Hello, and welcome to the Royal Vopak Q3 2026 Results Update. Throughout the call, all participants will be in listen-only mode, and afterward, there will be a Q&A session. This call is being recorded. I am pleased to present Mees Bovelander, Investor Relations Manager at Vopak. Please go ahead with your meeting.
Good morning, everyone, and welcome to our Q3 2026 Analyst Call. Our CEO, Dick Richelle, and CFO, Michiel Gilsing, will guide you through our latest results. We will refer to the Q3 2026 analyst presentation, which you can follow on the screen and download from our website. After the presentation, we will have the opportunity for a Q&A. A replay of the webcast will be made available on our website as well. Before we start, I would like to refer to the disclaimer content of the forward-looking statement, which you are familiar with. I would like to remind you that we may make forward-looking statements during the presentation, which involve certain risks and uncertainties. Accordingly, this disclaimer is applicable to the entire call, including the answers provided during the Q&A session. With that, I would like to turn the call over to Dick.
Thank you very much, Mees, and good morning to all of you joining us in the call this morning. Let's move to our results. We delivered an outstanding performance in the first nine months of the year, in which our well-diversified portfolio, robust customer demand, and strong contributions from our growth projects drove a record level of cash generation. This is reflected in our occupancy rate of 91%. Our proportional EBITDA grew by 5% year- on- year. That is on an adjusted basis, accounted for negative currency translation, divestment impact, and a specific one-off recorded in Q2 of 2025. Our operating free cash flow grew to EUR 671 million, driven by record cash generation in the third quarter. We also continued to make good progress on our growth strategy. In the Netherlands, we successfully commissioned the fourth tank at our Gate terminal.
The new capacity is backed by long-term take-or-pay contracts and is delivering returns in line with targeted investment multiples. In Canada, phase 1 construction of REEF remains on schedule for commissioning in the first quarter of 2027. We are also progressing with the construction of the Optimization 1 project for additional throughput capacity, which is expected to be in service in the second half of 2027. Furthermore, we are advancing the Optimization 2 project for additional capacity to reach a potential FID by the end of 2026. In India, AVTL commissioned capacity to store ammonia at our Pipavav location and made final investment decisions to further expand capacity. To outlook. Our strong operational performance and the contributions from our growth projects continue to drive momentum. As a result, we are raising our full-year outlook for proportional EBITDA and proportional operating free cash flow.
As always, this remains subject to ongoing market circumstances and currency fluctuations. Looking at shareholder returns, we introduced an interim dividend, with the first payment of EUR 0.72 per share distributed this September. We have completed 75% of the EUR 100 million share buyback tranche, which is part of a multi-year program of up to EUR 500 million. Let us take a closer look at the breakdown of our results, specifically for the different terminal types we operate. We see an overall solid performance across the portfolio, with higher results year on year. Our strong oil performance was driven by robust activity in key oil hubs like Rotterdam, alongside improved results from our oil distribution operation in South Africa. The chemical segment benefited from the contribution of newly commissioned capacity in the U.S., combined with improved autonomous performance.
Gas and industrial terminals, supported by long-term contracts, on balance, delivered a stable performance and achieved higher throughputs year- to- date. All in all, this has led to a proportional EBITDA of EUR 906 million, which is an increase of 5% compared to the same period last year on an adjusted basis. Having discussed results, I would like to provide some context on the conflict in the Middle East, particularly the impact we are seeing in our network. This conflict has triggered a historic supply-side shock across energy and manufacturing markets, driving product shortages and price volatility. As we operate on a global scale, these disruptions are not confined to the region. They extend across our broader terminal network. We must therefore look at both direct and indirect effects across our network to see the complete picture.
Taking a closer look at our direct exposure to the region, we own and operate four storage terminals across the Middle East, with strategic locations in Saudi Arabia and the United Arab Emirates. Around 5% of our proportional EBITDA is generated by these terminals, and they represent around 4% of our capital employed. Our terminals in Saudi Arabia are linked to industrial clusters, while our Fujairah terminal in the Emirates, located outside of the Strait of Hormuz, functions as an oil hub. Due to the disruptions caused by the conflict, we see reduced activity and customer utilization in our Middle East terminals. In terms of indirect exposure, we saw differentiated performance across our network, where strong performance at select terminals were partially offset by softer activity elsewhere.
