Neste Corporation has signed definitive agreements for the establishment of a 50/50 JV with U.S.-based Marathon Petroleum.
The JV will produce renewable diesel following a conversion project of Marathon's refinery in Martinez, California (the Martinez Renewable Fuels project).
The closing of the JV is subject to customary closing conditions and regulatory approvals, including obtaining the necessary permits, which depend upon certification of a final Environmental Impact Report.
Neste’s total investment will amount to approximately €900 MM ($1 B), 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 MMtpy. Production of renewable diesel 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 MMt by the end of 2023.
“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 U.S., 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,” said Peter Vanacker, Neste’s President and CEO.
Through this JV Neste obtains a 50% interest in the Martinez Renewable Fuels project. The production output will be split evenly between the JV 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 long experience in refinery operations and in executing major capex projects in the U.S. Both Neste and Marathon will be responsible for feedstock sourcing for the JV.