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Shell Cancels Singapore Aviation Biofuel Project

Shell has confirmed that it has stopped exploring a biofuels unit and a Group II base oil plant in Singapore. Although Shell will no longer pursue these particular projects, the company noted that it will maintain a presence in the region. 

Shell told Reuters, "We can confirm that we are stopping the exploration of two projects – a biofuels unit and a Group II base oil plant in Singapore," adding, "We will continue supplying base oil and lubricants, as well as biofuels, to our customers in Singapore and the region."

In late 2021, Shell announced that it was studying a project aimed at producing sustainable aviation fuel (SAF) on Singapore's Bukom Island. 

The project aimed to provide major Asian airports like Hong Kong International Airport and Singapore's Changi with SAF. The project was set to have a production capacity of 550,000 tonnes per year and would be flexible enough to produce renewable diesel and bionaphtha feedstock for petrochemicals. 

The company has now decided to halt the project.

Shell had planned to make a final investment decision for the project by early 2023. 

However, airlines have no mandate to use SAF in Asia, unlike in Europe and the United States. This lack of regulation means that customers are unwilling to pay higher prices for SAF, making it an unviable commercial venture in the region now.

Despite the setback in Singapore, Shell continues to press ahead with plans to decarbonize aviation fuel

The company is currently building an 820,000 tonnes per year biofuels plant in Rotterdam, the Netherlands. Furthermore, the company had previously targeted the production of approximately 2 million tonnes per year of SAF by 2025.

Decarbonizing jet fuel is a significant challenge. The aviation sector accounts for 3% of the world's carbon emissions and is one of the most challenging forms of transportation to decarbonize. Nonetheless, environmental concerns are driving increased investment into SAFs which have the potential to help the aviation industry decarbonize on a large scale.

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Despite the difficulties currently facing the aviation industry, Shell remains committed to delivering sustainable solutions that will enable the sector to reduce its carbon footprint. 

While the halted Singaporean project may be a temporary setback, Shell's ongoing investment in sustainable aviation fuels continues to build momentum toward a sustainable future for aviation.

By Michael Kern for OIlprice.com 

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