Neste Oil to build world's largest bio-diesel refinery in Singapore EUR 550 million plant to use controversial palm oil as raw material
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"According to information that we have, it will be the world's largest", said
Honkamaa says that the plant will require about a million tonnes of raw material - plant and animal fats - each year. "The starting point is that we will begin with palm oil", Honkamaa said.
The choice of raw materials is a controversial one. The environmental organisation Greenpeace opposes the use of palm oil as a raw material for fuel, because rain forest is routinely cleared away to make room for new palm oil plantations.
Nearly 40 million tonnes of palm oil are produced each year in the world. Malaysia and Indonesia account for 80 per cent of the production, according to a report by ISTA Mielke, independent consultants in the oil seed business.
The company predicts unprecedented growth for palm oil production next year - about ten per cent.
"The new plantations are to be set up mainly in Indonesia, and increasingly in swamp rain forests", says
When a marshy rain forest is felled, the peat layer begins to dry and decay. "In the years that follow, it releases all of the carbon that had been stored in it", Myllyvirta says.
Conseqeuntly, he says that palm oil grown in peat land ends up producing ten times more carbon dioxide emissions than fossil fuels do.
Palm oil plantations produce an average four tonnes of oil per hectare. When the Neste Oil plant is taken into use, it will bring demand to the market, requiring more than 200,000 hectares of palm oil plantation land to satisfy.
Neste Oil has said that it only uses palm oil that has been produced according to principles of sustainability.
Honkamaa insists that the greenhouse gas balance of palm oil is good. Neste Oil calculates that bio-diesel produces 40-60 per cent less greenhouse gas emissions than traditional diesel fuel.
According to Reuters news agency, the Citigroup investment bank has questioned Neste Oil's ability to implement its investment on schedule and within the planned budget.
Neste Oil has built a new production line for traditional diesel at its Porvoo refinery. The installation was completed this year about a year behind schedule at a cost of about EUR 750 million, up from the original estimate of about EUR 500 million.
"We have learned our lesson", said Neste Oil CEO
Rinne said that the Singapore investment has been carefully prepared. The preparations have involved the utilisation of experiences that Neste Oil got when it built its first bio-diesel plant in Porvoo. The installation, which was taken into use in the summer, has an annual output capacity of 170,000 tonnes.
The Finnish oil refiner Neste Oil has announced that it will build a refinery for the production of biological diesel oil costing EUR 440 million. The plant is to be taken into use in late 2010."According to information that we have, it will be the world's largest", said Jarmo Honkamaa , director of the company's bio-diesel operations at a press conference on Friday.Honkamaa says that the plant will require about a million tonnes of raw material - plant and animal fats - each year. "The starting point is that we will begin with palm oil", Honkamaa said.is a controversial one. The environmental organisation Greenpeace opposes the use of palm oil as a raw material for fuel, because rain forest is routinely cleared away to make room for new palm oil plantations.Nearly 40 million tonnes of palm oil are produced each year in the world. Malaysia and Indonesia account for 80 per cent of the production, according to a report by ISTA Mielke, independent consultants in the oil seed business.The company predicts unprecedented growth for palm oil production next year - about ten per cent."The new plantations are to be set up mainly in Indonesia, and increasingly in swamp rain forests", says Lauri Myllyvirta of the Greenpeace energy campaign.When a marshy rain forest is felled, the peat layer begins to dry and decay. "In the years that follow, it releases all of the carbon that had been stored in it", Myllyvirta says.Conseqeuntly, he says that palm oil grown in peat land ends up producing ten times more carbon dioxide emissions than fossil fuels do.produce an average four tonnes of oil per hectare. When the Neste Oil plant is taken into use, it will bring demand to the market, requiring more than 200,000 hectares of palm oil plantation land to satisfy.Neste Oil has said that it only uses palm oil that has been produced according to principles of sustainability.Honkamaa insists that the greenhouse gas balance of palm oil is good. Neste Oil calculates that bio-diesel produces 40-60 per cent less greenhouse gas emissions than traditional diesel fuel.news agency, the Citigroup investment bank has questioned Neste Oil's ability to implement its investment on schedule and within the planned budget.Neste Oil has built a new production line for traditional diesel at its Porvoo refinery. The installation was completed this year about a year behind schedule at a cost of about EUR 750 million, up from the original estimate of about EUR 500 million."We have learned our lesson", said Neste Oil CEO Risto Rinne on the delays and budget overruns.Rinne said that the Singapore investment has been carefully prepared. The preparations have involved the utilisation of experiences that Neste Oil got when it built its first bio-diesel plant in Porvoo. The installation, which was taken into use in the summer, has an annual output capacity of 170,000 tonnes.
Previously in HS International Edition:
Greenpeace: Neste palm oil-based biodiesel not so green (31.10.2007)
OKQ8 works with Neste Oil to find replacement for palm oil as bio diesel raw material (27.11.2007)
Police and border guard stop Greenpeace demonstration near Porvoo refinery (26.11.2007)
Helsingin Sanomat
Finnish company Neste Oil have announced that they intend to construct the world's largest biodiesel plant in Singapore at a cost of €440 million. The NExBTL facility will be Neste's third such project, and is intended to have a maximum capacity of 800,000 tonnes a year.

Demand for biofuels is expected to rise greatly over the next few years, as they are often cited as a good way to reduce greenhouse gas emissions, and are viewed as a renewable alternative to crude oil which has been at record high prices in recent months.

The site has been strategically selected to be close to Malaysia and Indonesia, both of whom are leading world suppliers of palm oil, which is intended to be the main fuel for the plant. Between them they account for 80% of global production. However, the use of palm oil is controversial, as some environmental scientists and campaigners believe using it will have a negative effect as increased demand in turn causes higher food prices and greater levels of deforestation.

Earlier this year, Greenpeace attempted to stop a palm oil tanker ship destined to Neste's existing biodiesel plant in Porvoo, Finland, but failed to stop the delivery. In addition to the Porvoo plant, which began operations earlier this year and is at its capacity production of 170,000 tonnes, Neste plan a second plant to open in 2009.

The new plant will increase demand for palm oil, as it will require 200,000 hectares of palm oil plantations to supply the million tonnes of oil it requires per annum. "The new plantations are to be set up mainly in Indonesia, and increasingly in swamp rain forests," said Greenpeace's Lauri Myllyvirta. When such terrain is cleared of trees, the peaty soil begins to dry out. "In the years that follow, it releases all of the carbon that had been stored in it", Myllyvirta continues. He concludes that he believes palm oil cultivated in such conditions produces ten times the carbon dioxide emissions of fossil fuels. Jarmo Honkamaa, director of Neste's biofuel sector, countered these claims with his belief that the gas balance remains positive and points to Neste statistics which say biodiesel diesel produces 40-60% less greenhouse gas emissions than standard diesel.

Another potential problem has been highlighted by Citigroup, who voiced concerns that Neste may not be able to complete the project on time and within the intended budget. Recently, Neste added a standard diesel production line at their Porvoo refinery. This was finished this year, approximately one year late and at an actual cost of €750 million, versus a budget of €500 million. Neste CEO Risto Rinne said in response, "we have learned our lesson," regarding the miscalculations on the new facility, and said that this knowledge, coupled with that obtained during construction of the Porvoo biodiesel plant, had been factored into calculations regarding the Singapore plant.

Construction on the third facility will start early next year, and is scheduled to end in 2010. Neste said in a statement that the investment was "part of Neste Oil's strategic goal of becoming the world's leading renewable diesel producer."