Marathon, Neste form joint venture for 730 mgy Martinez, California, renewable diesel project
Finland-based renewable diesel and sustainable aviation fuel (SAF) producer Neste Corp. and U.S.-based Marathon Petroleum Corp. signed an agreement to establish a 50/50 joint venture for Marathon’s refinery conversion project in Martinez, California. The project is expected to begin producing renewable diesel later this year, with a production capacity of 260 million gallons a year (mgy) in the second half of 2022 and 730 mgy by the end of 2023. Feedstock pretreatment capabilities are expected to come online next year as well.
Neste will contribute approximately $1 billion to the joint venture. Total project cost for the Martinez refinery conversion is $1.2 billion, according to Marathon.
Marathon will continue to manage project execution and operate the facility once complete. Both Neste and Marathon will be responsible for feedstock sourcing for the joint venture. Neste has a well-established global waste feedstock sourcing platform, including in the U.S. through acquisitions of Mahoney Environmental and Agri Trading, and Marathon is developing a soybean-crush project with Archer Daniels Midland Co. in North Dakota.
The production volumes will be split in half and each party will be responsible for marketing their portion under their respective brands. 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.
“We’re excited to partner with Neste as this strategic partnership enhances our strong Martinez project by leveraging our complementary strengths and expertise and is consistent with our previously announced strategy to source low carbon intensity feedstocks through long-term arrangements, joint ventures and alliances,” said Michael J. Hennigan, president and CEO of Marathon. “The project will utilize existing processing infrastructure, diverse inbound and outbound logistics, and is optimally located to support California’s Low Carbon Fuel Standard goals while strengthening Marathon’s footprint in renewable fuels. Our partnership with Neste signals another step in our commitment to the energy evolution and our focus on lowering the carbon intensity of our operations and the products we manufacture.”
Peter Vanacker, president and CEO of Neste, said, “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 have committed to helping our customers decrease their greenhouse gas emissions by at least 20 million tons of CO2-equivalent annually by 2030. This joint venture will help us in exceeding our commitment as it will bring a substantial amount of renewable diesel to our customers in the U.S. 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.”
U.S. renewable diesel imports in 2021, nearly all of which came from Neste’s Singapore plant, increased 40 percent over 2020 volumes.
