OREANDA-NEWS. May 07, 2014. Neste Oil and AGA, part of the Linde Group, have signed a long-term hydrogen supply agreement covering Neste Oil's Porvoo refinery, under which AGA will invest to build a new hydrogen production unit at the refinery.

AGA will be responsible for construction and Neste Oil will build the links needed to connect the unit to the refinery. The project represents an investment of around EUR 100 million.

Neste Oil already has two hydrogen production units at its Porvoo refinery and the plan is to replace output from the older of these with hydrogen from the new, more efficient unit to be built by AGA. The new unit is expected to be completed in 2016 and will be operated by AGA.

"Working together with AGA like this is an excellent way to increase the efficiency of our hydrogen production," says Neste Oil's President & CEO, Matti Lievonen. "The operating costs of the old hydrogen unit are high, and maintaining it would have called for some major investments over the coming years. Thanks to AGA's new unit, we will be able to modernize and grow the hydrogen supply capacity we have access to and thereby increase the reliability and flexibility of the refinery as a whole. The arrangement will also free up valuable capital to develop core business related to Neste Oil's cleaner traffic strategy."

"We have looked at how the prices of the inputs needed for a plant like this have been developing and have selected a very efficient plant concept," says AGA Sales Director, Johanna Ylikoski. "The unit will provide a competitive source of hydrogen for Neste Oil and it will also reduce local CO2 emissions. The plant represents a major industrial investment for Finland nationally speaking."

"This is major project for us and will strengthen our position as a hydrogen supplier to the refining industry," says Aldo Belloni of Linde's Executive Board. "The project will draw once again on the hydrogen production technology of Linde Engineering and the operating experience of our Gases Division."

When the new plant built and operated by AGA is operational, it will supply around 20% of the hydrogen needed by Neste Oil at Porvoo. The remainder will continue to be largely sourced in-house. Hydrogen is produced from natural gas using a steam reforming process and is used in numerous processes and products at Porvoo, to produce sulfur-free diesel products and premium-quality base oil, for example.

Construction work on the project will start immediately and the plan is to bring the new unit on stream in summer 2016. Construction could cause occasional noise disturbance and increased traffic in the area surrounding the Porvoo refinery.