CEO Talks: Solid performance in Renewable Products – Porvoo refinery major turnaround completed in Q2/2021
Neste’s President and CEO Peter Vanacker answers questions about the company’s second quarter 2021 and shares his thoughts about strategy execution and the EU’s Fit for 55 package.
You just shared your quarterly results. How do you see Neste’s performance in Q2/2021?
“Neste had a solid performance during the second quarter. We posted a comparable operating profit of EUR 241 million, despite the intensive scheduled turnaround in Porvoo.”
“In Renewable Products, the renewable diesel demand was robust, but the feedstock markets remained very tight as expected. Our sales volumes were 732,000 tons, impacted by the scheduled Porvoo units’ maintenance and postponement of some end-June deliveries. In the second quarter of 2021, the share of waste and residues increased to 93% of Neste’s total renewable raw material inputs globally.”
“Oil Products continued to be impacted by the weak oil product market as a result of the COVID-19 pandemic. For Oil Products, the quarter was mainly characterized by the Porvoo refinery major turnaround, which was implemented within the estimated twelve-week schedule. Some 6,000 persons took part in the turnaround works and over 1.5 million working hours were completed. Safeguarding the health and safety of our employees, contractors and other partners was the highest priority, and, for example, about 61,000 COVID-19 tests were taken to prevent spreading of infections. The turnaround is a significant investment to ensure the safety, availability and competitiveness of the refinery.”
Now let’s talk strategy: your ambition is to become a global leader in renewable and circular solutions. How are you progressing on that?
“We are focusing on the implementation of our growth strategy and continue to make progress in many areas. The Singapore renewables capacity expansion project is proceeding according to the schedule. It should expand our annual renewables production capacity by up to 1.3 million tons during the first quarter of 2023. Our Rotterdam Sustainable Aviation Fuel (SAF) optionality project is also moving ahead, and it is planned to extend our SAF capability by 500,000 tons by the end of 2023. We are now in the definition phase in preparation for a possible next renewable products refinery in Rotterdam, and aim at investment decision readiness late this year or early 2022.”
“Several new partnerships and commercial agreements have been recently announced in both Renewable Aviation and Renewable Polymers and Chemicals businesses. For example, together with our partners we have set up Sustainable Aviation Fuel (SAF) in the UK with London Heathrow, in Switzerland with Zurich Airport and in Germany now also in Cologne. In addition, we signed a new agreement with Boston Consulting Group (BCG) for the purchase of Neste MY Sustainable Aviation Fuel™, to be delivered to airlines SAS and Finnair, covering the volume of all the flights with these carriers taken by BCG employees in the Nordics.”
“In Renewable Polymers and Chemicals, first Neste RE deliveries have been supplied to Asia together with South Korean LG Chem. In addition, we have successfully expanded our partnerships with Mitsui Chemicals and Toyota Tsusho to start Japan's first production of renewable plastics. And with LyondellBasell, we have signed a long-term commercial agreement to make polymers and chemicals from renewable feedstock more widely available to global brands.”
“I am happy to say that we see a lot of progress and positive developments in the markets, on which we will give an update on our Capital Markets Day in September.”
The European Commission has published an extensive legislative proposal package, called Fit for 55, aiming at 55% emission reduction by 2030. How do you see this at Neste?
“Neste welcomes the EU’s Fit for 55 package which is necessary to combat the climate crisis. The overall target is positive, and will create market demand for our renewable products, including for example a clear, increasing mandate for SAF. The mandate is a key instrument to ensure the steady decarbonisation of aviation. It will provide market certainty for this growing business.”
“However, we need to ensure access to all sustainable raw materials to meet the ambitious targets, and there is still work to be done. No single solution, electrification of transport, biofuels, synthetic fuels or other, will be able to solve the challenge alone.”