The Mongstad refinery operated by Statoil near Bergen will be able to produce petrol and diesel oil with virtually no sulphur in 2003 — two years before such fuel becomes compulsory in the European Union.
Foundation work is already under way on the site of the new desulphurisation plant, and plans call for this facility to be ready in the first quarter of 2003.
That will allow Mongstad to supply automotive fuels with a sulphur content of only 10 parts per million (ppm).
Sulphur forms a natural component in crude oil feedstock, and current European standards permit petrol to contain 150 ppm of this substance.
It will cost Statoil NOK 0.12-0.13 per litre to meet the 10 ppm requirement.
Mongstad head Nils Bjørn Jordal believes the Norwegian government must reduce its environment duty by a corresponding amount from the first day the refinery can deliver to the new standard.
Most petrol from Mongstad contains up to 150 ppm. The EU is expected to require that 10 ppm petrol should be available in 2005, and become the sole standard in 2008.
Germany has approved a cut of DEM 0.03 (about NOK 0.13) per litre in excise duty on petrol and diesel oil containing 10 ppm sulphur from 1 January 2003.
If no market develops for this type of petrol in Norway, it could be exported to Germany and other countries which have reduced excise duty.