Neste forms JV with Marathon to produce renewable diesel
Finland’s Neste Corporation, the world’s leading producer of sustainable aviation fuel and renewable diesel, announced a joint venture with Marathon Petroleum Corp. to produce renewable diesel at the idled Martinez Refinery, in Martinez, California, U.S.A.
A leading, integrated, downstream energy company headquartered in Findlay, Ohio, U.S.A., Marathon Petroleum announced last year that it planned to convert its idled Martinez Refinery into a renewable fuels manufacturing facility. Prior to this announcement, Marathon said the refinery would be converted into a terminal facility. The refinery had a crude oil capacity of 161,000 barrels per calendar day and 740 employees before it was closed down.
Through this joint venture, Neste will take a 50% interest in the Martinez Renewable Fuels project. The production output will be split evenly between the joint venture partners, and each partner will be responsible to market the products under its own brand and responsibility. The facility will be operated by Marathon, which has experience as a leading refinery operator, in executing major capital projects in the U.S. Both Neste and Marathon will be responsible for feedstock sourcing for the joint venture.
Production of renewable diesel in the Martinez refinery is expected to come online in the second half of 2022. The facility is planned to reach its full annual nameplate capacity of 2.1 million tons (730 million US gallons) by the end of 2023.
Neste’s total investment in the joint venture is approximately EUR0.9 billion (USD1.0 billion), inclusive of half of the total project development costs projected through the completion of the project. The project is expected to increase Neste’s renewable products capacity by slightly over 1 million tons (365 million US gallons) per annum.
The closing of the joint venture is subject to customary closing conditions and regulatory approvals, including obtaining the necessary permits, which depend upon certification of a final Environmental Impact Report.
“This is a very important step in our renewables growth strategy execution. The location of the facility is in the middle of the growing renewable fuel market in California. The partnership will further strengthen our footprint in the United States, as we will have a broad value chain that covers feedstock sourcing to renewables production and sales in the U.S. We are thrilled to partner with Marathon: we both share an ambition in offering more high-quality, lower-emission renewable products, thus helping customers to achieve their sustainability goals,” says Peter Vanacker, Neste’s president and chief executive officer.
Neste has committed to help its customers decrease their greenhouse gas emissions by at least 20 million tons of CO2 equivalent annually by 2030. The joint venture with Marathon Petroleum will help Neste in exceeding its commitment as it will bring a substantial amount of renewable diesel to its customers in the U.S.
Together with the ongoing expansion of its Singapore facility, this joint venture will increase Neste’s total production capacity of renewable products to 5.5 million tons by the end of 2023.
The project for a possible next world-scale renewables refinery in Rotterdam is currently in the engineering phase, Vanacker added.
“We are approaching readiness for a final investment decision during the next months,” he said.