Oil is the largest commodity in the world, with the global crude oil market in 2022 estimated at $2.7 trillion. This trade is facilitated by both public and private entities and is dominated by traders of all types. Leading oil producers including the United States, Saudi Arabia, the United Arab Emirates, Russia and Iraq deliver oil to consumers like the European Union (EU), with a large part of Europe’s oil going through the ARA Amsterdam-Rotterdam-Antwerp) trade hub.
The ARA region is a highly interconnected network of ports and has been an energy gateway into Europe and a key player in the international oil markets for decades. ARA provides traders with time effectiveness and cost savings thanks to being home to a wide-range of well-developed infrastructure, refineries, petrochemical industry, storage and blending services and transport facilities.
The Port of Rotterdam is the primary crude oil trade hub, the Port of Antwerp hosts a sprawling chemical industry, while the Port of Amsterdam’s specialty is in logistics and blending with the port being the global hub for blending different grades of gasoline. The oil that is delivered to the Netherlands is either used domestically; refined or used in manufacturing and then exported or re-exported directly to global destinations or to the hinterland.
The manifold benefits offered by the ARA hub–flexibility, availability and diversity of products and logistics–make it an attractive investment hub for other related industries such as biofuels. The pre-existing facilities and interconnections by ARA offer significant logistical advantages for biofuels, with multiple European governments encouraging the use of biofuels or other renewable fuels for transport. Spain, Germany, France, Italy and the Netherlands are the top European producers of biofuels. Currently, crop-based biofuels represent only 4.5 percent of the EU’s transport energy mix but more than 60 percent of all renewables consumed in transport. Bioenergy currently accounts for 60% of the EU’s renewable energy production.
Overall, the Port of Rotterdam is estimated to have directly added value of 27.9 and 27.2 billion euros in 2019 and 2020, respectively, with crude and oil products worth 100-150 billion euros traded via Dutch Ports annually. Meanwhile, investments, employment and innovation in different sectors have led to the rise of the so-called ‘Rotterdam effect.’
Indeed, Rotterdam handles the largest amount of liquid bulk throughput in Europe. with small tankers able to bring Russian fuel to the Netherlands due to the shallow depth of the channel on the Baltic route from Russia to the Netherlands. But things have not always been this convenient. For a long time, large ships could only travel to Hamburg at high-tide, thereby limiting the flexibility of the port. Rotterdam, however, offers superior flexibility because it can be used as an assembly point whereby fuel is collected from multiple smaller ships then loaded on massive tankers and re-exported elsewhere.
It’s interesting to note that the ARA region is not officially recognized despite being one of the most closely integrated and well-known oil trade hubs. It’s also surprising that such a huge hub did not arise from government efforts or even purposeful spatial planning but rather grew from a spontaneous fragmented effort by mainly private entities. International corporations later opened offices, research facilities and other offices in the Netherlands and also invested in housing, schools and leisure activities.
Source: The Hague Center For Strategic Studies