Neste Oil’s S’pore plant to market renewable diesel overseas [News]

March 9, 2011 by Eugene Tay
Filed under News

Neste Oil has said its giant biodiesel plant in Singapore, which mainly uses palm oil as a raw material, will be able to sell its renewable diesel to Germany.

It is also looking at North America as a potential market.

This comes as increasing feedstock prices, including palm-oil prices, prompt concerns about rising costs faced by biodiesel plants worldwide.

Neste Oil said its Singapore plant has received a key certification; the International Sustainability & Carbon Certification (ISCC) requires minimisation of greenhouse gas emissions and preservation of biodiversity during the production of biofuels and bioenergy.

Although the certification is specific to Germany, Neste Oil hopes this will help it enter new markets, especially in North America.

Completed on schedule, the high-technology plant started operations in November, and cost 550 million euros to build. It currently has about 120 employees.

Speaking at the official opening of the plant on Tuesday, Deputy Prime Minister and Defence Minister Teo Chee Hean said global energy demand is projected to rise 25 per cent over the next 20 years.

He said: “Neste’s project is a milestone, because at 800 kilotonne per annum, this will be the world’s largest renewable diesel plant. We are confident that with this and other investments, Singapore will widen our lead in the fuel production sector.”

The Economic Development Board is also working with other bio-renewables plants in Jurong Island.

Mr Teo added that Singapore is actively pursuing projects that leverage bio-renewable raw materials for the production of fuels, and that Singapore’s strategic location in Southeast Asia, a region of abundant bio-renewable feedstock, will provide “exciting opportunities”.

Malaysia and Indonesia, two of the largest producers of palm oil in the region, are, however, facing some headwinds.

That is because European Union’s Renewable Energy Directive said that tropical forests should not be cleared away to produce raw materials for biofuels.

Meanwhile, adverse weather conditions are affecting oil-palm oil harvests in Malaysia and Indonesia, with a production shortfall leading to a rise in palm oil prices.

Matti Lehmus, executive vice president of Oil Products & Renewables, said: “Let’s say in general it is true that price fluctuations have some impact, but we have seen lately that both crude oil prices and vegetable oil prices have increased.

“Still, the demand is created by the legislations, so there is no impact on the demand in the short-term. But of course, in the long term, we hope that the prices will normalise.”

The benchmark crude palm-oil futures contracts in Malaysia hit almost a three-year high at more than 3,900 ringgit per tonne last month.

Analysts are concerned that biofuel plants worldwide will face a significant rise in their raw material cost.

Source and Image: Channel NewsAsia