US-headed advanced renewable fuel producer and biochemical platform technology developer Gevo Inc., has announced that it has entered into a binding Renewable Hydrocarbons Purchase and Sale Agreement with Trafigura Trading LLC, a wholly-owned subsidiary of Switzerland-headed Trafigura Group Pte Ltd (Trafigura), one of the world's largest independent physical commodity trading and logistics houses.
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The Agreement dated August 17, 2020, is a 10-year, take or pay contract, and is the largest contract in Gevo’s history. Under this contract Trafigura is expected to take delivery of 25 million (US) gallons (≈ 94.62 million litres) per annum of renewable hydrocarbons, the majority of which is expected to be low-carbon premium gasoline with a smaller portion of the volume for sustainable aviation fuel (SAF), starting in 2023.
This is our largest single contract to date, and with it, brings Gevo to over US$1.5 billion of revenue in long term contracts when added to the other contracts we have in place. As drop-in fuels, Gevo’s renewable, very high-octane gasoline and SAF are a perfect fit for Trafigura’s existing fuels business and will allow them to integrate these low-carbon options seamlessly into their supply chains. We expect that our low-carbon fuels will enable certain of Trafigura’s customers to substantially lower their carbon footprint, said Dr Patrick Gruber, CEO of Gevo.
This commitment will support Trafigura’s efforts to develop the market for low-carbon fuels including low-carbon premium gasoline. The Agreement will also enable Trafigura to supply SAF to both US and international customers whose interest is growing in low-carbon jet fuel.
Today’s agreement is a natural fit between our companies that will help drive the expansion of our renewable fuels product offering. We look forward to continuing to make a positive impact on the transition towards a low carbon economy, said Robert Kreider, Head of the Strategic Management and Development Group, North America for Trafigura.
The Agreement is subject to certain conditions precedent, including Gevo acquiring a production facility to produce the renewable hydrocarbon products contemplated by the Agreement and closing a financing transaction for sufficient funds to acquire and retrofit the production facility contemplated by the Agreement.