For example, in India and Pakistan, we saw a drop in rented capacity and activity level as prices triggered demand destruction across price-sensitive domestic sectors, compounded by shipping disruptions and export delays from key Gulf suppliers. However, we also saw positive effects. To substitute for the loss of product volume from the Middle East, we have seen a rebalancing of trade routes emerging. Our key terminals, hub terminals, play an important role in facilitating this, leading to increased activity. Also, security of supply concerns are leading to increased storage demand at some locations, which has supported spot sales. To conclude, this conflict has again proven that the diversification of our portfolio across geographies and products is one of our key strengths. As we navigate a volatile global landscape, we have demonstrated the ability to meet our customers' evolving needs regarding energy security, affordability, and sustainability.
Now, taking a closer look at these dynamics, it's clear that the investments we have made in the past years are proving to be highly relevant to address the main themes in energy markets. At Gate in Rotterdam, we support Europe's security of supply by providing essential LNG import capacity. In Canada, our REEF terminal connects Western Canada production directly to Asia, cutting shipping times down to just 10 days compared to the 25 from the U.S. Gulf Coast, delivering significant cost advantages. Meanwhile, in India, AVTL is enabling the transition to cleaner fuels by building the infrastructure to import products such as LPG and ammonia. In parallel, our recent battery energy storage systems investments are advancing into execution, providing the physical buffer capacity required for grid stability.
To summarize, the infrastructure that we own and operate and the investments that we've made in the past years continue to be highly relevant in the fast-evolving landscape of energy and manufacturing markets. With our diversified portfolio of strategically located terminals, we enable the secure, affordable, and sustainable flow of products, meeting our customers' evolving needs. As mentioned, the Gate terminal in Rotterdam is critical to provide energy security to Europe. This terminal enables our customers to import liquefied natural gas via seagoing vessels from various countries and distribute it as gas through pipelines, ships, and even trucks. This is successfully reducing the historical reliance on single-source pipeline imports and domestic production, improving security of supply. In 2023, we took an FID together with our partner Gasunie to build an additional tank with a capacity of 180,000 m³ . The proportional investment for Vopak was around EUR 175 million.
After a construction period of three years, the fourth tank was officially commissioned on the 1st of October this year, safe, on time, and within budget. With the fourth tank coming into operation, the terminal is now capable of supplying roughly two-thirds of the Netherlands' national gas consumption, which is primarily used for electricity generation and residential heating. The new capacity, like the rest of the terminal, is underpinned by a long-term take-or-pay contract and will be delivering returns in line with targeted investment multiples. Of our EUR 4 billion proportional total growth CapEx program to invest in gas, industrial, and energy transition infrastructure by 2030, we have so far committed a total of EUR 2.4 billion, of which around EUR 450 million has been committed in the first nine months of 2026.
We currently have EUR 1.5 billion in assets under construction, with around EUR 790 million scheduled for commissioning by year-end 2027. The majority of this will be driven by the commissioning of REEF Phase 1 and Optimization 1 in West Canada. Once operational, these assets are underpinned by long-term take-or-pay contracts and will deliver returns in line with targeted investment multiples. Looking ahead, we remain well-positioned to achieve our long-term ambitions. We've shown strong business performance in recent years, which we continued in the first nine months of 2026. The market indicators for storage demand remain firm, supporting the delivery of growth projects and the resilient performance of our existing business. This is reflected in our long-term OCR ambition of between 13% and 17% on a rolling 12 months basis, which we continue to deliver on.
In addition, we are well on track to invest EUR 4 billion growth CapEx through 2030. With that, I would like to hand it over to Michiel to give more details on the Q3 2026 results.
Thank you, Dick, and also from my side, a good morning to all of you. First of all, we had a very strong performance in the first nine months of 2026. We report a healthy occupancy rate, increased our EBITDA, and further improved our operating free cash flow generation. These results highlight the strength of our well-diversified portfolio, particularly in times of increased uncertainty and volatility. Simultaneously, we continue to invest in attractive and accretive growth projects while returning value to our shareholders. Let us take a closer look at the performance of the portfolio. Proportional EBITDA increased to EUR 906 million compared to EUR 902 million in the first nine months of 2025. Excluding negative currency translation effects, divestment impact, and a prior year one-off settlement related to a commercial resolution, the proportional EBITDA increased by 5% year-on-year.
