Vertex Energy enters 5-year offtake for all renewable diesel to be made at planned Mobile project
Vertex Energy Inc. announced Feb. 17 that it has entered into a five-year renewable diesel supply agreement with Idemitsu Apollo Renewable Corp. for all the product to be manufactured at its planned refinery conversion project in Mobile, Alabama. The agreement is conditional on completion of the refinery acquisition as well as conversion of its hydrocracking unit to produce renewable diesel. Vertex anticipates the project to be complete by the end of this year.
Initial production capacity of renewable diesel at the Mobile refinery is projected to be more than 150 million gallons per year (mgy) with plans to increase capacity to nearly 215 mgy in 2023.
Per the offtake agreement with Idemitsu, Vertex will supply 100 percent of the renewable diesel produced at the Mobile refinery to Idemitsu during the five-year term. Idemitsu will pay Vertex for each gallon produced at an indexed, spot-market price at the time of production, resulting in an immediate working-capital benefit to Vertex. Projections based on current values and conditions estimate revenue exceeding $6 billion over the term.
“As we seek to scale renewables production at the Mobile refinery over time, following our acquisition of such facility, Idemitsu is well-equipped to place incremental renewables volumes, given their extensive distribution network,” said Benjamin P. Cowart, president and CEO of Vertex. “We believe that this agreement, together with our existing conventional fuels offtake agreements with other, high-quality counterparties, position Vertex for success as we move toward the planned closing of the Mobile refinery acquisition.”
When Vertex first announced its intention to acquire and convert the Mobile refinery, the company also stated its expectation of entering into an offtake agreement with Idemitsu.