Finnish refiner to build world's largest biodiesel plant in Singapore

Channel NewsAsia 30 Nov 07;

SINGAPORE: Singapore's biodiesel industry got a boost on Friday. Neste Oil, a refiner from Finland, said it has decided to invest nearly S$1.2 billion to build the world's largest biodiesel plant in Singapore.

In a statement, Neste said the plant will have a design capacity of 800,000 tonnes each year.

This will make it the largest facility producing diesel fuel from renewable feedstock anywhere. The plant will use mostly palm oil for raw material.

The company said it chose Singapore because it is the world's third-largest centre for oil refining.

Singapore is also a central location in terms of product and feedstock flows and logistics.

Neste believes this will give Singapore excellent potential to develop into a centre for Asian biofuel production.

The Economic Development Board will also support the investment by helping with research and development, as well as assisting with recruiting and training personnel.

Construction of the plant at Tuas will start in the first half of next year and it is due to be completed by the end of 2010.

The plant will be integrated into the area's existing industrial infrastructure, and will make use of local site utilities and port and storage services.

When operational, the plant will employ around 100 people.

Analysts say the move is positive for Singapore.

ABN AMRO Asia Securities' investment analyst Nirgunan Tiruchelvam said: "..... it places Singapore as a hub in the biodiesel industry. There has been a few other developments earlier this year and last year where other companies have set up biodiesel facilities in Singapore because of its superior logistics."

According to Neste, the use of biofuels is predicted to increase rapidly in developed economies over the next few years.

For now, though, analysts believe the plant's impact on Singapore's economy will be minimal.

ABN AMRO Asia Securities' Nirgunan Tiruchelvam said: "The production being anticipated in this biodiesel facility is a small percentage of the petroleum requirements of this country. So the impact on the Singapore economy per se will be quite minimal. However it may encourage other players in the biodiesel industry to ramp up capacity in Singapore." - CNA/ir

World's biggest biodiesel plant to be built in Singapore
Bryan Lee, Straits Times 1 Dec 07;

A FINNISH firm will build the world's biggest biodiesel plant in Singapore at a cost of 550 million euros (S$1.18 billion).

The plant will convert palm oil into fuel for cars, trucks and other vehicles.

Oil refiner Neste Oil's investment will create 100 jobs and boost the Republic's goal of riding a growing global wave of environmentally friendly industries.

Unlike fossil fuels, biodiesels are a renewable energy source as they are derived from crops that can be repeatedly grown and harvested.

Also, Neste says greenhouse gas emissions from its fuel are 40 to 60 per cent less than conventional diesel.

Green industries are now far more than a mere buzzword for cause-hungry Hollywood celebrities.

They are fast becoming big business, and Singapore wants in on this hot new sector.

The Neste plant, announced yesterday by the Helsinki-listed firm, is the second big clean energy win for Singapore in as many months.

Norway's Renewable Energy Corp said in October that it is building a $6.3 billion solar panel plant - the world's biggest such facility here.

'Singapore is an excellent location for the plant because of its good infrastructure,' said Neste executive vice-president Jarmo Honkamaa. 'It is one of the world's big oil refining hubs.'

Mr Honkamaa said Singapore's proximity to palm oil production sites such as Malaysia and Indonesia was another reason for siting its first overseas biodiesel plant here.

Neste now runs a biodiesel plant with an annual capacity of 175,000 tonnes at its Porvoo oil refining complex in Finland. A second plant with a similar capacity is being added there and will come on stream in 2009.

The new plant here will be built on a 19-ha plot in Tuas, and will be able to produce 800,000 tonnes of biodiesel every year.

When completed in 2010, it will be the largest biodiesel investment here, much bigger than a US$130 million (S$188 million) project by Australia's Natural Fuel that is aiming for an annual capacity of 600,000 tonnes a year.

'This investment is a strong endorsement of Singapore's drive to develop a robust and sustainable biofuels industry, differentiated by a focus on next-generation technologies,' said the Economic Development Board's energy, chemicals and engineering services head Julian Ho.

