nordic refiner perspectice · 2016-09-29 · 9/16/2016 improving energy efficiency and smart...
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Nordic refiner
perspectice
Matti Lehmus, EVP Oil Products, Neste Oyj
29.9.2016
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Neste in brief
9/16/2016
Revenue
€ 11 billion
Comparable
operating profit
€ 925 million
Four Business
Areas
• Oil Products
• Renewable
Products
• Oil Retail
• Emerging
businesses
Largest owner
the Finnish State
(50.1%)
~ 5,000
employees
in 15 countries
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The European refining industry needs to
address a number of macrotrends
9/16/2016
Demand trends
affecting product
balances
Decarbonization
of traffic
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4
769791808869
20202010 2015 2025
-0,8%
-66 -63
-96
20
33
1110
32
38
-53
-4
2020
Gasoline
Middle
distillates
Fuel oil
-23
2010 2015
Surplus
Deficit
European long-term demand trends affect product balances
9/16/2016
Greater Europe total demand
forecast for oil products
Mt/a
Source: Wood Mackenzie, Greater Europe
product markets long term outlook, 1H 2016
Greater Europe all supply
balances outlook
Mt/a
Source: Wood Mackenzie, Greater Europe
product markets long term outlook, 1H 2016
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Pressure on European utilization rates
expected to continue
9/16/2016
%
Source: Wood Mackenzie Balancing the World, 1H 2016
Refinery utilization rate forecast including known
capacity changes
60
65
70
75
80
85
90
2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Greater
Europe
North
America
Russia and
Caspian
Asia Pacific
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Decarbonization of traffic is a key business
environment driver for the coming decades
9/16/2016
Traffic will
become the largest
source of CO2
emissions in
Europe
Source: European Commission
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9/16/2016
Improving
energy efficiency
and smart traffic
Alternative
powertrainsAlternative fuels
Complementary means for decarbonizing
traffic will be needed
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Assessing alternative solutions should
consider well-to-wheel emissions
9/16/2016
Well-to-wheels gCO2eq/km
Source: JEC: Well-to-Wheels analysis of future automotive fuels and powertrains
in the European context./January 2014
0 50 100 150
Fossil gasoline
Fossil diesel
Diesel hybrid
Natural gas
Electricity (EU mix)
Waste-based HVO
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Waste-based advanced biofuels are a
cost-efficient way to reduce emissions
9/16/2016
Estimated cost to society (in EUR) to reduce 1 ton of CO2
emissions in heavy duty and passenger cars
Source: Roland Berger,
Integrated Fuels and
Vehicles Roadmap to 2030,
2016
Data refers to situation in
2030. EU average projected
power mix (IEA). Oil price
range of 70-113 USD/bbl.
Expected 2030 cost for
alternative powertrains.
Includes required investments
in infrastructure.
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EU level commitment to greenhouse gas
reductions driving biofuels regulation
109/16/2016
Longer term
outlook
EU committed to
40% GHG reduction
and 27% renewable
energy target by
2030
EU Regulation up
to 2020
10% overall target
firmly in place -
current biofuel
blending level
estimated to be 6%
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Several Nordic countries have a high
ambition for decarbonisation
9/16/2016
FINLAND
• Roadmap towards a
carbon-neutral
society in 2050
• 40% renewable fuels
share by 2030
SWEDEN
• Ambition to be one
of the first fossil-free
developed econo-
mies in the world
• A fossil-free vehicle
fleet by 2030
NORWAY
• 40% reduction in
GHG by 2040, carbon
neutral by 2050
• Significant incentives
for electric vehicles
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9/16/2016 12
41 41
10 9
0
10
20
30
40
50
60+/-0%
50
Mton
2021
50
2016
Middle distillatesGasoline
0
1
2
3
4
5
>4
2016
>2
>10%/a
2021
Biofuels
Baltic Sea market outlook reflects high
ambition for decarbonisation
Baltic Sea biofuel demand
forecast 2016−2021
Baltic Sea demand forecast for
gasoline and distillates (incl.
biofuels) in 2016−2021
Baltic Sea demand estimate includes: Finland, Sweden, Denmark, Norway, Poland, Estonia, Latvia and Lithuania.
Mton
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Case Neste –
Focusing on two strategic objectives
9/16/2016
• Differentiated customer offering
• Operational performance improvement
• Asset development
Baltic Sea
champion
Global
renewables
growth
• Waste and residue feedstock focus
• Expanding to new markets and
applications
• Renewables capacity growth
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Neste’s One Refinery asset development program
positions our refining system for the future
9/16/2016
One Refinery program 2015−2017
• Construction of residual
hydrocracker feed pretreatment
unit to Porvoo
• Naantali conversion change
• Optimization as one refinery
system
Targets
• Increased fuel oil to distillates
conversion
• Improved feedstock flexibility
• Naantali production cost reduction
Naantali
reconfiguration
Porvoo feed
pretreatment
(SDA)
Porvoo
Production
Line 4
VGO +400 kt/a
VGO import
-350 kt/a
Middle distillate
+100 kt/a
Heavy fuel oil
-300 kt/a
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9/16/2016 15
New configuration enables increased feedstock
flexibility and improved product mix
65 %75 %
27 % 23 %
8 %2 %
0%
20%
40%
60%
80%
100%
Before After
VGO
Others
Urals
8 % 5 %
50 % 53%
31 % 31 %
11 % 11%
0%
20%
40%
60%
80%
100%
Before After
Others
Gasoline
Middledistillates
Fuel oil
Feedstock flexibility improvement Product mix improvement
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Renewables growth − Neste has grown into a
giant of the circular economy
9/16/2016
2Million tonsWaste and residues
2Million cars
Annual consumption
2Billion litresRenewable Diesel
More than 75 % of our renewable feedstocks are wastes and residues
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Expanding into new markets and
applications
9/16/2016
Renewable fuels
for road traffic
and expanding
the feedstock
range
Renewable
solvents and
biobased
chemicals
Renewable
aviation fuels
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Neste’s renewable diesel expanding
into new markets
189/16/2016
“By 2020, all plastic material
used in our home furnishing
products will be 100%
renewable and/or recycled.”
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Thank you.
Matti Lehmus,
EVP Oil Products Business Area,
Neste