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ENEOS explores 3 million barrels/year SAF, renewable diesel output in Australia

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ENEOS explores 3 million barrels/year SAF, renewable diesel output in Australia


ENEOS sees SAF feedstocks, renewables potential in Australia

Australia already producing significant biofuels feedstocks: CSIRO

Australian refineries face closures, turning import terminals

  • Author
  • Takeo Kumagai    Neo Rong Wei    Gawoon Philip Vahn
  • Editor
  • Aastha Agnihotri
  • Commodity
  • Agriculture Energy Transition Oil Shipping

Japan's largest refiner ENEOS has agreed with Australian refiner Ampol to explore producing up to 500,000 kl/year (3.14 million barrels/year) of sustainable aviation fuel and renewable diesel at the 110,000 b/d Lytton refinery in Brisbane by the late 2020s, it said March 23.

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The move marks ENEOS' first initiative to develop SAF and renewable diesel supply chains abroad, as it accelerates its efforts toward achieving carbon neutrality for Scope 1 and Scope 2 CO2 emissions by fiscal year 2040-41 (April-March) and slashing emissions by 46% by FY2030-31 from FY2013-14 levels.

The development follows the signing of a memorandum of understanding between ENEOS and Ampol to explore the production of biofuels, including SAF and renewable diesel, at the Lytton refinery in Queensland state.

The companies have also signed a separate MOU with the Queensland government and will discuss investment and project development as part of the Queensland biofutures 10-year roadmap.

As part of a pre-feasibility study, the companies will consider the use of agricultural, animal and other waste feedstocks and use the existing refinery to produce biofuels for domestic and export markets.

Rich potential

ENEOS, which has had oil products trade with Ampol, sees Australia having a great potential for securing SAF feedstocks, as well as renewables as the source of hydrogen to be used for producing renewable diesel, a spokesperson said.

Australia is already producing a "significant" quantity of feedstocks for biofuel production, which makes it well-positioned to move into SAF production, said CSIRO, a state-owned agency responsible for scientific research.

Already, Australia's Qantas Airways had committed to using 10% SAF in its fuel mix by 2030, and about 60% by 2050.

In 2022, the country's national carrier also kicked off an SAF coalition program with five other companies.

The program will contribute to the incremental cost of up to 10 million liters of SAF sourced by Qantas at the UK's London Heathrow, which represents around 15% of the fuel Qantas ordinarily consumes on flights out of the airport, and from 2025 to a further 20 million liters each year sourced out of Los Angeles and San Francisco.

Refinery in transition

The production exploration of 500,000 kl/year of SAF and renewable diesel output comes in Australia, where a series of refineries have already closed in recent years.

When asked whether ENEOS is concerned about a potential closure of its 110,000 b/d Lytton refinery, another spokesperson said the move to develop the biofuels supply chain would help boost the refinery's competitiveness.

The Lytton refinery in the state of Queensland and Geelong refinery in the state of Victoria are Australia's only remaining refineries in operation, though the fuel producers had both mulled closure during the first half 2021 after posting hefty losses in 2020.

An extended period of pandemic-related oil demand destruction during 2020 had exposed weaknesses in Oceania refineries, as a slew of fuel producers in Australia have either ceased their operations or are at the brink of shutting down due to tepid oil product margins and weak fuel demand.

In October 2020, BP Australia shut its 146,000 b/d Kwinana refinery in Western Australia and converted it to a fuel import terminal and ExxonMobil Australia's Altona refinery in Melbourne started the process of shutting down the plant in August 2021.

BP, meanwhile, has announced that it plans to start producing SAF by 2025 after converting its Kwinana refinery to produce renewable fuels.

In Japan, ENEOS plans to build and start up a 300,000-mt (400,000 kl)/year SAF production unit at its Wakayama refinery in western Japan by 2026 in its collaboration with France's TotalEnergies.

The Wakayama refinery currently has a refining capacity of 120,400 b/d on a sole crude distillation unit, which is scheduled to be decommissioned in October.

Japan's SAF consumption is estimated to be around 1.7 million kl or 10.69 million barrels in 2030, by which time the country aims to have displaced 10% of the jet fuel consumption by domestic airlines with SAF, according to the Ministry of Land, Infrastructure, Transport and Tourism.