.
In terms of the energy transition, yeah, as I mentioned, we see in Vlaardingen a great opportunity to grow in the biodiesel segment. The renewable diesel, I should say. Why is Vlaardingen a good location for that? Because this is for renewable diesel, there's a big demand for waste-based feedstock as a building block for that, like used cooking oil. This is not going to come in big lots on big vessels on big ships. It's coming in via barges via trucks, different specification. So people need small tanks, need a lot of modality, and that's exactly what we can offer in Vlaardingen.
On Vlissingen and as I mentioned, we are currently constructing in Vlaardingen, and what we're constructing is specifically for waste-based feedstock, and we started to build that on a speculative basis. A few months after we actually mentioned that, we were able to contract out the full capacity to a nearby player who's building a biorefinery in that area of Vlissingen. It's in the area of decarbonization, helping the industry to decarbonize. I think CO2 storage is most likely there.
The first opportunity where I think industry players are not necessarily interested in building that infrastructure themselves are looking for a party that can build it for them, and hopefully not only for one party, but as common infrastructure for a couple of players over there. Thanks. Patrick?
The last question: With the growth in returns trending towards more Americas and Asia and lower growth and return in Europe, how would it affect and shape up your future CapEx plan, especially in the view of significant investments of EUR 1 billion in new energies?
Yeah. Maybe that's best for me to take. We can clearly see that with the investments that we are doing and the proportion of that investment, first of all, in joint ventures, but also in the areas of gas and industrial, that will certainly be allocated to a larger extent to Americas, but even more so towards Asia, Middle East, and China. That's where you will see a large portion of that capital flowing. I think second, if you look at the EUR 1 billion of capital that we allocate towards new energies and sustainable feedstocks, I think the initial portion of that, a large part will be spent actually here in Northwest Europe, because that's by nature.
If you listen to Marcel's elaborate overview of the projects, that will be by nature in this part of the world. But we also expect over time that that will have its effect in North America, that that will have its effect on what's happening in the Middle East and also in Asia. It will come maybe at a later stage, but we certainly expect that also the investments will take place over there. So it's well spread. New energies predominantly here and over time in the other parts of the world. LNG, LPG and industrial terminals, U.S., Middle East, Asia. Less here. Yeah? Thank you, gentlemen. Thank you. Thanks for your
Thank you.
Good presentations. Thank you and sharing a bit of insight and examples to all the stories that we've highlighted. Gives me the opportunity to close off the morning and, well, the afternoon already, but this part of the program before in the afternoon you will go on this highly recommended tour to Gate, as Kees already shared with you. Maybe a few things to take away before I invite you over for lunch on the other side. That's basically where I started. Let me see. That's basically where I started. Very clearly indicating this morning to you the fact that we are that leading global platform. You've heard me talk about it.
You see that coming back from each and every one in the presentation, what the value of each and every asset is and what opportunities that gives us. Patrick was very clear in indicating the opportunities that existing part of the portfolio give us to growth opportunities. Marcel was very clear on the opportunities around the industrial clusters and what those opportunities give us with a changing end market of our customers and the drive for decarbonization.
The focus on improvement of the existing portfolio, I think very clearly laid out in Frits' presentation of what we do over there, the financial metrics that we expect and the story around repurposing, rationalizing and transforming the different assets with, I think, very clear and good examples, but very specific examples, and I hope you get an appreciation of how different the approach is in each and every asset. I compare the story of Patrick, of what we do in Vlaardingen and what we do in Vlissingen. It's two complete different stories. You have to go side by side, location by location, use the local experience, local expertise and the global knowledge to really make the best fit for purpose plan to turn the local locations and sites around.
Our commitment to ESG is very clearly indicated in Frits' presentation, and I think following through in everything that we do with our purpose. Last but not least, the disciplined capital framework and the drive for improved cash return and focus on free cash flow and the impact that has certainly within the organization, because that's where we expect that focus on free cash flow will certainly drive a different type of mentality and put the focus on that very clearly. All in all, shaping the future, improving our existing business, focus on allocating significant amount of capital towards growing LNG, LPG and industrial terminals, as well as accelerating our growth towards new energies, is a very exciting journey that lies ahead of us.
It's a very exciting journey for me as a CEO. I'm very confident that we can deliver on that because I know the people and the tremendous commitment of the people that we have within this organization, the capabilities that we've shown over time to transform and transition this organization into where we are. I'm super excited to work together with Frits and Michiel and the rest of all the Vopak colleagues to make this a reality. As Michiel already said, I won't use the slogan that he used, but another slogan over here in Rotterdam, and that's we like to roll up our sleeves and get to work actually.
That's what I'm very much looking forward after having had this day with you now as of this afternoon and tomorrow we can go into action and start executing and deliver on the promises and commitments we make here in front of you. Again, I wanna thank you for connecting with us online, for being here in person and invite you, for the ones that stay here, to the other room and join us for lunch. Thank you very much.