Operating free cash flow increased to EUR 671 million, an increase of 6% year-on-year, excluding negative currency translation effects and divestment impact. Our operating cash return on a 12-month rolling basis increased to 15.8%, reflecting the structural ongoing trend of improved cash generation. Demand for our services remains strong, which is reflected in an occupancy rate of 91% year-to-date. Moving on to our business unit performance overview. Excluding negative currency exchange effects of EUR 9 million and EUR 6 million divestment impact, the proportional EBITDA increased by 2% year-on-year. However, as said, a significant positive one-off item was reported in Q2 2025, which had a EUR 22 million impact. If we exclude this one-off, year-on-year EBITDA growth is around 5%.
A large part of this growth can be explained by the strong EBITDA contribution of EUR 26 million from our growth projects, particularly in the U.S., the Netherlands, and South Africa. The performance across the existing network was strong, primarily driven by strong oil markets, which benefited, for example, our Europoort oil hub terminal in the Netherlands and oil distribution terminals in South Africa. This was partly offset by the weaker performance in the Asia and Middle East business unit due to the ongoing Middle East conflict. We are continuously focused on generating predictable, growing cash flows to create value for our shareholders. In Q3, we generated a record level of operating free cash flow of EUR 227 million. In the first nine months of 2026, we showed a further improvement in our EBITDA to cash conversion, which is now around 74%.
This improvement was driven by decreased operating CapEx and IFRS 16 leases compared to the first nine months of 2025. The increase in EBITDA combined with higher cash conversion led to an increase in operating free cash flow of 4.3%. If we subtract from the operating free cash flow the taxes and financing costs, we arrive at the proportional free cash flow, which increased by 6.8% year-on-year. Based on the EUR 486 million of free cash flow generated in the first nine months of this year and the market cap at the end of Q3, our free cash flow yield currently stands at around 12%. This yield is supporting our robust shareholder distributions in a period of increased growth investments. The improvement of our cash generation has been a structural trend in recent years. Year-to-date, we have realized an operating free cash flow per share of EUR 5.88.
In the first nine months of 2021, this was EUR 3.49, reflecting an increase of 68%. This has been realized by a strong operational performance, contribution of growth projects, and the transformation of the portfolio. This has been further accelerated by our share buyback programs. Since the beginning of 2024, Vopak has bought back 12.1 million shares at an average share price of around EUR 39. This has reduced our share count by approximately 10%, including the expected cancellation of the shares we bought back during 2026. Moving on to our balance sheet. Our proportional leverage, which reflects the economic share of the joint venture debt, increased to 2.95 times, reflecting a ramp-up of our growth investments. If we exclude the impact of assets under construction, which do not yet contribute to the EBITDA, the proportional leverage is at 2.15, which has remained stable in the last years.
Of the 0.8 leverage associated with assets under construction, approximately half is attributable to REEF, which is scheduled for commissioning in Q1 2027. Our ambition for the proportional leverage is unchanged and between 2.5x and 3x . To facilitate the development of growth opportunities that enhance our operating cash return, Vopak's proportional leverage may temporarily fluctuate between 3x and 3.5x during the construction period, which can last two to three years. This is all in line with our disciplined capital allocation framework. Investing in growth opportunities is a key part of our capital allocation policy. We have the ambition to invest EUR 4 billion on a proportional basis by 2030 to grow our base in gas and industrial terminals and to accelerate toward energy transition infrastructure.
At this point, we have already committed around EUR 2.4 billion to growth investments since 2022, of which around EUR 855 million has been commissioned and is delivering returns in line with the targeted investment multiples. Around EUR 1.5 billion of growth projects are currently under construction, with around EUR 790 million of them being delivered during 2026 and 2027. In addition, for 2028 and beyond, another EUR 750 million of projects are expected to come into operation and will contribute to the results. These projects will be delivered in line with the provided CapEx to EBITDA multiples and support our long-term operating cash return ambition of between 13%-17%. That brings me to the outlook for the full year 2026. As mentioned by Dick, the market indicators for storage demand remain firm, supporting the delivery of growth projects and the resilient performance of our existing business.
