Neste to invest USD 1bn in US renewable diesel JV with Marathon
The Martinez Refinery in California. Source: Marathon Petroleum Corporation.
Finnish renewable fuels producer Neste Oyj (HEL:NESTE) has committed to invest roughly EUR 900 million (USD 1bn) in a new renewable diesel production joint venture in the US with Ohio-based downstream energy company Marathon Petroleum Corp (NYSE:MPC).
Under the terms of newly-signed deals between the partners, Neste will acquire a 50% interest in the Martinez Renewable Fuels project, which involves the conversion of Marathon's refinery in Martinez, California. 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.
The above-mentioned sum to be invested by Neste includes half of the total project development costs projected through the completion of the project, an announcement on Wednesday says.
Renewable diesel production at the site is seen to begin in the second half of 2022 and the facility is planned to reach its full annual nameplate capacity of 2.1 million tonnes (730 million US gallons) by the end of next year. The project is estimated to increase Neste's renewable products capacity by slightly over 1 million tonnes per year.
"Our ongoing Singapore expansion project and this joint venture will increase our total production capacity of renewable products to 5.5 million tons by the end of 2023 and we will be the only global provider of renewable products with a production footprint in North America, Asia and Europe. As announced in Neste's Financial Statement Release 2021, the project for a possible next worldscale renewables refinery in Rotterdam is in the engineering phase and we are approaching readiness for a final investment decision during the next months," said Peter Vanacker, Neste's president and CEO.