Most of the new plant's output will likely be shipped to Europe, where demand for biodiesel is strongest.

But demand from other developed nations is expected to pick up over the next few years as governments move to cut emissions of greenhouse gases to address rising concerns about global climate change.

$1.2b investment for biodiesel
Finnish company to build facility here to produce renewable diesel from palm oil
Esther Fung, Today Online 1 Dec 07;

From 2010, Singapore will be home to the world's largest facility producing diesel fuel from renewable feedstocks.

Finnish company Neste Oil Corporation is investing approximately 550 million euro ($1.17 billion) to build a plant here to produce 800,000 tonnes of renewable diesel a year using its NExBTL technology. NExBTL diesel uses a flexible mix of vegetable oils and animal fats to produce the diesel, which Neste says significantly reduces exhaust emissions.

"Singapore is an excellent location for this type of plant. Because of its existing infrastructure, we can save some investment costs," Mr Jarmo Honkamaa, deputy chief executive officer and head of oil refining said in a teleconference from Finland.

"We have received favourable tax treatment from Singapore, so that helps us make the decision to locate in Singapore."

Palm oil is the main raw material to produce this biodiesel, and Singapore was chosen for this site because of its proximity to suppliers from Malaysia and Indonesia.

"The palm oil has to be certified as sustainable palm oil, but we have also options to use vegetable oils and animal fats, especially animal fats which could be available in the area," Mr Honkamaa said.

He said that the biodiesel, which can be used in cars, will be mainly exported to Europe, but did not rule out producing for Singapore, South Korea and the United States, which have voiced interest to buy these fuels.

Construction of the plant will begin in the first half of next year, and is expected to be completed by end 2010. The plant will occupy a 19-ha site in the Tuas Industrial Zone, and will hire around 100 people.

When the Singapore facility is ready, it will overtake the one in Europe, which produces about 600,000 tonnes of diesel, Mr Honkamaa said.

The Singapore Economic Development Board (EDB) has assisted the refining and marketing company in the preparations for the project.

"This second-generation biofuels manufacturing investment is a strong endorsement of Singapore's drive to develop a robust and sustainable biofuels industry," said Mr Julian Ho, the EDB's executive director, energy, chemicals and engineering services.

Refiner to build 550m euro S'pore biodiesel plant
Finnish facility with capacity of 800,000 tonnes a year set to be world's largest
Matthew Phan, Business Times 1 Dec 07;

(SINGAPORE) Finland-listed refiner Neste Oil is building a palm oil-based biodiesel plant in Singapore at a cost of 550 million euros (S$1.17 billion), it said yesterday.

The plant will have a design capacity of 800,000 tonnes per annum, making it 'the largest facility producing diesel fuel from renewable feedstocks anywhere', Neste said in a release to the Helsinki Stock Exchange.

Using Neste's proprietary NExBTL technology, the plant will produce biodiesel that is 'completely sulphur free', with 'no aromatics', Jarmo Honkamaa, executive vice-president at Neste, told BT in a phone interview.

With over 99 per cent cetane levels - this is analogous to the octane level for gasoline and measures how evenly a diesel fuel burns - Neste's fuel goes far beyond the average cetane levels of about 50 per cent now found in European diesel oils, he said.

Neste will export output from the Singapore plant 'most likely to Europe', as the fuel is meant for the latest vehicle engines there, said Mr Honkamaa.

But it is also seeing a lot of interest from Japan and the US, and would consider selling in Singapore if a local market emerged, he said.

Construction of the plant will begin in the first half of 2008, and is due to complete by end 2010.

It will be located in the Tuas industrial zone and integrated into the area's existing industrial infrastructure, making use of local site utilities and port and storage services, Neste said.

The plant will employ about 100 people when operational.

To supply the plant, Neste will 'most likely source palm oil locally produced', said Mr Honkamaa.

The firm has 'committed itself to only using palm oil certified by the Roundtable on Sustainable Palm Oil as soon as sufficient quantities are available'.

The RSPO certification system was approved only this month and compliant palm oil will be available from early 2008 onwards, it said.

