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    NESTE   FI0009013296

NESTE OYJ

(NESTE)
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Exclusive-Kinder Morgan, Neste to retrofit tanks for green fuels feedstocks

09/13/2021 | 10:08am EDT
FILE PHOTO: The headquarters of U.S. energy exporter and pipeline operator Kinder Morgan Inc. is seen in Houston

(Reuters) - Pipeline operator Kinder Morgan Inc plans to convert some Louisiana tank and piping infrastructure to hold used cooking oil and other feedstocks for Finnish renewable-fuels giant Neste, the companies told Reuters.

U.S. energy companies are keen to modify https://www.reuters.com/world/middle-east/exclusive-exxon-chevron-look-make-renewable-fuels-without-costly-refinery-2021-08-12 existing infrastructure to use for boosting the supply of renewable fuels that emit less carbon than traditional refined products like gasoline or diesel.

Houston-based Kinder Morgan has entered a long-term contract with Neste to make rail, trucking and marine enhancements as part of the expansion of the Harvey, Louisiana, facility, the companies said.

Neste will initially use 30 converted tanks as its primary U.S. hub to store feedstocks used to produce renewable diesel, sustainable aviation fuel and renewable plastics.

The tanks will be able to hold more than 650,000 barrels of oils, about one-fifth of the farm's current capacity, the companies said.

"The U.S. has all the infrastructure in place," said Jeremy Baines, president of Neste U.S.

The companies did not disclose terms of the deal, but Kinder Morgan said its terminal division plans to finance the project internally.

The first stage of the project is due to be complete in the first quarter of 2023.

"We've seen this market shift coming for quite some time," said John Schlosser, president of Kinder Morgan Terminals, adding that the hub will lower the logistics costs for Neste.

Neste is one of the largest refiners of renewable fuels in the world. The company is doubling the size of its Singapore refinery to be able to produce up to 1 million tons of sustainable aviation fuel, renewable diesel and renewable raw materials for polymers and chemicals. In 2023, the company expects to be able to produce more than 515 million gallons of SAF per year.

It has been buying companies that collect used cooking oil from restaurants across the United States, including Illinois-based Mahoney Environmental in 2020 and Minnesota-based Agri Trading last week. Used cooking oil is less carbon-intense than most other vegetable oil feedstocks.

Processing it can be more profitable than for other vegetable oils because of state and federal incentives to use such feedstocks.

Refiners generate federal and state tax credits for making certain types of biofuels such as renewable diesel, which also helps them meet the requirements of the Renewable Fuel Standard.

Neste is one of a few companies that have been able to secure supply of used cooking oil. U.S. petroleum refiners such as Chevron, Marathon Petroleum Corp and Phillips 66 have made recent investments to secure soybean oil for their new refinery conversion projects.

Last week President Joe Biden said he is seeking a sustainable aviation fuel https://www.reuters.com/business/sustainable-business/white-house-targets-20-lower-aviation-emissions-by-2030-2021-09-09 tax credit as part of a $3.5 trillion budget bill being pushed by his fellow Democrats in Congress to try to lower aviation emissions 20% by 2030. The industry said the tax credit is necessary to offset the higher cost of producing the fuel.

(Reporting by Laura Sanicola; Editing by William Mallard and David Evans)

By Laura Sanicola


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
KINDER MORGAN, INC. 0.27% 18.515 Delayed Quote.35.04%
LONDON BRENT OIL -1.39% 84.14 Delayed Quote.64.20%
NESTE OYJ 0.23% 48.78 Delayed Quote.-17.73%
WTI -1.23% 81.994 Delayed Quote.69.35%
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Financials
Sales 2021 13 248 M 15 373 M 15 373 M
Net income 2021 1 338 M 1 552 M 1 552 M
Net Debt 2021 154 M 179 M 179 M
P/E ratio 2021 27,9x
Yield 2021 1,58%
Capitalization 37 377 M 43 371 M 43 372 M
EV / Sales 2021 2,83x
EV / Sales 2022 2,51x
Nbr of Employees 5 137
Free-Float 53,4%
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Mean consensus HOLD
Number of Analysts 20
Last Close Price 48,67 €
Average target price 57,52 €
Spread / Average Target 18,2%
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Managers and Directors
Peter Vanacker President & Chief Executive Officer
Jyrki Mikael Mäki-Kala CFO, Head-Information Technology & Strategy
Matti Kähkönen Chairman
Lars Peter Lindfors Senior Vice President-Innovation
Jean-Baptiste Renard Independent Non-Executive Director
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