Yahoo Finance Chevron (CVX) Signs MOU With Bunge for Renewable Fuel Business
Chevron Corporation CVX through its subsidiary Chevron U.S.A. Inc. announced a memorandum of understanding (MOU) of a proposed joint venture with Bunge Limited’s BG unit Bunge North America, Inc., a global leader in the procurement, processing, and distribution of oilseed and grain products plus additives. The MOU aims to explore a potential collaboration to meet growing demand for renewable fuels and produce lower-carbon feedstocks.
Chevron and Bunge's joint venture, once completed, will provide both companies with a reliable supply chain from farmer to fueling station. Bunge will provide its soybean processing facilities in Destrehan, LA and Cairo, IL while Chevron will invest $600 million cash in the joint venture. By the end of 2024, the two entities expect to double the total capacity of the facilities from 7,000 tons per day, courtesy of the joint venture.
Through this collaboration, the companies will also look for new prospects in lower-carbon-intensity feedstocks and invest in feedstock pretreatment.
Bunge will continue to operate the facilities under the proposed joint venture agreement, exploiting its skills in oilseed processing and farmer contacts to handle the origination and marketing of meal and plant-based oil. Chevron will hold offtake rights to the oil to be utilized as renewable feedstock to produce lower-carbon diesel and jet fuel. It will also provide market insights as well as downstream retail and commercial distribution channels.
The proposed joint venture's formation is contingent on the negotiation of definitive agreements as well as the fulfilment of standard closing criteria like the regulatory approval.
Mark Nelson, Chevron's senior vice president of Downstream and Chemicals, stated that, “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. Chevron’s proposed joint venture with Bunge positions us to expand into the renewable fuel feedstock value chain, which will advance our higher returns, lower carbon strategy.”
Brief on the Company
Chevron is one of the largest publicly traded oil and gas companies in the world with operations spread to almost every corner of the globe. A component of the Dow Jones Industrial Average, this energy player is fully integrated, participating in every energy-related process, ranging from oil production to refining and marketing.
Zacks Rank & Other Key Picks
Chevron currently has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include Matador Resources Company MTDR and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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