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Eni considers biofuels acceleration

The Italian oil and gas firm may speed up its move into biorefining

Eni has a set a target of 5mn t/yr of biofuels capacity by 2050. But, due to the strong performance of the fledgling business and what it sees as a significant demand opportunity, it may look to move quicker along this path than it had previously planned.

Its 2050 target was set out “without specifying any interim result”, says Massimo Mondazzi, chief operating officer of the firm’s Energy Evolution business. “But, considering the very good results that we are achieving, plus the significant market that we see is going to be opened up—including the biojet opportunity that could come in the next [number of] years—certainly, the… transformation could be accelerated,” he says, promising a more detailed update at Eni’s next strategy presentation.

Quick off the blocks

The Italian firm was a “first mover” in converting a traditional refinery to a biorefinery and “the results are now becoming material”, says its CFO, Francesco Gattei. It started up its retooled 360,000t/yr Porto Marghera facility in Venice in 2014. An end-of-2023 upgrade to the plant will boost capacity to 560,000t/yr, with increased feedstock diversification from food production waste, animal fats and other advanced byproducts, says Gattei.

“The cost of refinery conversion… is very low because what we have done in Venice and in Gela is just transformed existing refining and reusing existing assets” Ricci, Eni

Sicily’s Gela biorefinery became operational in August 2019, with its capacity building towards an eventual 750,000t/yr. Following the startup of pre-treatment units by the beginning of 2021, it too will able to process a wide variety of feedstocks.

Eni’s biorefining system will become free of often controversial feedstock palm oil in 2023, Gattei continues, and, by the end of that year, will be 80pc supplied by second- and third-generation feedstock compared with 20pc at present today.

Biorefining activity “has proved to be profitable, with a contribution of €60mn ($71.2mn) in the first nine months of 2020 and is expected to have an IRR of 15pc”, the CFO says,

And, after launching in 2018 a waste-to-fuel demonstration plant in Gela, in July this year subsidiary Eni Rewind finalised the Feed study for a first industrial-scale plant near the existing Porto Marghera facility. The new plant will treat up to 150,000t/yr of organic waste—equivalent to that generated by 1.5mn people—and yield bio-oil to be used directly as low-sulphur fuel for shipping or refined to create high-performance biofuels.

Looking up

Increasing demand for biofuels in Europe is “driven by the [EU’s] ambitious decarbonisation mandate”, in particular its Renewable Energy Directive II rules that have boosted requirements in the transport sector, says Giuseppe Ricci, Eni’s chief refining and marketing officer. “Just as an example, we see that, in the last year, hydrogenated vegetable oil demand in Germany alone increased by ten times.

“We expect further growth in demand in the future because of the recent announcement by

the European Commission, confirmed by the [European] Parliament, to increase the [greenhouse gas] saving targets to 2030,” says Ricci.

5mn t/yr – Eni 2050 biofuel capacity target

Eni’s biorefinery utilisation rates in the third quarter were relatively low, at 53pc. But “we had planned maintenance in both the biorefineries—this is the reason the service factor has been so low,” says Ricci.

“In the fourth quarter, we expect to increase the service factor up to 80pc. We also have to consider that Gela refinery is still in ramp-up. The overall production across the nine months is, in fact, [equivalent to] more than 0.5mn t/yr, 60pc more than last year. And we expect to have a continuous increase in ramp-up to maximum capacity.”

The cost of the Gela conversion was c.$300mn for its 750,000t/yr capacity, notes Biraj Borkhataria, deputy head of European research at bank RBC. “The cost of refinery conversion—in the range of $400-500/t of [capacity]—is very low because what we have done in Venice and in Gela is just transformed existing refining and reusing existing assets,” agrees Ricci.

“In the case of a further investment, it depends on the type of investment that we will do. We expect to follow both solutions—brownfield and greenfield—depending on the conditions and areas where we will realise new biorefineries,” he continues.

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