Singapore: Neste Oil opens $973m renewable diesel plant

Finnish firm seeks to convert new materials into biofuels
Yasmine Yahya Straits Times 9 Mar 11;

THE FINNISH operator of the world's largest renewable diesel plant, which opened yesterday in Tuas, has started investing heavily in research to find new materials to be turned into biofuels.

As the price of crude palm oil continues to surge, Neste Oil is looking for alternatives to the commodity which currently makes up 45 per cent of its feedstock - its single largest raw material input.

Its 550 million euro (S$973 million) renewable diesel plant was opened by Deputy Prime Minister Teo Chee Hean.

At the opening ceremony, the firm's chief executive Matti Lievonen told the media the company has begun committing about 80 per cent of its annual research and development budget into finding new sources of feedstock.

It is looking for ways to convert new raw materials, such as microbes, algae and wood waste, into biofuels, he said.

However, it will be quite a while before such research comes to fruition. 'It will take another six years at least before algae can be used as feedstock. Microbes could take a shorter time but there aren't huge volumes of microbes that you could get from the market,' Mr Lievonen said.

Mr Teo said in his speech that the Government is working to strengthen the capabilities of local research institutes in the area of biorenewable feedstock. These efforts could help Neste identify new sources of feedstock, he added.

The plant, with a capacity of 800,000 tonnes a year, is the biggest renewable diesel facility in the world.

Besides palm oil, the plant also uses by-products of palm oil production from Malaysia and Indonesia, as well as waste animal fat from Australia and New Zealand, to produce its renewable diesel, which Neste Oil claims is the cleanest diesel fuel on the market today.

It is being sold in Europe and North America, where governments have adopted biofuel mandates, under which sellers of transportation fuel have to ensure that part of the fuel they sell is biodiesel.

No country in Asia has adopted such a mandate yet, and while this remains the case, Mr Lievonen said Neste Oil is unlikely to start marketing its biodiesel in the region: 'Asia in the next five years is not going to be a big market for us.'

Biodiesel is more expensive than conventional diesel, and fuel sellers have little incentive to buy biodiesel if they are not required by law to do so.

Mr Lievonen added that he has a 'very positive' outlook for refining margins in 2012 and 2013, as the firm has started output from its Singapore plant and is in the midst of building another one in Rotterdam of the same capacity as the one here.

Neste's profits from processing crude oil into products such as fuel and diesel averaged US$8.50 a barrel last year, Mr Lievonen said, declining to give margin levels this year. There is potential for diesel margins to improve because of gains in industrial output, he added.

Singapore Neste plant starts biodiesel exports to EU
But Finnish refiner may not ramp up output fully yet, as outlook is less than rosy
Ronnie Lim Business Times 9 Mar 11;

(SINGAPORE) Made-in-Singapore renewable biodiesel from Neste Oil's S$1.2 billion Tuas plant - the world's largest - has started to enter European markets. But the Finnish refiner may not run the plant fully just yet, given the less-than-rosy market outlook.

'Whether we ramp up to full capacity or not depends on margins, feedstock prices and development of the market,' Matti Lievonen, its president and CEO told a press conference, following the opening of the world-scale 800,000 tonnes per annum plant yesterday.

Neste is mindful that as it ramps up production here, followed by that for another identical-sized twin facility in Rotterdam starting up mid-year, it is at the same time encountering strong headwinds in the form of rising prices for palm oil (its main raw material) and slow progress in biofuels legislation in its key European and US markets.

Mr Lievonen in fact warned last month that the group's renewable diesel division would make a loss this year, although Neste was just at 'start-up phase', in this business and still saw a future in producing the world's cleanest diesel.

'We expect the business to turn around in 2012,' he said yesterday of its second-generation, renewable NExBTL, which is said to be of higher quality and is more flexible to use, outperforming biodiesels and even the best fossil diesels.

Neste's two world-scale plants in Singapore and Rotterdam will add considerable biofuel capacity to its two smaller Finnish plants, which have a combined output of 380,000 tpa. 'The annual volume (from the Singapore plant alone) is enough for 10 million cars to run continuously with 10 per cent NExBTL blend,' he said.

Amidst rising crude oil prices - due to the current political crisis in Libya, and also threats to Gulf oil supplies - Neste says that its renewable NExBTL in fact becomes more viable. 'Renewable prices follow those of crude.'

'From an energy security viewpoint, when oil prices rise, renewables like biodiesel also help to meet supplies,' he said.

Neste uses fully-sustainable biofeedstocks: with palm oil currently accounting for 45 per cent of this; stearin, a by-product of the palm oil production process for 20-25 per cent, and animal fats for another 20-25 per cent.

But to counter the threat of ever-rising palm oil prices, the Finnish refiner has also started to look into using other alternatives like wood-based biomass and also algae and microbes.

Asked when these would likely become economically viable, Mr Lievonen said that it already has a pilot plant in Finland to convert wood waste to wax, 'but the investment costs are really huge'. Still, coming EU subsidies for this, expected in the second half of next year, could potentially make the project viable.