This gives us the confidence to increase our full year 2026 outlook, with proportional operating free cash flow projected at around EUR 840 million and proportional EBITDA expected to range between EUR 1.2 billion and EUR 1.22 billion. Bringing it all together in this slide, we had a strong first nine months of 2026, with solid cash generation and a portfolio that remains well-positioned despite increased volatility in the market. In addition, we continue investing in attractive growth opportunities while returning value to shareholders, with the recent addition of an interim dividend payment. With that, I hand it over back to Dick.
Thank you, Michiel. With that, I would like to ask the operator to please open the line for Q&A.
Thank you. To ask a question, you will need to press star, one, and one on your telephone and wait for your name to be announced. To withdraw your question, please press star, one, and one again. Please stand by while we compile the Q&A roster. We will now take our first question. One moment, please. Our first question-
Good morning
is on the line of Philip Ngotho from Kepler Cheuvreux. Please go ahead.
Yes. Hi. Good morning. Thank you for taking my questions. I have two, if I may. First of all, on the EBITDA bridge from Q3 to Q4, but also thinking into maybe early thoughts about 2027. Starting with the Q3 to Q4, if you could just help us understand a little bit if we should expect any other movements except for, of course, Gate coming now into contributing fully for this quarter, if there should be other things that we should be mindful of when looking at the Q4 EBITDA estimates. Because it feels a little bit, if I look now at what you're expecting in terms of uplift from Gate, that the higher end of your guidance range should be actually achievable. But just wondering if you could share your thoughts there, what to keep in mind. And the same for going into 2027.
What are the items that we should be mindful of when thinking about as expectation of 2027? My follow-up question on that as well is, you have given indications also on the Middle East, the total impact as well. But I'm just wondering to what extent could we see there for 2027 any pressure if there are contract renewals? I don't know what the average duration is on the contracts that you are currently in place. So we have seen, of course, a bit of impact on throughputs, but what could be the impact on potential new pricing levels? That's it.
Good morning. First of all, the EBITDA bridge from Q3 to Q4, indeed, the Gate project is going to contribute to the results. We own effectively half of it, 50% up to EUR 350 million investment. So that's going to contribute to the results in Q4. I think what you should take into account, what you tend to see in our business is that the seasonality of cost in the fourth quarter is always a bit leading to higher maintenance costs. In Q4, we see also a bit of rising energy costs. So we're a bit cautious on the cost side, I would say, also given what we have seen in previous Q4s, when you compare it with the previous years. And there is still a bit of unknown what's going to happen in the Middle East. You mentioned already the renewal of contracts.
Obviously, if you look at the two main locations we have in the Middle East, the one is the Jubail facility that is in fact by very long-term contracts, so you do not see a lot of renewal risk there. But in Fujairah, the contracts are shorter, and the appetite to renew is less than obviously before the crisis. That is a factor we take into account for the fourth quarter as well. That may also, leading to your second question, that may also still move into the next year. That is very hard to predict, of course, exactly. Where is the conflict going? How severe is it going to be? Will there be any solution? To a certain extent, we see volumes recovering, especially on the crude side, but not really on the LPG and on the product side.
On the chemical side, that is where we still see, let us say, quite a bit of a supply shock from the Middle East. So that may impact ultimately the renewals for the Fujairah location. It still may impact markets like Pakistan and India going forward, but the level of that impact is very hard to predict. It will be significantly compensated, any impact, obviously, by the growth projects coming on stream. So, you may expect that as from Q2 next year, REEF is going to have quite a positive impact on our results in line with the investment multiples we have given to the market. So that is going to be positive contribution to our results. So, definitely 2027 should see a step-up in terms of growth and some uncertainty still around the Middle East.
So far, if you look at the results over the first nine months, and those are also the measures we have taken, you see that the impact of the Middle East conflict, although it is negative for the locations I just mentioned, we see certain positive developments as well, like South Africa, for example. But we see also quite a strong business in the Netherlands and to a certain extent in the U.S. Overall, we are not able to compensate it in full for the conflict, but we have taken additional measures on the cost side, on the operating CapEx side, just to really protect our cash flows.
