Finnish refiner Neste is confident that its new renewable fuel facilities in Singapore and the U.S. will drive its growth this year, despite expectations of lower oil product margins in the second quarter, according to CEO Matti Lehmus.
Lehmus acknowledged the impact of the macroeconomic situation on various businesses, stating, “We, for example, also highlighted that in our oil products business, we would expect the refining and margin environment in the second quarter to be clearly lower than in the first quarter.”
However, Neste remains optimistic about its expansion plans. The company recently inaugurated its second 1.3 million tonne-per-year renewable fuels plant in Singapore, boosting the total capacity of sustainable aviation fuel (SAF) at the site to 1 million tpy. Lehmus commented, “For Neste, it is a year of growth. We are just starting up our expansion here in Singapore.” He further mentioned that the Singapore plant is gradually increasing production and will take several quarters to reach full capacity.
See also: Neste Takes Bold Steps towards Sustainability with 120 MW Green Hydrogen Project
Neste's growth strategy also includes the upcoming start-up of the second and third phases of its U.S. renewable diesel joint venture with Marathon Oil Corp in the autumn. These phases will involve the addition of a feedstock pre-treatment unit.
In line with its expansion plans, Neste announced its acquisition of a stake in a fuel storage and infrastructure joint venture at Singapore's Changi Airport, specifically for blending and supplying SAF to airplanes. Lehmus highlighted that Neste has previously supplied SAF to several airports in Japan and New Zealand.
Neste primarily produces renewable fuels from waste and residues, such as used cooking oil and animal fat from food industry waste. Lehmus stated that waste and residues will continue to account for over 90% of the company's feedstock in the foreseeable future, while they explore new options like algae and hydrogen.
One of the challenges faced by biofuels producers is sourcing sustainable raw materials. Neste is actively researching and addressing this issue.
Separately, Neste is expected to make a final investment decision on its green hydrogen project at its Porvoo refinery in Finland in early 2024. If the project proceeds, renewable fuel production could commence in 2026 and be primarily used in the refinery's processes, replacing fuel derived from fossil feedstocks.
Lehmus added, “Longer term, if the availability of green hydrogen can be scaled up, it offers then the possibility to also further convert green hydrogen into fuels or chemicals.”
It is important to note that the commercialization of synthetic fuels from green hydrogen and carbon dioxide has not yet been achieved and remains costly.
