March 4, 2022 [Reuters] – Marathon Petroleum Corp (MPC.N) said on Tuesday it would form a joint venture with Finnish refiner Neste (NESTE.HE) for its Martinez renewable fuels project in California, the latest partnership between an oil company and a biofuels producer.
Marathon is currently converting its Martinez, California refinery to produce renewable fuels after idling the facility in 2020. The project is pending environmental permits.
The partnership with Neste will be structured as a 50/50 joint venture. The Finnish company is expected to contribute a total of $1 billion, including half of the total project development costs projected through the project’s completion.
The agreement comes days after Chevron Corp (CVX.N) announced its acquisition of biodiesel maker Renewable Energy Group Inc (REGI.O) for $3.15 billion.
Oil companies making their foray into renewable fuel production are on the hunt for renewable feedstocks to process in their facilities amid growing demand for renewable diesel, supply constraints and soaring prices for fats, greases and oils.
Marathon and Neste will individually source feedstock for the facility and will retail the fuels separately under their respective brands, according to the companies.
Marathon has secured some soybean oil feedstock through a new joint venture with Archer-Daniels-Midland Co, which will exclusively provide Marathon with renewable fuels feedstock.
Neste is one of the largest exporters of renewable diesel into California from its biofuels facility in Singapore. The company produces fuels mainly from waste and residues such as used cooking oil, animal fat from food industry waste, fish fat from fish processing waste and residues from vegetable oil processing.
The Martinez facility is expected to be able to produce 260 million gallons per year of renewable diesel in the second half of 2022, with pre-treatment capabilities expected to come online in 2023.
Marathon will continue to manage project execution and operate the facility once it is ready for use, according to the agreement.
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