That is also the reason why we have increased, let us say, the cash flow actually a step more than maybe the EBITDA side, because certain of the elements which are in the free cash flow are not in the EBITDA, especially on the operating CapEx side. So that maybe is a bit of a long explanation to your question, but hopefully it gives you a bit of guidance.
Yeah, definitely. Thank you very much. That is clear.
Thank you. We will now take the next question from the line of Quirijn Mulder from ING. Please go ahead.
Oh, good morning, everyone. I hope the noise on the background is not returning now. First of all, my question is about the CapEx programs and the plans for the projects. If I look at the text of the second quarter and compare the third quarter with it, then I see only one change in the tables. That is the story about AVTL, where you have shifted, let me say, from the third quarter to the fourth quarter 2026. I think it is more fine-tuning. That is all what is in the table changed. But at the same time, if I read the text, and especially with regard to AVTL, there is some progression with regard to a cryogenic project, and there are also other changes maybe to be made. Do we have to expect some update full-year numbers with the new projects coming up or FID? Is that in the planning?
I also would like to know how the progression is with regard to Australia, both with regard to the LNG terminal and the Botany Bay storage. Maybe you can elaborate on that.
Good morning, Quirijn, and a special word of appreciation to you because I know this is the last time you will be calling in to the Vopak results call after many, many years. A big thank you to you for all your contributions and constructive feedback to the company over the past years. Maybe to your questions, your two questions. Maybe AVTL, what you see in the table is the expected in-service date from the project in Mumbai, JNPA. What we are announcing is further expansions in that same location. It is a bit, we will try to probably at the full-year results to make sure that you have the right specification for those projects. For now, JNPA is an attractive port in Mumbai.
We're investing currently in liquid and cryogenic storage, and we have additionally added more capacity in that same location, which is listed under the announcement that we made today, like further investments made next to Kochi in India. I think that's one element. Again, we will clarify that probably in the next quarter once we have a good visibility on all the timelines. Second, your question on Australia, both LNG as well as the Sydney expansion. LNG, we're making very good progress on the permit side, meaning that the whole public process of our permit application for the LNG terminal has passed.
We're now waiting for the publication of our permit, which for now looks quite promising and positive if it wasn't for the effect that our elections upcoming in the state of Victoria, there will probably be a slight delay because of the fact that the elections are taking place at the end of this month. I think by and large, the way we look at it from a permit perspective, the public engagements that we've seen have until now, and as I said, that have finished, that looks quite promising in terms of getting the permit in line with what is good for the project delivery.
To Sydney and the potential for fuels expansion, that's a project that we're working on in the current terminal, and that looks promising and expected if everything goes in the right direction, meaning customers and contractor quotes that are coming in, expected to come in. We hope to take a final investment decision on that in the coming quarters.
Thanks also for your kind words.
Very good.
Thank you. We will now take the next question from the line of Jeremy Kincaid from Van Lanschot Kempen. Please go ahead.
Good morning, all. First, a couple of small questions. I note that there was, or there is a strike at Trigon at the REEF facility. I was just wondering if you could comment on whether or not you think that will impact your operations or earnings in the fourth quarter. I also saw a couple of articles about SPEC in Colombia, which might have been down for a short period of time. I am not sure if it is up and running again, but I was just hoping to get a comment on if you think that will impact the fourth quarter. My second big question, obviously you are doing quite a few developments in the battery space in the Netherlands.
I was just wondering if you could frame the size of that opportunity going forward, how big you think, or how much money you might invest into that category of assets over the coming years.
Jeremy, good morning. Thanks. Maybe on Trigon and SPEC specifically. Trigon, yes, indeed, we know that there's a strike ongoing at the moment. Together with our partner, because this is a joint venture that we have together with AltaGas, we're working to get to a resolution for the situation. We know that obviously the attraction and the importance of the LPG exports that are currently already ongoing through the Port of Prince Rupert and through REEF are important. We're just trying to work to find a resolution for that. No indication at this moment in time that it will have a prolonged impact on Q3, sorry, on Q4. Then maybe on SPEC. SPEC is running at almost full capacity. That has also to do with the fact that the drought in Colombia is impacted by the El Niño effect.
