SINGAPORE, March 30 (Reuters) – Shell has decided not to go ahead with two projects it was studying to produce biofuels and base oils in Singapore, a company spokesperson said on Thursday.

“We can confirm that we are stopping the exploration of two projects – a biofuels unit and a Group II base oil plant in Singapore,” the company told Reuters in an emailed statement.

“We will continue supplying base oil and lubricants, as well as biofuels, to our customers in Singapore and the region.”

Shell announced in late 2021 that it was studying a 550,000 tonnes per year project (tpy) at Singapore’s Bukom Island to produce sustainable aviation fuel (SAF) to supply major Asian hubs such as Hong Kong International Airport and Singapore’s Changi.

The company had planned to make a final investment decision for the project, which would have the flexibility to produce renewable diesel and bionaphtha feedstock for petrochemicals, by early 2023.

Unlike Europe and the United States, there is no mandate for airlines to use SAF in Asia, an industry source said, adding that customers were not willing to accept higher costs for the fuel.

Shell is building a 820,000 tpy biofuels plant in Rotterdam, the Netherlands, and had targeted to make about 2 million tpy of SAF by 2025.

Aviation, accounting for 3% of the world’s carbon emissions, is one of the most difficult forms of transportation to decarbonise.

Reporting by Trixie Yap and Florence Tan; Editing by Jan Harvey and Christina Fincher

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