Finland’s Neste Oil’s New Biodiesel Technology Selected for Austrian Plant

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Researched by Industrial Info Resources (Sugar Land, Texas). The Finnish oil and energy engineering company Neste and Austria’s OMV (OTC:OMV), the country’s largest listed company and the leading oil and gas group in Central Europe, have signed a letter of intent for the construction of a new generation biodiesel production plant linked to OMV’s existing oil refinery at Schwechat, Germany. Details of the ownership structure of the plant and the joint venture are still being negotiated and the outcome will determine how the project investment and the plant’s output are divided between the two companies.

Neste Oil Manager for Biological Fuels, Jyrki Ignatius said there is a demand for the second generation biological process being developed by the company and the company has several projects under development similar to the joint venture with OMV.

The proprietary process producing the NExBTL biodiesel fuel allows for nearly all vegetable oils and animal fats to be used as raw materials for feedstock. The new fuel developed from fatty acids can be added to fossil fuel-based diesel as an additional component in the mix. The first generation of biodiesel production, prior to Neste’s new process, was based on a technology that is not suitable for all fatty acids. Rapeseed oil is currently used as the major biodiesel feedstock in Europe

The company claims that NExBTL biodiesel offers superior fuel properties and out performs conventional biodiesel grades currently on the market, according to recent tests conducted by leading heavy-duty engine manufacturers. The new fuel is also claimed to perform better in cold conditions and to have less emissions than the previous generation of biodeisel.

The new technology produces synthetic biofuels as defined by the 2003 European Union (E.U.) directive covering the development of biofuels in the E.U. Member states are encouraged to increase biofuel usage to 5.75% of all gasoline and diesel fuel used in vehicle engines by 2010. In Austria, legislation requires a major increase in the proportion of biodesel in domestic supplies and OMV is the front-runner to fill the supply gap.

The E.U.’s 2010 target date is estimated to require new investment for the production of 2 million tons of biodiesel by the end of the decade by E.U. member states.

The new plant at Schwechat will have a production capacity of 200,000 tons of NExBTL biodiesel per annum. In October 2005, construction started on a plant using the new technology at their existing Porvoo Refinery Complex. The $120 million Porvoo plant will produce 170,000 tons of the new biodiesel per annum when it begins operations in mid-2007. The fuel will be supported with tax breaks from the government to allow it to compete on the market and fulfill the E.U.’s target three years early. Some of the Porvoo output will be exported.

Another current project at the Porvoo refinery, due to be commissioned at the end of this year, is a $720 million refinery that will produce one million tons per annum of high-quality diesel fuel from heavy fuel oil.

The Neste Jacobs Company is based at Porvoo and markets technology licences and Neste’s clean fuel technology and automation technology. The company, which is a joint venture between Jacobs Engineering (NYSE:JEC) (Pasadena, California) and Neste Oil is split 66% Neste and 34 % Jacobs. It executes projects in Europe, North America and the Middle East in the fields of oil refining, petrochemicals and chemical processes and provides engineering, procurement and construction management services to clients.

Neste’s oil refineries are located in Porvoo and Naantali, Finland and have a total capacity of 250,000 barrels per day. Group turnover in 2004 was $9.48 billion and owns gas stations in the Baltic States and Russia. Finland’s ministry of Trade and Industry has a 50.1% stake in the company.

OMV is expanding globally with exploration and production activities in eighteen countries. It refines 340,000 barrels per day with an annual refining capacity of 26.4 million tons and owns oil and gas reserves equivalent to 1.4 billion barrels. Turnover is nearly $12 billion and the company also has 2,536 gas stations in Central Europe and the Danube region.

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