Shell has definitively pulled the plug on construction of a biodiesel and kerosene plant. Construction costs are too high, and the company is unable to make the plant competitive. Oil, a market in which Shell remains active, experienced erratic price movements last week.
After a decline last week, the oil price rose again, only to start falling again on Tuesday. Overall, at the time of writing (Thursday morning, September 4th), the oil price is down 2,6% compared to last Thursday. A barrel of Brent crude currently costs $66,84 per barrel, compared to $68,62 on August 28th.
OPEC+ meets on Sunday, and according to Reuters, eight of the countries want to further increase production. Since April, OPEC+ members have been scaling back the production cuts they imposed on themselves to support oil prices.
Diesel
The price of diesel rose further last week to €125,28 per 100 litres (from 4.000 litres).
Insufficiently competitive
Shell began construction of a biofuel plant at Shell Energy and Chemicals Park Rotterdam (Pernis) in 2022. The plant was intended to be one of the largest biofuel plants in Europe and, starting in 2024 or 2025, would produce 820.000 tons of biodiesel and biokerosene annually from used cooking oil, animal fat, and other industrial and agricultural waste products. This was part of Shell's strategy to achieve net-zero emissions by 2050. According to the NOS, approximately €1 billion has already been invested in the plant.
Work was halted a year ago and has now been decided not to resume. In a press release, Machteld de Haan, president of Downstream, Renewables and Energy Solutions at Shell, said: "Market dynamics and the expected construction costs ultimately make the project insufficiently competitive for us to meet our customers' demand for affordable biofuels. This was a difficult decision, but the right one. We want to focus our investments on projects that deliver value for both our customers and our shareholders."
Finnish Neste (also active in Singapore) has just completed its existing biorefinery in Rotterdam in April started with sustainable aviation fuel (SAF). Up to 500.000 tons of SAF can be produced. By 2027, the company aims to more than double the production of biodiesel and biokerosene in Rotterdam to a combined 2,7 million tons per year.
Natural gas
Gas is selling for €4 per MWh today (September 31,920). A fraction higher than last Thursday, when gas was at €31,708 per MWh. The gas price remained around the same level throughout the week.
According to data from Gas Infrastructure Europe, European gas reserves are now 78% full. Dutch gas reserves are 65% full. According to the National Energy Dashboard, Dutch gas demand (for heating) will be roughly the same next week as last week. Only on Sunday, the day the highest temperatures of the week are expected, will demand for heating be lower.
Electricity
Just like a week earlier, the average electricity price on the Spot market Epex has been relatively high every day of the past week, with a low of €53,38 per MWh and a high of €90,98 per MWh.
This coming week, (much) more solar energy will be generated than in this week's three-year average, according to the National Energy Dashboard. There's also a lot of wind energy today, but the rest of the week will be around average.