Neste mulling closure of oil refinery as part of restructure

Citing a continued decline in demand for fossil oil products and a growing share of renewable energy solutions, the Finnish oil refining and marketing company says it is exploring the shutdown of its refinery operations in Naantali.

Additionally, Neste says it is seeking to transform its Porvoo refinery operations to co-processing renewable and circular raw materials to ‘ensure the competitiveness’ of its oil products business.

If implemented, the plans would mean up to 470 redundancies, including possible outsourcing, the company said.

Neste said that the COVID-19 pandemic had ‘substantially accelerated the decline in demand for oil products’ and noted that it was ‘not expected to recover to previous levels’. Accordingly, the company said ‘fundamental changes’ were needed to secure the competitiveness of its oil products business and that the planned measures were aimed at improving its productivity, resource efficiency and adaptiveness to market changes.

‘The energy transition is proceeding faster than expected. The forthcoming operating and maintenance investments in the Naantali refinery are not viable nor sustainable in a situation where there is large over-capacity for oil refining globally,’ said Neste’s President and CEO, Peter Vanacker. 

‘Although the time is not optimal, and this news is unfortunate for many of us, the planned actions to develop our refinery operations are urgently needed to maintain operations and strategic capabilities in refining in Finland and to secure oil products’ competitiveness.’ 

To initiate the transformation, the company will start cooperation negotiations in the oil products business unit and its supporting functions in Finland. The planned changes are expected to result in annual fixed cost savings of approximately €50 million.

Vanacker continued: ‘Neste’s ambition is to become a global leader in renewable and circular solutions, and to achieve carbon neutral production by 2035. The planned changes will support the transformation of the Porvoo refinery into a leading sustainable, safe and efficient refinery, enabled by our highly innovative and efficient Neste people.’