Finnish state oil refiner Neste bet its future on renewable diesel

Neste Oil, the Finnish refining and marketing company majority-owned by the state, spent over €800 million on new production facilities at its Porvoo refinery over a few years. In 2007 it inaugurated a new diesel production line worth more than €700 million and a biodiesel plant worth €100 million.

The diesel line converted low-value heavy fuel oil into premium-quality, sulfur-free diesel, with output of about one million tonnes a year. The biodiesel plant was the first to produce second-generation biodiesel using Neste's proprietary NExBTL (Next Generation Biomass To Liquid) technology, and it ran on a flexible mix of vegetable oil and animal fat, producing 170,000 tonnes a year.

The Minister of Trade and Industry formally opened the facilities. Neste projected the new diesel line would begin to show in its total refining margin from the third quarter. The two projects were the clearest sign that the company had committed to premium, cleaner fuels rather than conventional refining.

Neste described its strategy as prioritizing the growth of its refining and premium-quality biodiesel businesses, with refineries at Porvoo and Naantali totaling about 250,000 barrels a day of capacity and around 4,700 employees. The decision to back NExBTL, developed in-house, set Neste on a path to lead renewable diesel worldwide.

The 2007 NExBTL plant made Neste the world's leading producer of renewable diesel, and it went on to build an 800,000-tonne plant in Singapore.

Conventional refining margins were under pressure, pushing Neste toward premium products.

Neste developed its own NExBTL technology and could make diesel from waste and residues.

The new diesel line lifted margins by converting heavy fuel oil into high-value diesel.

The state majority owner accepted a multi-hundred-million-euro bet on an unproven fuel.

A state energy firm that treats a new technology as a strategic bet rather than a side venture can outrun much bigger oil companies — even into a new fuel category.

Neste's NExBTL renewable-diesel bet made it the world's leading producer of renewable diesel and sustainable aviation fuel. It built an 800,000-tonne-a-year NExBTL plant in Singapore, the world's largest diesel-from-renewables facility at the time, and later announced plans to transform its Porvoo crude-oil refinery into a renewables and circular solutions hub. The Finnish state remained a large shareholder, holding about 44% of Neste.