Shell scraps Singapore SAF/HVO, base oil plant plans

Shell has cancelled plans to set up a biofuel unit and a Group 2 base oil plant in Singapore.

The biofuel unit was planned to produce 550,000 t/yr of sustainable aviation fuel (SAF), hydrotreated vegetable oil (HVO) and renewable chemicals, using renewable hydrogen and waste biofuel feedstocks such as used cooking oil and animal fats. The amount of Group 2 base oils it planned to produce is unclear. Shell previously also closed a Group I base oil unit at its 500,000 b/d Pulau Bukom refinery in Singapore.

But the cancellation of the two projects will not adversely affect Shell's ability to supply base oils and biofuels to its customers. "We will continue supplying base oil and lubricants, as well as biofuels to our customers in Singapore and the region," the company said on 31 March.

Lack of SAF mandates, feedstock shortages Shell did not say why it was scrapping the projects, but market participants thought it could be a combination of potential feedstock shortages and a lack of SAF blending mandates in Asia in contrast with other regions.

European countries such as Norway and France have introduced SAF mandates. The UK is seeking to introduce at least a 10pc SAF mandate this year.

The EU has also proposed a mandate , with aircraft landing at EU airports set a 2pc blended SAF target by 2025, 5pc by 2030, 20pc by 2035, 32pc by 2040 and 63pc by 2050.

The US Department of Energy meanwhile released a federal roadmap in September last year that would target the use of 3bn USG/yr of SAF by 2030 and 35bn USG/yr of SAF by 2050.

But there does not seem to be any official government policies in Asia mandating the use of SAF in the aviation industry.

Only India and South Korea so far have explicitly committed to introducing a SAF mandate, while Japan has a non-binding 10pc SAF target by 2030.

Feedstock supplies will also become tighter in Asia-Pacific with some 7.5mn t/yr of SAF capacity coming on line by 2030 in Asia, while another 5mn t/yr of HVO capacity will be available in the next four years.

Finnish biodiesel producer Neste is Singapore's only HVO and SAF producer for now, after Shell pulled the plug on its biofuels project.

Shell recently purchased a southeast Asian oil recycling firm to boost its biofuel feedstock supplies, but this agreement will be unaffected by the fallout from the Singapore project cancellations as it still needs to supply its 820,000 t/yr Netherlands refinery .

By Ryan Ang

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