Neste Using Veggie, Biomass and Animal Inputs for Biofuel Lead

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Researched by Industrial Info Resources (Sugar Land, Texas). The basis of Neste Oil’s (DE:A0D9U6) (Porvoo, Finland) strategy to become the world’s leading biodiesel producer is the unique refining technology developed by the company, which allows high quality fuels to be produced from a variety of lower-cost raw materials. The company expects to invest several billion dollars in expansion projects over the next ten years.

“We are aiming to be the world’s leading biodiesel producer, which means production volumes of millions of tons annually. Our proprietary biodiesel, which is based on a long-term R&D effort, can be produced from a variety of vegetable oils and animal fats – and is premium-quality fuel that clearly outperforms both the vegetable oil and crude oil-based diesel fuels currently in the market,” said Neste’s President and CEO, Risto Rinne.

In line with this policy, Neste has signed long-term procurement contracts with Honkajoki Oy and Findest Protein Oy, companies owned by Finnish food manufacturers, for the supply of animal fat for biodiesel at the company’s refinery at Porvoo. Neste is planning to import additional animal fat to supplement domestic supplies that are inadequate for production. Neste is constructing a 170,000-ton per annum (tpa) biodiesel plant at Porvoo, which currently has a production capacity of 4 million tpa of diesel fuel production. Biodiesel production at the new $130 million plant is scheduled to begin in mid-2007.

Neste will also incorporate ethanol in its biogasoline production and has signed a procurement contract with Altia Corporation for a long-term contract beginning in 2009 for the annual supply of 76,000 cubic meters of ethanol, which will supplement Neste’s total requirements. The ethanol will be used mainly in the manufacture of ETBE (ethyl tertiary butyl ether) gasoline additive or mixed with gasoline.

The company will continue to invest in R&D to increase the range of different raw materials used as input for biofuel production. It is looking to develop biofuel production to a minimum of 40,000 bpd and will build production facilities independently or with partners in various world market regions. Discussions are taking place with OMV (OTC:OMVJF) (Vienna, Austria) to build a second-generation 200,000 tpa biodiesel plant at Schwechat. An MoU (memorandum of understanding) was signed with Total (NYSE:TOT) (Paris, France) in 2005 to build a 200,000 tpa at Dunkirk in northern France and initial discussion about a similar project in California are reported to be in the exploratory stage. For related news item, see March 30, 2006 – Finland’s Neste Oil’s New Biodiesel Technology Selected for Austrian Plant

Targeting a return on average capital employed of at least 15% over the expansion cycle, the company, with a current refining capacity of 250,000 bpd, is aiming to use the drive for clean fuels to utilize the cost efficient inputs of biomass, waste and other vegetable and animal biofeeds. In the EU, a minimum level of 5.75% biofuel in fuels sold is required by 2010 and 20% by 2020.

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