This article first appeared in The Edge Malaysia Weekly on July 31, 2023 - August 6, 2023

AS a global oil company, Petroliam Nasional Bhd (Petronas) is bound by its commitment to achieve net zero carbon emissions by 2050. To this end, it has been charting a path to produce and market cleaner products while maintaining its fossil fuel exploration, extraction and production business.

One of the pathways that Petronas has taken is in the biofuel space, where the group plans to develop a 12,500-barrels-per-day biorefinery in Pengerang, Johor, to produce biofuel by 2026. In fact, Petronas has been progressive in delivering biofuels ahead of target.

“As we gear up for 2026 when our biorefinery will be ready, we have also made significant progress in the biofuel space through partnerships with the likes of Neste, the world’s leading producer of sustainable aviation fuel and renewable diesel,” says Datuk Sazali Hamzah, Petronas’ executive vice-president and CEO of downstream.

Petronas is refuelling the Mercedes-AMG Petronas (MAMGP) Formula One Team’s fleets across the nine races in Europe with HVO100 biofuels. The lessons learnt in supplying the team’s fleets across Europe with biofuel will be useful for the group in developing further its green liquid business.

The partnership with Neste allows Petronas to fuel MAMGP F1 Team’s fleets in Europe, as the group does not have the infrastructure on the continent to deliver HVO100.

“It’s been a really interesting process,” Alice Ashpitel, Mercedes-Benz Motorsport head of sustainability, said during a recent briefing at MAMGP F1 Team’s headquarters in Brackley, about 70 miles northwest of London.

“We wanted to try HVO100 for the final three races of the European season last year, so the first challenge we faced was sourcing it, because there is a big variation in the market across Europe, as well as in other locations. So this year, when we worked with the Petronas team to actually start to explore the whole European season to be HVO100 fuelled, to actually identify the right locations to refuel, and it is not quite as simple as going to a local refuelling station and then putting in the plug,” said Ashpitel.

The partnership between Petronas and Mercedes AMG in F1 is just one of the many partnerships that the group has formed in its sustainability journey. According to Petronas chief sustainability officer Charlotte Wolffe-Bye, it has to up its partnership game to fast-track its energy transition.

“For us to fast-track this energy transition, we need to partner like never before, and have this existing partnership where we build trust in our relationship between our teams to the next level and all these other areas,” she said during the briefing in Brackley. “We are having way more conversations, all sorts of schemes, and it shows the power of collaboration. Of course, here in biofuel, we are working both in the supply as well as the demand space, as we create new value chains.”

Wolffe-Bye says Petronas is looking at a number of developments on its sustainability agenda and will continue to develop solutions with its partners, whether for carbon capture and storage or for hydrogen.

“We also have quite an important venture on putting bets out there, we can’t leave any stones unturned. What it really means is we have to work across value chains and with different partners,” she said.

Besides supplying the MAMGP F1 Team’s fleets with HVO100 across Europe, Petronas has been developing fluids specifically for the Mercedes power units since their partnership started in 2010. The partnership culminated in the Petronas Syntium and Tutela product line-ups.

The partnership is taking another step forward, with Mercedes-AMG and Petronas co-developing advanced sustainable fuels (ASF) that will power the former’s power units in F1 racing cars. Besides MAMGP, currently three other teams are using Mercedes’ power units in F1 — McLaren Racing F1 team, Williams F1 team and Aston Martin Aramco Cognizant F1 team.

“With the MAMGP F1 Team, we will take on a vital role in meeting the technical challenge presented by the motorsport, which will have all cars powered by 100% advanced sustainable fuels by 2026. This exciting endeavour presents a unique opportunity for Petronas to showcase the potential of biofuels for the gruelling F1 race, which serves as the ultimate test bed before we bring the technology and innovation to everyday road users,” says Sazali.

Bradley Lord, chief communication officer of MAMGP F1 Team, said the team has set targets, with the first milestone to be net zero by achieving 100% reduction of its Scope 1 and 2 emissions and 50% reduction of Scope 3 emissions by 2026. Scope 3 emissions refers to activities arising from assets not owned or controlled by the reporting organisation, but indirectly affects its value chain.

The MAMGP F1 Team aims to achieve net zero by 2026 for Scope 1 and 2 emissions earlier than the motorsport’s target of achieving net zero by 2030. Lord says MAMGP hopes to achieve 75% reduction of its Scope 3 emissions, with the remaining 25% to be offset with carbon removal offsets, by 2030.

“So, we are really into carbon removal and capture, and trying to stimulate not just the nature of it but also technology-based solutions that are in the early stages of research and development, which are just coming to life in the market,” he added. “We feel we have a very strong role, although ultimately, we are quite a small company — but a small company with a big global shop window. So, our ability not only demonstrates that if F1 can do it in terms of achieving net zero, so can many other industries.”

The 12,500 bpd biorefinery is Petronas’ commitment to building its capabilities to prepare for tomorrow’s energy needs with biofuels across a wide range of industries, including transport and aviation, says Sazali.

“As a progressive energy partner enriching lives for a sustainable future, we will make biofuels more accessible and affordable to the world, and this includes the development of our own biorefinery in Pengerang in partnership with Eni and Euglena,” he adds. “The plan is to market this globally, with a focus on regions where demand and value are highest based on market trends. Pengerang is strategically located, with easy access to major international shipping lanes and close to the growing markets in Asia.”

The biorefinery will enable Petronas to produce up to 12,500 bpd of biofuels such as ASF, sustainable aviation fuel (SAF) and hydrogenated vegetable oil (HVO), or renewable diesel.

“It is particularly important that we enter new spaces with credible partners, capitalising on each other’s strengths and market presence. With Eni and Euglena, we are able to leverage their experience in operating biorefineries already in operation since 2019,” says Sazali. 

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