Strategy implementation during 2011
Neste Oil continued implementing its cleaner traffic strategy during 2011. As part of its annual strategy review, the company updated its vision and defined its goal as being “the preferred partner in cleaner traffic fuel solutions”. The strategy dialogue that took place across the company and saw over 1,000 employees generate around 7,000 strategy-related ideas had a major impact on this updated vision.
In line with its updated vision, Neste Oil will focus on partnerships and offering customers value-added solutions rather than simply individual products. Five Value Creation programs were launched to support this shift in focus and the company’s overall strategy.
Renewable Fuels investment program completed
Neste Oil has now completed its approx. EUR 1.5 billion investment program aimed at increasing renewable fuels capacity. The company’s fourth renewable diesel plant, in Rotterdam in the Netherlands, was commissioned in September 2011. The EUR 670 million Rotterdam refinery was completed on-budget and on-schedule and strengthened Neste Oil’s position as the leading producer of renewable diesel. Following the completion of the investment program, Renewable Fuels will now concentrate on developing its global customer base and supply chain, achieving high levels of utilization and improving the profitability of its business. Read more about Renewable Fuels business in 2011.
Additional capacity for the growing base oil market
Neste Oil is also seeking growth on the base oil market. During 2011, the company started up a new premium-quality base oil production plant in Bahrain, together with Bahrain Petroleum Company (Bapco) and nogaholding. Neste Oil owns 45% of the plant. Following the start-up, Neste Oil is now one of the world’s leading producers and suppliers of Group III base oil. In addition, a partnership is being developed with Abu Dhabi International Oil Company (ADNOC) to increase total base oil capacity to nearly 1.3 million t/a from 2014 onwards. Negotiations on the implementation of the cooperation are continuing. Read more about Oil Products business in 2011.
Divestment of non-core businesses
Neste Oil divested various non-core businesses during 2011 to focus on developing its growth activities. The gas business in Estonia was sold to Alexela, the polyalphaolefins (PAO) plant in Beringen, Belgium to Chevron Phillips Chemical, and Neste Oil’s 50% stake in an iso-octane plant in Edmonton, Canada to Canadian-based Keyera Corporation. The sale of the iso-octane plant was confirmed in January 2012. Read more about Neste Oil's refineries and other production plants.
Enhanced production and logistics
Work on enhancing Neste Oil’s production and logistics operations continued in 2011. Particular attention was given to capacity utilization levels at the company’s refineries and optimizing the supply chain. This resulted in better utilization rates at both the Porvoo and Naantali refineries compared to 2010. Work continued on extending uninterrupted operations and improving reliability on Diesel Line 4 at the Porvoo refinery, and resulted in increased output and lower production costs on the line. Total production costs at Neste Oil’s refineries increased slightly, however, compared to 2010, mainly due to higher energy costs. Capacity utilization at the new Singapore and Rotterdam renewable diesel refineries was ramped up on a phased basis, but the plants were still run at limited utilization as a result of a soft product market. Read more about Production and Logistics.
A broader raw material base
Neste Oil succeeded in extending its renewable raw material base from five inputs to eight during 2011. Camelina oil, jatropha oil, and soybean oil were added to its feedstock pool during the summer. The company also increased its use of waste products and sidestreams significantly, which saw the amount of crude palm oil used fall to 54% of total renewable input. Read more about Neste Oil's renewable raw material base.
Research and technology work concentrated on new raw materials and product applications
Research and Technology played an important role in testing the new raw materials introduced during 2011. Work also continued to progress successfully in areas such as microbial and algae oil research. Neste Oil decided to build a pilot plant to produce waste-based microbial oil at its Porvoo Technology centre at the end of 2011. In the algae oil area, a major partnership was launched with the Marine Research Centre of the Finnish Environment Institute (SYKE), and Neste Oil decided to take part in international algae research projects in the Netherlands and Australia. Read more about Research, technology, and engineering.
Drawing on its R&D expertise, Neste Oil succeeded in producing its first batch of NExBTL renewable aviation fuel in summer 2011. Neste Oil became a global pioneer in the renewable aviation fuel sector following the start of the world’s first commercial flights using NExBTL renewable aviation fuel by Lufthansa in July. In addition, the company launched a trial to test Neste Oil's 100% renewable diesel in marine use in cooperation with the Port of Rotterdam.
Improving the sustainability of Neste Oil’s supply chain and safety performance
Neste Oil completed the certification of all its renewable diesel plants under the ISCC (The International Sustainability & Carbon Certification) system. ISCC certification carried out by independent third-party auditors verifies that NExBTL renewable diesel produced from certified raw materials complies with the EU’s sustainability requirements. Read more about sustainability certifications.
Improving safety performance was one of Neste Oil’s key goals in 2011, and positive progress was made in this area compared to 2010. The company’s most important occupational safety indicator, Total Recordable Injury Frequency (TRIF), fell to 2.3 in 2011 from 4.7 in 2010. This is Neste Oil’s best-ever result. Read more about safety.
Neste Oil has now completed its approx. EUR 1.5 billion investment program aimed at increasing renewable fuels capacity.
Neste Oil succeeded in extending its renewable raw material base from five inputs to eight during 2011.