by Carl Surran (Seeking Alpha) Shell (NYSE:SHEL) said on Tuesday it will stop construction of a major biofuels production facility in the Netherlands, as it seeks to ensure the project's competitiveness in a market that faces an anticipated flood of sustainable fuels from the U.S.
"Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project," said Huibert Vigeveno, Shell's (SHEL) Downstream, Renewables and Energy Solutions Director.
Upon completion, the facility at the Shell Energy and Chemicals Park Rotterdam is set to become one of Europe's biggest biofuels production facilities, behind the 1.4M metric tons/year plant owned by Neste, which is also in Rotterdam.
The Shell (SHEL) plant was expected to produce 820K metric tons/year of biofuels, including sustainable aviation fuel and renewable diesel made from waste such as cooking oil; production was expected to start in 2025.
Rival BP said recently that it was pausing two biofuel projects in Germany and the U.S.
UBS analyst Joshua Stone said the pause is consistent with Shell's (SHEL) strategy of placing a greater focus on returns, and "the delays further highlight that the advanced biofuels market is not an easy one." READ MORE
Related articles
- Shell to temporarily pause on-site construction of European biofuels facility (Shell)
- Shell halts construction of large biofuels plant in Holland - here's why (Daily Mail)
Excerpt from Shell: Shell Nederland Raffinaderij B.V., a subsidiary of Shell plc, is to temporarily pause on-site construction work at its 820,000 tonnes a year biofuels facility at the Shell Energy and Chemicals Park Rotterdam in the Netherlands to address project delivery and ensure future competitiveness given current market conditions.
As a result, contractor numbers will reduce on site and activity will slow down, helping to control costs and optimise project sequencing.
“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director.
“We are committed to our target of achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy to help us and our customers profitably decarbonise,” added Vigeveno. “And we will continue to use shareholder capital in a measured and disciplined way, delivering more value with less emissions.”
- Following the decision to pause on-site construction, an impairment review will be conducted for this project. Further guidance will be included in Shell’s second quarter update note scheduled for publication on Friday, July 5, 2024.
- Shell took a final investment decision for the planned biofuels facility in September 2021. The facility is designed to produce sustainable aviation fuel (SAF) and renewable diesel made from waste. Additional information regarding project status and timelines will be communicated in future updates.
- Shell is one of the world’s largest energy traders and blenders of biofuels. Through its Raizen joint venture in Brazil, Shell is the largest producer of second-generation ethanol and the leading sugar cane ethanol producer globally.
- As announced at Capital Markets Day in June 2023, Shell plans to invest $10-$15 billion across 2023-2025 to support the development of low-carbon energy solutions including e-mobility, low-carbon fuels, renewable power generation, hydrogen, and carbon capture and storage. READ MORE
Excerpt from Daily Mail: Shell gave the project the green light in September 2021 as part of its plan to provide more low-carbon fuels for transport and hydrogen across Europe.
Should the facility be finished, it will produce enough renewable diesel to eliminate 2.8 million tonnes of carbon dioxide each year, equivalent to taking more than one million cars off the road.
However, Britain's oil and gas industry has been rethinking its low-carbon energy ambitions, partly motivated by investor concerns over weak returns.
Last week, BP announced it was freezing all new offshore wind power schemes and investment in two biofuel projects in Germany and the United States.
Its chief executive, Murray Auchincloss, said the FTSE 100 business would instead prioritise investment in fossil fuel assets.
His approach represents a stark departure from his predecessor, Bernard Looney, who introduced the company's target to cut emissions to net zero by 2050.
Shell has also been scaling back energy transition projects and targets under its new Wael Sawan, who succeeded longtime boss Ben van Beurden last year.
Although the firm is still aiming for net zero in 2050, it recently ditched a target to reduce the net carbon intensity of its energy products by 45 per cent by 2035. READ MORE
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