Nynas looks to ramp up bitumen production from 2021

Swedish speciality products firm Nynas is looking to ramp up bitumen production to meet any shortfall in European supply arising from planned refinery closures when the 2021 construction season begins in the northern hemisphere spring.

Nynas declined to comment on its production or planned strategy, but Argus understands it targeted 2mn t of bitumen output — against 2.2mn t/yr of production capacity — and 800,000t of naphthenic base oils production this year at its 50,000 b/d Harburg refinery in Germany, 28,000 b/d Nynashamn and 12,500 b/d Gothenburg refineries in Sweden and from its 50pc stake in the 27,000 b/d Eastham joint venture refinery with Shell in northwest England.

Nynas was one of Europe's leading bitumen producers until it filed for reorganisation in December. This led to Venezuela's state-owned PdV cutting its stake in the firm to 15pc from 50.1pc, and to Nynas being freed from US sanctions on Venezuela.

The interruption to its business, which included a necessary switch from Venezuelan bitumen-rich naphthenic crudes to alternative feedstocks, combined with Covid-19 lockdown restrictions on road project activity and bitumen demand from March through to May, has led Nynas to downgrade its full-year output projections by 15-20pc. It now sees production of 1.6mn-1.7mn t of bitumen and 650,000-660,000t of naphthenics this year. Again, Nynas did not comment.

But with the reorganisation and final agreement with creditors likely by mid-December, it can double down on efforts to reclaim its customer base and aims to make up for anticipated closures of European production capacity next year. Total plans to shut its 93,000 b/d Grandpuits refinery near Paris in the first quarter of 2021 and Neste plans to close its 55,000 b/d Naantali refinery in Finland. These typically produce 200,000-250,000 t/yr and 350,000-400,000 t/yr of bitumen respectively.

Nynas is now targeting as much as 3.5mn t/yr of global bitumen production and distribution capacity by 2023. This includes units operated by bitumen production, trading and supply firm Bitumina Industries, which bought Finnish refiner Neste's 49.9pc stake in Nynas last month.

This process of raising output is being helped by Nynas purchasing of naphthenic crudes from the US and Brazil — Colombian crudes are also on the menu — and Russian straight-run fuel oil (SRFO) for its Swedish, German and UK refineries, to make up for the absence of the Venezuelan grades, renowned for producing a range of high-quality bitumen grades, especially bitumen emulsions, that it used to get from PdV.

By Keyvan Hedvat