'Currently, 80 per cent of Neste's R&D is also focused on feedstocks like algae and microbes, but it would take six years at least for algae use to become viable,' he reckoned.

Deputy Prime Minister and Defence Minister, Teo Chee Hean, who officiated at the Neste plant opening, said that the investment will play an important role in Singapore's move to increase production of cleaner and higher-quality fuels.

Germany's Lufthansa is for instance starting to use some of Neste's jet biofuel for its aircraft. And DPM Teo said that 'adopting sustainable bio-renewable feedstock as an alternative source of raw material for transportation fuels is a promising economic opportunity. It could also play an important role in contributing towards greater environmental sustainability.'

Neste Oil's S'pore plant to market renewable diesel overseas
Julie Quek Channel NewsAsia 8 Mar 11;

SINGAPORE : Neste Oil has said its giant biodiesel plant in Singapore, which mainly uses palm oil as a raw material, will be able to sell its renewable diesel to Germany.

It is also looking at North America as a potential market.

This comes as increasing feedstock prices, including palm-oil prices, prompt concerns about rising costs faced by biodiesel plants worldwide.

Neste Oil said its Singapore plant has received a key certification; the International Sustainability & Carbon Certification (ISCC) requires minimisation of greenhouse gas emissions and preservation of biodiversity during the production of biofuels and bioenergy.

Although the certification is specific to Germany, Neste Oil hopes this will help it enter new markets, especially in North America.

Completed on schedule, the high-technology plant started operations in November, and cost 550 million euros to build. It currently has about 120 employees.

Speaking at the official opening of the plant on Tuesday, Deputy Prime Minister and Defence Minister Teo Chee Hean said global energy demand is projected to rise 25 per cent over the next 20 years.

He said: "Neste's project is a milestone, because at 800 kilotonne per annum, this will be the world's largest renewable diesel plant. We are confident that with this and other investments, Singapore will widen our lead in the fuel production sector."

The Economic Development Board is also working with other bio-renewables plants in Jurong Island.

Mr Teo added that Singapore is actively pursuing projects that leverage bio-renewable raw materials for the production of fuels, and that Singapore's strategic location in Southeast Asia, a region of abundant bio-renewable feedstock, will provide "exciting opportunities".

Malaysia and Indonesia, two of the largest producers of palm oil in the region, are, however, facing some headwinds.

That is because European Union's Renewable Energy Directive said that tropical forests should not be cleared away to produce raw materials for biofuels.

Meanwhile, adverse weather conditions are affecting oil-palm oil harvests in Malaysia and Indonesia, with a production shortfall leading to a rise in palm oil prices.

Matti Lehmus, executive vice president of Oil Products & Renewables, said: "Let's say in general it is true that price fluctuations have some impact, but we have seen lately that both crude oil prices and vegetable oil prices have increased.

"Still, the demand is created by the legislations, so there is no impact on the demand in the short-term. But of course, in the long term, we hope that the prices will normalise."

The benchmark crude palm-oil futures contracts in Malaysia hit almost a three-year high at more than 3,900 ringgit per tonne last month.

Analysts are concerned that biofuel plants worldwide will face a significant rise in their raw material cost.

- CNA/ms

Giant renewable diesel plant opens in Singapore
Yahoo News 8 Mar 11;

SINGAPORE (AFP) – Finnish firm Neste Oil opened the world's biggest renewable diesel plant in Singapore on Tuesday, taking advantage of massive palm oil production in nearby Malaysia and Indonesia.

Clean diesel produced from the 550 million-euro ($769 million) plant using feedstocks such as palm oil and animal fat will be marketed in Europe, Canada and the United States, which already have legislation in place supporting biofuels.

"Asia in the next five years is not going to be a big market for us," Neste Oil Corp president and chief executive Matti Lievonen said at the plant's opening.

With an annual capacity of 800,000 metric tonnes, the Singapore facility is the biggest renewable diesel plant in the world, Neste Oil said.

The plant produces Neste Oil's patented NExBTL renewable diesel, which the company says is the cleanest diesel fuel in the world, although it is more expensive than conventional diesel.

NExBTL can be used in all diesel engines and significantly reduces exhaust emissions compared with regular diesel, the company says.

About 45 percent of the facility's feedstock is currently palm oil from neighbouring Malaysia and Indonesia, while the rest comes from other by-products of the palm oil production process and waste animal fat from Australia and New Zealand.

The palm oil industry in both Malaysia and Indonesia has come under pressure from environmental campaigners who believe it causes deforestation and threatens species such as orangutans and rhinos.

Neste Oil said that its Singapore plant had obtained an International Sustainability and Carbon Certification (ISCC) certificate from Germany, guaranteeing that it has met tough environment standards.

Lievonen said the firm had earmarked 80 percent of its research and development for finding ways to produce clean diesel from other feedstocks like algae and microbes.

Algae will not compete for fresh water or land because production plants can be built on wasteland and the algae can be grown in seawater, said the company, adding that research was still in its early stages.