Neste said it has completed a strategic study for converting its crude oil refinery in Porvoo, Finland, and will now begin a lengthy transition to processing plant materials at the site.
After announcing the project in a Dec. 20 news release, the Finnish energy company declined to comment about implications for the site’s API Group III base oil plant, but Chevron, which receives offtake from that plant, suggested base oil production would not be affected, even if or when the refinery stops processing crude oil.
A Chevron representative cited a base oil supply agreement between the companies but did not say specifically whether Neste is obligated to honor it if the refinery is converted. Chevron has declined to disclose the length or other terms of the supply agreement since it went into effect as part of the American company’s purchase of Neste’s base oil business in 2022.
“The study is focused on transportation of fuels and not base oils,” the representative told Lube Report last week, speaking on condition of anonymity because they were not authorized to comment officially. “Our long-term offtake arrangement still remains in place with Neste, and they are meeting requirements of this contract.”
Neste has been among the most aggressive oil companies in evolving its business in the name of sustainability, reducing is processing of crude oil and production of oil products while revving up output of products with lower carbon footprints, such as renewable diesel and aviation fuel. In 2021 it ceased refining operations at what was its other Finland crude refinery, in Naantali. That site is being converted to port and distribution terminal activities.
In Porvoo the company said it has decided to switch to processing renewable feedstocks – an undertaking that officials priced at €2.5 billion. They added, however that it would be tackled in phases, would require multiple future final investment decisions and would not be completed until the mid-2030s. Ultimately they said the site will have capacity to make about 3 million metric tons per year of renewable and circular products, such as renewable diesel, sustainable aviation fuel and both renewable and circular feedstock for the polymers and chemicals industry.
“The demand for fossil fuels is declining in our traditional markets due to the growing share of renewable fuels and electrification,” Oil Production Executive Vice President Markku Korvenranta said in the news release. “The Porvoo refinery starts this transformation roadmap to proactively create a sustainable future for the site.”
Refineries processing renewable feedstocks can make substitutes for a range of petroleum products, but so far base oils have not been integrated into their production slates as they are at conventional fuels refineries.
The Porvoo base oil plant has capacity of 250,000 t/y and is one of Europe’s biggest Group III producers. For years Neste marketed those oils under its Nexbase brand, but Chevron acquired the brand, too, and continues to market Porvoo base oils as such.
Chevron’s spokesman declined to specify whether the mineral oil feedstocks might be transported to Porvoo to allow it to continue making base stocks. The spokesman cast doubt on the idea of the plant making base stocks from renewable feedstock, saying public policy supports making of products such as kerosene and diesel at such facilities but not base stocks.
“Although there are technologies put in place for production of high quality base oils from waste plastics, there is no policy support for them, and such projects would be hampered by scale-up problems,” the spokesman said, adding that supply chain would be the biggest challenge to commercial production of pyrolysis base oils.
Neste’s announcement comes at a time when other European refiners are pledging to shift from fossil fuels to refining of sustainable feedstocks such as soybean or palm oil. Eni is mulling a similar transformation of its refinery in Livorno, Italy, which includes a large Group I base oil plant.
These efforts align with the European Union’s Green Deal, an overarching policy initiative aimed at leading the world to sharply cut greenhouse gas emissions in order to stave off global warming.
Neste said the company’s ambition is to make the Porvoo refinery “the most sustainable refinery in Europe by 2030.”
“Neste is committed to reaching carbon-neutral production by 2035, and will reduce the carbon emission intensity of sold products by 50% by 2040,” the news release stated. “Neste has also set high standards for biodiversity, human rights and the supply chain.”
The company has consistently been included in the Dow Jones Sustainability Indices and the Global 100 list of the world’s most sustainable companies. In 2022, Neste’s revenue stood at €25.7 billion.