CEO Talks: Resilient Renewable Products business – challenging market in Oil Products continued in Q1/2021
Neste’s President and CEO Peter Vanacker answers questions about the company’s first quarter 2021 and shares his thoughts about strategy execution and the future of sustainable aviation.
You just shared your quarterly results, and it seems to be again a “mixed picture”. How do you see Neste’s performance in Q1/2021?
“Neste’s 2021 started in the same way as the previous year ended: with a resilient Renewable Products business and challenging market in Oil Products. We posted a comparable operating profit of EUR 302 million in the first quarter, compared to EUR 408 million in the corresponding period last year.”
“Renewable Products’ sales margin was healthy, sales volumes were high, and our production facilities reached a new quarterly production record of 829,000 tons. Oil Products, on the other hand, continued to suffer from a weak refining market and oversupply caused by the COVID-19 pandemic.”
“Uncertainty on the further development of the pandemic and its impact on the global economy will continue. We also continue to take the risks relating to the pandemic very seriously. Our primary objective is to ensure the health and safety of our employees, customers, contractors and other partners as well as to ensure the continuity of our operations and secure supply of products to our customers. This is particularly important for the Porvoo refinery major turnaround, which is being implemented during the second quarter.”
Let’s talk a bit about your strategy execution. How are you progressing on your ambition to become a global leader in renewable and circular solutions?
“We are fully focused 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 revised schedule. It will expand our annual renewables production capacity by up to 1.3 million tons with full optionality by the first quarter of 2023.”
“The acquisition of Bunge's refinery plant in Rotterdam will increase our raw material pretreatment capacity for the production of renewable products. After a thorough study phase we also announced Rotterdam as the chosen location for our possible next world scale renewable products refinery. We have now started the detailed engineering in preparation for a final investment decision late this year or early 2022.”
“In addition, we just announced a new Sustainable Aviation Fuel (SAF) investment at our existing Rotterdam facility. We will modify our existing renewables production capacity in Rotterdam to enable production of SAF. The modifications to the refinery will enable us to optionally produce up to 500,000 tons of SAF annually as part of the existing capacity.”
“The refinery operations in Naantali were shut down in March, and we will focus the site on terminal and harbor operations. In the second phase of the transformation, the Porvoo refinery will be developed towards co-processing renewable and circular raw materials. In the short term, the focus is on the successful implementation of the Porvoo turnaround.”
Talking about the aviation industry, how has the pandemic changed the outlook for sustainability in aviation and specifically the use of sustainable aviation fuels?
“As we all well know, aviation itself has been in the worst crisis ever since the first commercial planes took off a hundred years ago. However, the aviation industry is likely to resume on a growth trajectory after its recovery from the COVID-19 pandemic, so there is a growing need and urgency to act on aviation-related emissions.”
“Sustainable aviation fuels or SAFs offer considerable potential. Instead of consuming fossil oil, the fuels are produced from renewable and sustainable raw materials. And our SAF is already available on the market, and in use by over 10 airlines globally. SAF is the today solution to help airlines reduce their greenhouse gas emissions.”
You have also talked a lot about the necessary conditions for driving transformation and embracing more sustainable solutions. What’s your message here?
“My message boils down to the climate crisis: the challenges we face are too enormous to be tackled with one single solution. We are past mere target setting as a multitude of sustainable solutions are already available.”
“A progressive, technologically forward thinking and consistent policy framework can encourage all industry players to innovate and maximize value from existing resources. What we need is teamwork, openness towards multiple technologies, and an unbiased assessment of how we can achieve the greatest possible impact in the limited time we have. By working together, we have a unique opportunity to build a sustainable and resilient economy and society.”