Shell puts work on Dutch biofuels project on hold

Energy giant Shell plc (LON:SHEL) has decided to temporarily put on hold on-site construction work at its project for a HEFA-based biofuels plant in the Netherlands in a drive to control costs and optimise project sequencing amid unfavourable market conditions.

The facility, being built at the Shell Energy and Chemicals Park Rotterdam, is designed to produce sustainable aviation fuel (SAF) and renewable diesel made from waste in the form of used cooking oil, waste animal fat and other industrial and agricultural residual products. It is targeting a production capacity of 820,000 tonnes of biofuel per year.

“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” Huibert Vigeveno, Shell’s downstream, renewables and energy solutions director, noted in a statement released today.

Shell took a final investment decision (FID) for the project, among the biggest such schemes in Europe, in September 2021.

The Rotterdam biofuels facility was originally expected to start production in 2024. Shell had rescheduled the project to around 2026 in its most recent earnings report.

Following the decision announced on Tuesday, the British firm will now make an impairment review for this project with further details to be disclosed in its second-quarter update note scheduled for publication later this week.

Shell’s announcement comes shortly after British energy major BP Plc last month said it has decided to scale back plans for developing new SAF and renewable diesel biofuel projects at its existing sites in a drive to simplify its portfolio and focus on value and returns.

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