Gunvor joins Varo to jointly develop large-scale SAF project

The Gunvor Energy Rotterdam site will be the expected location of the new sustainable aviation fuel (SAF) manufacturing facility. (Photo: Gunvor Group)

Gunvor Group announced Aug. 1 that it will join Varo Energy in building a large-scale sustainable aviation fuel (SAF) manufacturing facility at the Gunvor Energy Rotterdam site through a proposed joint venture.

Since Varo announced last September its intention to build a large scale SAF facility as a sole owner with total feedstock capacity of 350,000 tons per year, the project has made good progress.

Under the terms of the agreement, costs and risks to develop the plant up to the final-investment decision (FID) will be shared on an equal basis.

Upon joint FID, and subject to necessary regulatory approvals, Varo and Gunvor will form a project company owned equally by both parties.

Following a rigorous project-development process, the basis of design has been finalized and the front-end engineering design (FEED) phase is expected to be completed in the fourth quarter of this year.

The facility is being designed to be able to process a variety of feedstocks.

It will also have the capability to produce either SAF or renewable diesel end products, allowing Varo and Gunvor to capture potential value by switching based on market conditions and regulatory requirements.

The location of the future facility, on the brownfield location of the Gunvor Energy Rotterdam site, will see it benefit from extensive existing infrastructure.

This includes the transportation and relevant pipeline network, existing utilities and port facilities and geographic proximity to key customers and markets in Northern Europe and beyond.

Aviation is a vital and growing part of the global economy, connecting people and businesses around the world.

It is also, however, one of the fastest-growing sources of greenhouse-gas emissions.

Through this investment, Varo and Gunvor will support the aviation sector’s decarbonization with the capacity to produce SAF equivalent to 7 percent of the current SAF mandate set by the European Union for 2030.

“Large-scale production and adoption of SAF are critical to meeting the airline industry’s goal of achieving net-zero emissions by 2050,” said Gunvor CEO Torbjörn Törnqvist. “We look forward to working with Varo to develop SAF production at our site in Rotterdam, which is a strategically central location with proximity to extensive port facilities, major European airports and well-developed energy infrastructure.”

Varo CEO Dev Sanyal added, “If efforts to decarbonize aviation are to be successful, it is essential that European SAF supply increases to meet mandated demand growth by the end of the decade. This can only be achieved by designing and constructing production facilities leveraging existing infrastructure coupled with the ability to process the widest range of feedstocks and the flexibility to produce both [renewable diesel] and SAF. At Varo, we have developed this project with a focus on cost competitiveness in order to be a reliable counterparty for our customers’ growing demand. Strong partnerships between companies will accelerate this pathway and I am delighted that Gunvor will be joining us as an equal partner. Our focus now is on completing FEED this year in order to move towards a final-investment decision.”