Trading Giant Gunvor Doubles Down on Biofuels Bet

Commodity trading major Gunvor has struck a deal to acquire 50% of a biofuels project in the Netherlands as part of a diversification push following record profits in the past two years.

The Financial Times reports that Gunvor already operates two biofuel plants and is doubling down on the sector despite weakening demand for biofuels. The commodity firm’s move stands in stark contrast to recent decisions by two oil supermajors to take a step back from biofuels because of demand trends.

Last month, Shell said it would pause construction of a biofuel plant in the Netherlands amid slackening demand in Europe. The facility, in Rotterdam, was going to be one of the largest in Europe but now its future has become uncertain.

Also last month, BP said it would scale back its biofuels expansion plans and instead boost investment in oil production with a new project in the Gulf of Mexico.

Gunvor’s new asset, also in Rotterdam, is owned by refiner Varo Energy, which has previously teamed up with BP on biofuels as well. The facility is set to produce sustainable aviation fuels and biodiesel from waste oils.

The market for SAFs is potentially huge but production is difficult to scale from waste oils because not enough of those are being produced to satisfy the potential demand. Even so, the EU has mandated blending 5% of sustainable aviation fuel to jet fuel beginning next year, making Gunvor’s investment quite timely. The blending requirement will rise to 6% by 2030 and to 20% by 2035, per EU plans.

“Large-scale production and adoption of SAF are critical to meeting the airline industry’s goal of achieving net zero emissions by 2050,” Gunvor owner Torbjörn Törnqvist said in comments on the deal with Varo Energy.

“Europe is a good neighbourhood to invest in this space,” the chief executive of Varo Energy, Dev Sanyal, said, as quoted by the FT.

By Charles Kennedy for Oilprice.com

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