Therefore, the gas imports are really crucial and important. We've seen in some of the performance, the operational performance of the FSRUs that are there, and the alignment with what needs to be received and pumped into the gas grid. We've seen a few hiccups over the past period, and we're working with the FSRU providers and the pipeline operator to make sure that that is smoothened out. It's not expected to be a fundamental challenge in Colombia. That I think to the details of Trigon and Colombia. Maybe Michiel, you can say something on the batteries.
Yeah, definitely. On the batteries, we have invested or committed around EUR 400 million. Those are two large battery systems, as well as the acquisition of Green Energy Storage. If you look at our overall Accelerate ambition, it's EUR 1.4 billion. Approximately half of that now is committed. There is still room for, let's say, doing additional expansions on the battery side. That is what you may expect. The exact size at this moment is very hard to predict. The likelihood of other new infrastructure on the energy transition side is there. To be honest, if you look at the developments over the last years, it goes much slower than expected. Anything which is related to ammonia and hydrogen or CO2 storage is harder to get off the ground. It's probably closer to the end of the decade now, given where the situation is.
That means that there is an opportunity maybe for us to go a bit faster on the battery side, but it has not been decided yet. We will certainly, at a certain moment in time, give more guidance on this. But for the moment, it is just too early. We are working on a few other projects to see whether we can get them off the ground, hopefully get to FID beginning of next year. That would be an additional investment. But as I said, too early to give you an exact indication, but definitely an ambition to further invest in this space.
Great. Helpful color. Much appreciated.
Thank you.
You are welcome.
We will now take the next question from the line of Kristof Samoy from KBC Securities. Please go ahead.
Yes, good morning. Kristof Samoy, KBC. Thank you for taking my questions. First of all, congratulations on the results. In terms of questions, maybe first on REEF, it is more of a semantic discussion. You are mentioning, or you label investments or potential investments in REEF as Optimization 2 phase. Is this the phase 2 that you referred to earlier in which you said, "Okay, we want to push forward or pull forward investments to avoid a ramp down and ramp up of our construction team that is working on the phase that is going to see commission in the first quarter of 2027?" Then maybe a follow-up on BESS. Could you give an indication of the size of uncovered investments that you are willing to make when you take FID?
I know you try to secure tolling agreements, long-term offtake, and so forth, but what capacity would you like to have secured via a tolling agreement if you take FID? Then on ongoing business development in Australia, I was wondering if you could share your views on the news that we saw on the Golden Beach project in the state of Victoria, the storage project, and how it is potentially impacting your trajectory towards FID, if you have to scale down, if it is a positive, a negative. Then on Fujairah, is there a possibility that you can indicate what impact the conflict had on throughput levels pre-conflict and where we are now so that we can get a sense of potential recovery should the situation in the Middle East ease? Thank you.
Kristof, good morning. Thanks for your questions. Maybe first one on REEF. I get your question on the semantics because we call it Optimization 1 and 2. First of all, the reason that we call it optimization because it is much more of an addition to, I would say, the main and the first base investment in Prince Rupert on this particular site. Why do I call that the main and the base? Because that is where the massive truck or rail car unloading mechanism built, but most importantly, the jetty. Any addition to that, we call that an optimization of the first phase. That is an Optimization 1 that we have taken the investment decision already on and announced earlier in 2025 that will be commissioned after the first phase in the second half of 2027.
The other one that we are referring to today, which is your question, Opti 2, Optimization 2, that is a further optimization within, I would say, the scope of the current REEF setup. That is more butane and propane export capacity, tank and rail unloading capacity, but does not require further investments in the jetty because the jetty is already there. That is why we call it REEF, phase one, Opti, sorry, REEF, Opti 1, and Optimization 2. Hopefully, that clarifies. Optimization two, we have not taken yet an FID, but hope to be in a position to do so in the remainder of this year. I hope that clarifies enough. Then maybe on BESS.
Maybe-
Your question.
Maybe-
Yeah.
