Chevron, the U.S. oil giant, announced this Thursday it is partnering with oilseed and feedstocks processing leader Bunge Ltd. Under the Memorandum of Understanding the two companies reached, they will form a joint venture to create a supply chain of renewable fuels and feedstocks to help meet the demand.
Mainly, it was Chevron U.S.A. Inc, a subsidiary of Chevron Corporation, the company that signed the MoU with Bunge. The proposed joint venture is for 50/50 participation. Upon finalization of the joint venture, the two companies will have created a reliable supply chain from farmers to fueling stations.
Under the agreement, Bunge will contribute with its soybean processing facilities in Destrehan, Louisiana, and Cairo, Illinois. At the same time, Chevron will contribute approximately $600 million in cash to the joint venture. The aim is to double the combined capacity of the facilities; from 7,000 tons per day by the end of 2024.
According to the companies’ statement, the joint venture would also pursue new growth opportunities in lower carbon intensity feedstocks. As well as consider feedstock pretreatment investments.
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Chevron to manufacture low-carbon diesel and jet fuel
On the other hand, the MoU considers Bunge as the operator of the facilities. Due to its extensive expertise in oilseed processing and farmer relationships. Chevron will offtake rights to the oil to use as renewable feedstock to manufacture diesel and jet fuel with lower lifecycle carbon intensity.
In addition, it will provide the market knowledge and downstream retail and commercial distribution channels. The joint venture is still subject to negotiation of definitive agreements with customary closing conditions, including regulatory approval.
Mark Nelson, executive vice president of Downstream & Chemicals for Chevron, said. “Through our commercial work with Bunge, we have come to appreciate their strong company culture, their strategic desire to advance the production of lower-carbon fuels, their commitment to capital discipline and promotion of sustainable agriculture in their supply chains.”
Finally, Greg Heckman, Bunge CEO, said. “As the world’s largest oilseed processor, we are pleased to expand our partnership with an energy industry leader to increase our participation in the development of next-generation, renewable fuels. Together, we share a commitment to sustainability and reducing carbon in the energy value chain. This relationship with Chevron would enable Bunge to better serve our farmer customers by accessing demand in the growing renewable fuels sector.”