BP Forces its Way Into Renewables with New Bioenergy Firm

Oil giant BP has announced its “major expansion” into the renewable energy marketplace with a new partnership in the biopower sector.

The firm has formed a 50/50 joint venture with US-headquartered agricultural commodities company Bunge to form new venture, BP Bunge Bioenergia.

Under the agreement, BP will combine it’s Brazilian biopower and biofuels business with Bunge to create a business that produces sugarcane ethanol in Brazil.

The deal will see BP pay £60 million to Bunge and assume more than £650m debt in Bunge assets.

BP Bunge Bioenergia will also create 11 biofuels sites in Brazil.

It claims almost 70% of vehicles in Brazil currently run on ethanol and it expects the country’s demand for ethanol to increase by around 70% by 2030.

Bob Dudley, BP group chief executive, said: “This is another large-scale example of BP’s commitment to play a leading role in a rapid transition to a low carbon future.

“Biofuels will be an essential part of delivering the energy transition and Brazil is leading the way in showing how they can be used at scale, reducing emissions from transport.

“This combination will unlock new possibilities for improved efficiency and future growth in this key market.”

REFS

Published on energyvoice.com and written by David McPhee

Neste to Sell its Fuel Retail to Russian PJSC Tatneft

Neste Corporation has signed an agreement to sell its fuel retail business consisting of 75 fuel stations and a terminal in St. Petersburg region to PJSC Tatneft, one of the leading integrated oil and gas companies in Russia.

The divestment has no impact on Neste’s Marketing & Services’ operations in Finland and the Baltic countries.

“Neste targets to become a global leader in renewable and circular solutions. The divestment of Russian fuel retail business will enable us to focus on our strategic priorities,” says Neste’s President and CEO Peter Vanacker.

“Over the years we have developed the operations in St. Petersburg area into a successful business with approximately 1,000 employees who are known for their outstanding customer service and commitment to high health, safety and environmental standards.

We are happy that Tatneft is keen to develop our fuel retail business in Russia further,” continues Vanacker.

“Neste has an extensive network of over 1,000 stations in Finland and in the Baltic countries. We focus on developing our solutions and services in Finland and the Baltic countries, where we can supply Neste MY Renewable Diesel and other high-quality fuels from our own refineries,” says Panu Kopra, Executive Vice President of Marketing & Services business unit.

Nail Maganov, the General Director of Tatneft, said: “Tatneft’s retail network is one of the five largest Russian chains with more than 600 own petrol stations.

The retail sales strategy focus is on the realization of high-grade fuels produced at our state-of-the-art refinery TANECO and provision of high quality service to our customers, including convenience store services (i.e., café, shops).

The acquisition of Neste’s retail business in the North Western Russia, which is one of the highest priority regions for Tatneft, is a significant contribution to the achievement of our strategic goals, including the marketing of approximately 50% of our own produced fuels domestically.

One of the key priorities in developing and operating Tatneft’s retail network is to minimize environmental impact.

Neste is one of the leaders in this field in Russia, which would allow us to expand and promote the best practices in this area throughout our operation”.

Pursuant to a separate agreement between Tatneft and Neste following the acquisition the retail network will continue to operate under the Neste brand for up to 5 years.

The parties have agreed that the transaction price shall remain confidential. The transaction will not have a material effect on Neste’s and Tatneft’s respective financial positions.

The completion of the divestment is subject to the approval of the Russian competition authorities and the transaction is estimated to be completed by the end of 2019.

REFS

Neste to divest its fuel retail business in Russia and sell it to PJSC Tatneft

The Plastics Backlash has Some Oil Giants Worried

Faced with sooner than anticipated peak demand from transportation, industry, buildings and the power sector, BP Plc, Total SA and Exxon Mobil, amongst others, are investing in factories and refineries that convert fossil fuels into plastics and chemical feedstocks–a sector that is, according to the BP Energy Outlook 2019 “the single-largest projected source of oil demand growth in the next twenty years.”

Indeed, the EIA expects U.S. demand for feedstock to increase from 40 million metric tons a year today to 60 million by 2040.

Royal Dutch Shell PLC is thought to have invested at least $6 billion in a chemical processing plant to produce ethane and polyethylene feedstocks in Western Pennsylvania. Similarly, Exxon Mobil plans to spend $20 billion over the next decade on a series of petrochemical complexes and refineries on the Gulf Coast.

Likewise, traditional crude oil producers and refiners see a bright future in chemicals and plastics.

For example, Saudi Aramco, is planning to invest some $100 billion over a decade, aiming to convert about 2-3 million barrels of crude oil per day directly into petrochemical products. Indeed, Saudi Aramco recently forked over $70 billion to acquire Sabic, a Saudi petrochemical giant, to help it become “the leader in energy and chemicals” according to Amin Nasser, Aramco CEO.

It is not just oil companies that see a future in chemicals. Oil refineries are being built to focus on chemical products rather than fuel. For example, China’s Hengli Petrochemical Co. and Rongsheng Petrochemical Co. will devote as much as half of their capacity to chemicals, mostly paraxylene, a material that China imports to make polyester and plastic bottles. That’s a sharp increase from the 10 percent chemical production at a typical refinery and as much as 20 percent at modern refineries integrated with chemical plants.

Black Swan Event?

Quite unexpectedly, the oil industry’s recent investments into increasing plastic and chemical feedstock capacity is not looking as bright, as this strategy is threatened by the worldwide consumer response to plastic polluting oceans and clogging rivers as highlighted by government discussions in Europe, India, China and some U.S. states to ban single-use plastics.

According to Paul Bjacek, a principal director at consulting firm Accenture Plc, increasing implementation of plastics recycling and plastic bans could cut petrochemical demand growth to one-third of its historical pace – to about 1.5 percent a year.

In addition, demand for fossil fuels from the chemicals industry is likely to fall as an increasing number of sustainable bio-fuels, bio-lubricants, bio-chemicals and bioplastics come on the market.

Taking advantage of the trend towards sustainability, the Italian oil company Eni SPA has invested heavily in a bio-petrochemical plant at its refinery in Porto Marghera near Venice, using vegetable oil and biomass.

As for the future

Meeting the challenge of more energy with fewer emissions has encouraged oil companies to invest in renewable energy.

The increasing focus of oil company’s refineries on the production of chemicals instead of fuel, is a direct response to the anticipated decline in demand as governments around the world mandate an end to production of new combustion engine vehicles, perhaps as soon as 2030.

In parallel, heightened public concern over pollution from plastics is encouraging the chemical industry to invest in production of bio-technologies and recyclable products and manufacturers and retailers are responding with plans to reduce plastic packaging.

If current trends continue Christof Ruehl, the former head of research for the Abu Dhabi Investment Authority, foresees a 20 percent cut in oil demand and should a “war on plastics” really take off; in the process, the oil majors could be badly stung.

REFS

This article was published on rigzone.com

The Plastics Backlash has Some Oil Giants Worried