Marathon Petroleum Corp. (MPC) announced the closing of its joint venture with Neste for the Martinez renewables project.
All required closing conditions have been met, including the receipt of the necessary permits and regulatory approvals.
The partnership, to be called Martinez Renewables, is structured as a 50/50 joint venture, with Neste to contribute a total of $1 billion, inclusive of half of the total project development costs projected at $1.2 billion through the completion of the project.
MPC will continue to manage the completion of the conversion project and will operate the facility once construction is complete. The annual feedstock supply requirements are split between the joint venture partners, which include specific commitments to supply advantaged feedstocks. The annual production output will be shared evenly between the joint venture partners, and each partner will have the ability to market its share of the products.
The JV, being optimally located to strengthen both partners’ footprint in renewable fuels, will utilize existing processing infrastructure and diverse inbound and outbound logistics.
“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.
The project will utilize existing processing infrastructure, diverse inbound and outbound logistics, and is optimally located to support California’s LCFS goals while strengthening MPC’s footprint in renewable fuels,” said President and Chief Executive Officer Michael J. Hennigan in an earlier press release.
“We expect the partnership to improve the overall economics of the project through the improved procurement of advantaged feedstock,” said Hennigan.
MPC and Neste will leverage their complementary core competencies in the joint venture. MPC 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 in renewable liquid fuels production. 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 LCFS.
“This strategic partnership also creates a platform for additional collaboration within renewables. We believe there will be opportunities to leverage the differentiated knowledge and capabilities of two industry leaders as we pursue our shared commitment to the energy evolution and goal of leading in sustainable energy,” he added.
The first phase of the Martinez renewables project facility is targeted to be mechanically complete by year-end 2022. Initial production capacity is expected to be 260 million gallons per year of renewable fuels. Pretreatment capabilities are expected to come online in the second half of 2023; the facility is expected to be capable of producing 730 million gallons per year by the end of 2023.
MPC is a leading, integrated, downstream energy company headquartered in Findlay, Ohio. The company operates the nation’s largest refining system.
