Marathon Petroleum Forms JV For Renewable Fuels Project
Marathon Petroleum has entered into definitive agreements to form a joint venture with Neste for Marathon's Martinez renewable fuels project.
The partnership will be structured as a 50-50 joint venture with Neste expected to contribute a total of $1 billion, inclusive of half of the total project development costs projected through the completion of the project.
Marathon will continue to manage project execution and operate the facility once construction is complete. The 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.
This strategic partnership is expected to advance the current project objectives of delivering low carbon intensity fuels to support California's climate goals.
“[Marathon] brings experience in renewable diesel facility conversion, large capital project execution, and operating expertise in the California market. Neste brings knowledge in sustainable feedstock sourcing and renewable liquid fuels production,” Marathon said.
The joint venture reflects both partners' commitment to obtain low carbon intensity feedstocks to achieve the project objectives of providing fuels that meet the demand driven by the Low Carbon Fuel Standard.
"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 Marathon President and CEO Michael J. Hennigan.
“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," Hennigan added.
The Martinez facility is currently targeted to have a production capacity of 260 million gallons per year of renewable diesel in the second half of 2022, with pretreatment capabilities to come online in 2023.
The facility is expected to be capable of producing 730 million gallons per year by the end of 2023. Estimated total project costs for Martinez remain at approximately $1.2 billion.
Both Neste and Marathon will be responsible for raw material sourcing for the joint venture. The production output will be split evenly between the joint venture partners, and each partner will be responsible for marketing the products under its own brand.
The expected and targeted timelines for achieving the production capacities outlined above are dependent upon the timing of obtaining the necessary permits to operate the facility.
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