Just then on the wording Optimization 2, does that also mean that it will be very limited as compared to the amounts that you disclosed when taking or when announcing FID for phase one? Or we should not read into that?
No, define very limited. I would say in terms of capacity, obviously REEF is the largest investment, again, because of all the land work that had to be done and has to be done, and the marine infrastructure. Opti one is relatively a small investment because it is really an optimization of existing infrastructure. Opti two, the way it is being progressed at this moment in time, would entail additional storage capacity. So it is somewhere in between the other two, REEF and Opti 1, if that makes sense, in terms of investment dollars. But again, we are not yet at the point to take an investment decision, but that is just to give you an indication. I hope that is helpful.
Yes, that is.
Okay. Then maybe on BESS, your question was the tolling versus the exposure to maybe merchant risk over there. It's roughly around two-thirds of the available capacity in a battery we're looking to cover with longer-term toll agreements. The remainder, we have taken the position to actually wait till we get closer to a date for in-service of the batteries and then define how we will cover the contractual situation for the remaining capacity. That could be we take a bit of merchant market risk, or we put the available capacity in the market, but for different type of contract durations. That's how we look at the investment. That's how we also have taken the investment decision for the first two batteries that we announced in Q2. That's to give you an indication. Then maybe on Fujairah, your question was on the activity levels in Fujairah.
Hard to indicate it into exact figures, but to give it an indication, I think first and foremost, it's important to realize it continues to be a very volatile situation. The initial effect was in terms of occupancy, still high, but activity levels quite low. What you see now, and quite low basically meaning product that was in the tanks was taken out as much as possible, but there wasn't a lot of new product coming in, and I'm talking about Q2 in this year. What we have seen in Q3 is the compounded effect of a few things. Yes, there's already the first effect of some renewal contract discussions that have taken place. Part of it has been successfully renewed, part of it is still subject to renewal, and not yet maybe expected to be renewed because people can afford to take a bit of a wait-and-see approach.
What you see in Q3 and what we expect to continue is a different type of flow of product coming through because there's a lot of shuttle servicing that is now happening through the Strait of Hormuz, and that requires ship-to-ship transfers in Fujairah, and that requires quite a bit of activity in the terminal, which is keeping the crew quite occupied at the moment. There's a few other, I would almost say, land-based flows that are also very important and are taking shape in Fujairah. I think it's a bit of a mix of how that activity level is going to develop also going forward. It's very hard to predict that given that the situation remains uncertain and volatile.
But it at least gives you a bit of an indication that it's not completely zero, and we're looking for quite some opportunity still in that area and have confidence with the location of Fujairah in the medium- to longer- term, given the strategic positioning of it. Then your last question was on Golden Beach, and you have to help me there a little bit in Victoria, what the project is about, and what your question was specifically.
Well, there was some news flow popping up two weeks ago that the Golden Beach project received a permit from Victoria State, which would allow for gas storage in almost depleted gas fields.
Okay, that's the one. Okay. Yeah, I think that's a different type of situation because even to store gas in depleted gas fields, I think the key topic here is there is not enough gas expected to be in and around Victoria at the end of this decade, and therefore, at least maritime flows, so marine flows, LNG import flows, are expected to take care of the deficit that Victoria State will have. So having on land or even offshore, but a gas storage underground is not necessarily going to change the demand for liquid gas imports that anyhow need to happen in the state of Victoria. So that's the basis in which we are developing the project. As I said earlier to one of the earlier questions, that's also how we continue to progress the project in good confidence.
Okay. Just one last follow-up, if I may, on AVTL. Could you remind me on the timeline according to Indian legislation by when AVTL has to go to a free float of 25% via secondary offering?
Yeah, that is within three years of the initial listing. So the initial listing, the first one was in 2025, so that is kind of like middle of 2028.
Okay. Thank you very much. No further questions.
You are welcome, Kristof.
Thank you. We will now take our next question. From the line of Thijs Berkelder from ABN AMRO or WHF. Please go ahead.
