MOSCOW (MRC) -- Neste Corporation has signed definitive agreements for the establishment of a 50/50 JV with US-based Marathon Petroleum, reported Reuters.
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 EUR900 MM (USD1 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 US, as we will have a broad value chain that covers feedstock sourcing to renewables production and sales in the US. 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 US. Both Neste and Marathon will be responsible for feedstock sourcing for the JV.
As MRC wrote before, Neste has successfully concluded its first series of trial runs processing liquefied waste plastic at its Porvoo refinery in Finland. After kicking the series off with its first-ever industrial scale trial run with liquefied waste plastic in 2020, Neste has conducted additional runs in 2021. In the course of the trial runs, Neste has been able to upgrade liquefied waste plastic to drop-in solutions for plastic production and develop industrial scale capabilities to upgrade recycled feedstocks. Trials pave the way for continuous and commercial activities. Neste has set itself the goal of processing more than 1 MM tons of plastic waste per year from 2030 onwards.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,265,290 tonnes in the first eleven months of 2021, up by 14% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,363,850 tonnes in January-November, 2021, up by 25% year on year. Supply of homopolymer PP and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding PP random copolymers decreased significantly.
Neste (Helsinki) creates solutions for combating climate change and accelerating a shift to a circular economy. The company refines waste, residues and innovative raw materials into renewable fuels and sustainable feedstock for plastics and other materials. The company is the world’s leading producer of renewable diesel and sustainable aviation fuel, developing chemical recycling to combat the plastic waste challenge. In 2020, Neste's revenue stood at EUR11.8 billion, with 94% of the company’s comparable operating profit coming from renewable products.