Neste selects Rotterdam for possible renewables refinery

Neste Corp. has selected Rotterdam, the Netherlands, to potentially site a proposed renewables refinery as part of the operator’s plan to expand its existing European feedstock and production platform for renewable products.

Conclusions of a study examining possible locations in Porvoo, Finland, and Rotterdam—two cities in which Neste already maintains existing renewable production capacity—indicate difference in costs between the locations considerably favor Rotterdam, Neste said.

“Our decision relies on ensuring our future competitiveness and our renewables’ growth strategy execution,” said Peter Vanacker, Neste’s president and chief executive officer.

“Based on the thorough studies and calculations, the overall cost of the investment is significantly lower in Rotterdam,” Vanacker added.

Criteria for site selection included current markets and regulatory framework supporting market growth, raw material-sourcing opportunities, investment and operating costs, infrastructure, low-carbon utilities, as well as local synergies and incentives, according to Neste.

The operator confirmed key aspects contributing to more favorable economics at Rotterdam included logistics costs, site-specific construction costs, and availability of low-carbon hydrogen supply.

An additional factor adding to the allure of Rotterdam includes its proximity to new markets for renewable aviation fuels, renewable polymers and chemicals, as well as its nearness to renewable feedstock sources.

Study results also indicated Porvoo presented complexities that would pose a higher level of risk during project execution, which could result in a longer construction schedule.

Neste—which has yet to reveal details regarding capacity or precise location of the proposed Rotterdam expansion—said it expects to reach final investment decision on the project by yearend 2021 or early 2022.

Should the planned renewables capacity expansion advance, the project would begin production in 2025, Neste said in a Mar. 12 release. 

Selection of the Rotterdam location follows Neste’s €258-million November 2020 purchase of Bunge Ltd. subsidiary Bunge Loders Croklaan JV’s sustainable plant-based specialty oils and fats refinery in Rotterdam in a deal that closed earlier this month, according to a Mar. 2 release from Bunge Loders Croklaan.

In a Nov. 3. 2020 release to investors, Neste said it planned to use the newly acquired refining plant to increase pretreatment capacity of complex waste and residue feedstocks in support of expanding production capacity of its more than 1-million tpy existing renewable diesel refinery in the Port of Rotterdam beyond 2023.

In March 2020, Neste also confirmed a feasibility study was under way for a project that, by 2023, would add 450,000 tpy of sustainable aviation fuel (SAF) production at the Rotterdam refinery.

Neste additionally has invested €1.4 billion in a project to expand production of renewable products at its 1.3-million tpy renewable diesel refinery in Singapore. Currently under way and scheduled to begin commercial operation in 2023, the 1.3-million tpy capacity expansion at Singapore—which includes optionality to produce up to 1 million tpy of SAF at the plant—will bring Neste’s total global renewable production capacity to 4.5 million tpy, the operator said in its 2020 annual report to investors released on Mar. 3, 2021.

Expansion of its renewable diesel and SAF production platform comes as part of Neste’s two strategic climate commitments, which include achieving carbon-neutral production by 2035 and reducing customers’ greenhouse gas emissions by at least 20 million tpy by 2030.

Conventional refining restructure

In line with its broader sustainability ambitions and strategy of ensuring long-term competitiveness, Neste in late 2020 approved a restructuring of its conventional refining operations in Finland under a program that will include permanently shuttering processing and production at its 58,000-b/d Naantali refinery by the end of March 2021 (OGJ Online, Dec. 3, 2020).

As part of the plan, Neste will transform the Naantali refinery—already home to Finland’s fifth-largest harbor in terms of traffic volume—exclusively into a harbor and distribution terminal, as well as upgrade its 206,000-b/d refinery in the Kilpilahti industrial area of Porvoo to co-processing renewable and circular raw materials.

Upon announcing its decision, Neste said the business transformation comes amid its determination that demand for fossil-based fuel products will continue to decline, requiring fundamental changes to secure competitiveness of its business, which includes increasing its share of renewable energy solutions in line with continued growth for these energy sources moving forward.

By 2030, Neste said it expects global renewable diesel demand to exceed 20 million tpy.