Yeah. Thank you. Thank you for a good quarter. I also want to first thank Quirijn for decades of very nice competition and very nice talks. Please enjoy your well-deserved pension. Let's go back to Q&A. Oil performance this year has been very strong, and also led to a growing contribution in your proportional EBITDA mix to well over 40%. Are you strategically looking at potentially taking profits on some of these oil storage facilities now you're more or less at peak performance? Maybe related to that, you especially have benefited in South Africa and Europoort, like you said. How should we look at expected performance for South Africa and Europoort in 2027 versus 2026, and the contract renegotiations there? Third question is on, we've seen interest rates rising rapidly all over the world. Is that also at this moment delaying investment decisions?
with your JV partners or with the governments you're talking to?
Maybe, Thijs, good morning. Always good to hear that there is competition in the analyst community. Well, Quirijn, also from my side, many thanks for your great contributions over the many years. It has been a pleasure to work with you. Well, I wish you obviously a fantastic retirement and hopefully good memories of Vopak as well. To your questions, Thijs, on the oil performance, yeah, that's always a question whether it's peak performance or it's not peak performance. I recall, let's say, four years ago when Dick and myself became the board of Vopak, everybody told us to sell the oil assets as soon as possible because it was doom and gloom. We felt a bit differently. You could say now maybe it's peak oil to be seen, I would say. We definitely monitor our portfolio.
Every year we go through a major strategic exercise to really see where do we feel that we can still create value, where do we feel it's neutral, and where do we feel it's not creating any value, and we will take decisions based on that. What you also see in many of the predictions is that oil has a much longer lifetime, first of all, than everybody expected. The latest insights are again seven years away, peak oil, which is already for the last two decades almost. I don't want to deny, let's say, that there is no risk in oil, but definitely there is also a bit of lifetime in oil. What we see happening at facilities with good locations is that effectively it transitions into lower carbon fuels, and that's an opportunity for us as well to redevelop these sites going forward.
So, that is where our mind sits. That does not give you maybe a straight answer on, is there any plan of selling anything? There is no plan at the moment. As I said, we will continuously look at our portfolio. If you look at the second question, South Africa and Europoort, what is the expected performance for 2027 versus 2026? Well, South Africa still has a strong performance, so we would still expect quite a strong performance in 2027 as well. There is no reason to basically be more negative about it. So, that is one. On the Europoort, it is effectively the same. If we look at the contracts we have in place, if we look at the renewal risks, obviously anything may happen, but so far, if we look at it, then it should be positive.
Also, we have a few projects coming on stream at the Europoort, which is going to contribute to the results. So, no immediate warning there. On the interest rates, yes, they are rising. We have quite a fixed interest rate at the moment. 80% is fixed, 20% is floating. So overall, we are still quite stable in terms of interest rate cost. We will most likely have to go to the market next year for a USPP issue to refinance part of our ongoing funding and to fund the growth program. So, if it looks today, but to be seen what is happening in the coming months, indeed, the interest costs will be higher. That is what you may expect, but not at a level where we are delaying any investment decisions or we see sort of joint venture partners delaying any investment decisions because of higher interest rates.
So, that is for the moment to be seen what is also going to happen in the coming six to 12 months. But so far, everything is business as usual.
Okay. Thanks very much.
You are welcome.
Thank you. As a reminder, to ask a question, please press star, one, and one on your telephone. We will now take the next question from the line of Quirijn Mulder from ING. Please go ahead.
Yeah, this is Quirijn again. I do not want to ask a question, but I would like to thank Thijs for his nice words and also would like to thank the management. I have covered this name for 25 years, even since the company was still including Univar, and I always loved to cover Vopak in the past. It was one of the nicest company to do with all these connections, et cetera. Thanks a lot and good luck for everyone.
Thank you very much, Quirijn. And remember, almost all good things come from Rotterdam, right?
Yeah.
Very good.
It is also nice that you have been at the start of, let's say, ever-increasing dividends for Vopak, because next year, if we increase our dividends, then we will be a dividend aristocrat, and then you have been at the start and the finish of that. So, well, that was a nice journey, I hope.
Thanks.
Very good. If there are no further questions, operator, then we wait for 10 seconds, and if not, we close the call.
Thank you.
Oh, there is-
No, no, there are no further questions.
Thank you very much. Thank you, everyone. Have a good day.
This concludes today's conference call. Thank you for participating. You may now disconnect.