In order to lower costs and reduce dependency on Russian feedstock, Neste Oil will invest about EUR250 million (USD284 million) in integrating its two Finnish refineries.
Neste plans to modify and upgrade its 206,000 barrel-per-day (bpd) Porvoo refinery and its 58,000 bpd Naantali refinery between 2016 and 2017, according to Chief Executive Matti Lievonen.
This will cost around EUR200 million (USD227 million) at Porvoo and EUR50 to 60 million (USD57-68 million) at Naantali. The upgrade will reduce production of heavy fuel oils by 2% to 5-6% and will result in a return on investment of 15%.
Under the plan, Naantali will produce vacuum gasoil (VGO), which Porvoo uses to make valuable products such as diesel and aviation fuel. Currently, Porvoo gets most of its crude oil and secondary VGO feedstock from Russia. As Russia undertakes its own national refinery upgrade program, its refineries will become more complex and will require more VGO, which means Russia will cut back on its VGO exports.
The plan will entail an eight-week shutdown of the Porvoo refinery starting in April, which will cost around EUR100 million (USD113.5 million).
Neste Oil is a Finnish company based in Espoo. Aside from its Porvoo and Naantali locations, it operates renewable diesel refineries in Singapore and Rotterdam.