Finnish renewable fuels producer Neste Oyj (HEL:NESTE) and US downstream energy company Marathon Petroleum Corp (NYSE:MPC) have set up a joint venture (JV) to produce renewable diesel in California.
The deal, initially announced in March, will see Neste acquire a 50% interest in the Martinez Renewable Fuels project, which involves the conversion of Marathon's refinery in Martinez, California. The JV will be called Martinez Renewables, the duo said on Thursday.
Neste has pledged to invest USD 1 billion (EUR 1.03bn) into the project, including half of the USD 1.2 billion worth of development costs through the completion of the project,
The partners intend to mechanically complete the first phase of the Martinez scheme by the end of this year, targeting the initial production of 260 million US gallons of renewable fuels annually. The site is planned to reach full capacity by the end of 2023, producing 730 million US gallons (2.1 million tonnes).
Each partner will receive an equal portion of the production output of the plant to market it under its own brand. Marathon will be the one to operate the facility, but both companies will take responsibility for feedstock sourcing.
"We expect the partnership to improve the overall economics of the project through the improved procurement of advantaged feedstock," said Michael J Hennigan, Marathon’s president and CEO.
(USD 1.0 = EUR 0.969)
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