January 16, 2008 (Thomson Financial) – Finnish oil refiner Neste Oil said Tuesday that its biodiesel plant in Singapore, its largest, will be operational 2010 and initially cater to Europe’s growing biofuel requirement.The company’s investment of 550 million euros to build the plant, which will have an annual capacity of 800,000 tons, is in line with its strategy to become the world’s leading producer of diesel from renewable feedstock.
It is anticipating that demand will grow rapidly in developed economies.
Demand for biodiesel in Europe is currently around 6-8 million tons annually and is expected to grow to 13-15 million tons by 2010.
‘It keeps growing because in Europe there is a legislation in place that by 2010, 5.75 percent of energy content of gasoline and diesel needs to be bio-based,’ Jarmo Honkamaa, deputy chief executive of Neste Oil, told a briefing.
Honkamaa said California and Japan are also interesting potential markets for Neste Oil’s biodiesel.
Neste Oil has one plant in Finland with annual production of 170,000 tons, which started last year, and another plant of similar capacity which will start production in 2009.
Neste Oil also has a joint venture with Austrian oil and gas group OMV for a plant with a 200,000 ton capacity in Austria.
‘We are committed to investing billions of euros [in] growth projects by 2015,’ said Risto Rinne, president and chief executive of Neste Oil.
The past three years saw the group investing about 600 million euros a year to expand its biofuel production capacity.
Neste has partnered with French company Technip to provide engineering, procurement and project construction management services for the Singapore project.
Separately, Singapore Oxygen Air Liquide Pte Ltd (SOXAL), a unit of French company Air Liquide, is investing 250 million Singapore dollars in setting up a new hydrogen facility and expanding its pipeline network on Jurong Island that will allow it to deliver hydrogen to Neste Oil.
Neste Oil and Air Liquide have signed a long-term hydrogen supply deal.
Hydrogen is used to reduce the impurities in gasoline and diesel.
SOXAL’s project will start in the next few months and should be completed slightly before Neste Oil’s biodiesel plant in 2010.