Mr Honkamaa said that Neste plans to build other biodiesel plants of similar scale in Rotterdam and the US, to complement existing plants in Finland.

The first NExBTL facility was commissioned in Finland in summer 2007, and a second is due to come onstream in 2009.

But the local Economic Development Board has been very helpful with smoothing the process, which led to the Singapore plant being announced first, he said.

EDB will support the investment through R&D and assistance with recruiting and training personnel, according to the release.

Singapore is the world's third largest oil refiner, with a central location in terms of product and feedstock flows and logistics, giving it 'excellent potential to develop into a centre for Asian biofuel production', said Neste.

Neste To Build US$814 Mln Singapore Biofuel Plant
Story by Tarmo Virki, PlanetArk 3 Dec 07;


HELSINKI - Finnish refiner Neste Oil said on Friday it would spend 550 million euros (US$814 million) to build the world's largest biodiesel plant in Singapore to meet growing but controversial demand for biofuels.


Neste said the plant would have a design capacity of about 20,000 barrels per day, and use mostly palm oil as its raw material, though it can use also soy oil or animal fats.

"The investment forms part of Neste Oil's strategic goal of becoming the world's leading renewable diesel producer," the firm said.

Neste said the use of biofuels is seen growing rapidly over the next few years and that its biodiesel, branded NExBTL, is the cleanest renewable fuel around.

While Neste believes using its proprietary technology is the best way to do business, the market has voiced scepticism over its ability to manage large investment projects, as the refiner has faced major teething problems with its key unit producing conventional diesel at its refinery in Porvoo, Finland.

"For now at least the market will rightly be left wondering if the Neste Oil management can be trusted to project manage any material investment programmes -- and this goes to the heart of its ambitious, biodiesel ambitions," Citigroup said in a note.

The use of biofuels made from crops such as maize, sugarcane and vegetable oils is expected to rise rapidly in developed economies and is seen by many as a way to cut emissions of greenhouse gases and provide an alternative fuel source to crude oil, which has been pushing US$100 a barrel this year.

Some environmentalists, however, dispute the greenhouse gas emissions benefits of biofuels and are alarmed by deforestation to increase palm oil output and the effect on food prices.

On Sunday environmental group Greenpeace tried to prevent a tanker bringing palm oil to Neste's first biodiesel plant, which is now running at full capacity of 170,000 tonnes, in Porvoo.

Construction of the plant in Singapore, which is close to major palm oil producers Malaysia and Indonesia, will begin in the first half of 2008, with completion due by the end of 2010.


PALM OIL PRICE BOOST

The announcement is expected to boost prices of palm oil, which have more than doubled since January 2006, a Malaysian industry analyst said on Friday.

"We are already facing supply constraints and not even able to meet the demand from the food sector," said M. R. Chandran, an independent consultant and former head of Malaysian Palm Oil Council. "It is very good news for the market."

Soaring feedstock prices have squeezed the margins of biodiesel producers in Asia and only large producers like Neste Oil will survive, he said.

"Obviously now it is the volumes game, it is like the refinery sector. Margins are so small that you have to have the volumes in order to be economically viable," Chandran said.

The news about the biodiesel plant came on a day when the world's largest palm planter Sime Darby relisted on the Malaysian stock exchange at a 36 percent premium to its indicative price, after merging with two other palm-oil groups.


ENVIRONMENT WORRIES

Neste said it was committed to only using palm oil certified by the Roundtable on Sustainable Palm Oil (RSPO), a system approved in November 2007, which would probably be available from the early part of 2008 onwards.

Greenpeace said the certification scheme was not enough.

"It does not matter if there are certificates or not. Growing demand is leading to accelerating destruction of rain forests," said Juha Aromaa, Greenpeace spokesman.

Shares in Neste Oil were up 1.2 percent at 24.05 euros at 1447 GMT, against the DJ Stoxx European oil and gas index, up 0.7 percent.

(Additional reporting by Naveen Thukral in Kuala Lumpur and Sami Torma in Helsinki; Editing by Louise Ireland)