Brazilian biofuels producer ECB Group has agreed to supply Shell with 500mn liters (8,616 b/d) per year of hydro-treated vegetable oil (HVO) green diesel from its biorefinery project in Paraguay.
The five-year contract, which is the second that the company has announced this month, will start in 2024, when ECB's $800mn Omega Green biorefinery is scheduled to begin operating.
The contract is equivalent to roughly 50pc of Omega Green's production capacity. With the contract signed with BP earlier this month, the company has already contracted about 90pc of the plant's future installed capacity. The company does not plan to sign any additional contracts.
"Other oil majors have contacted us, but we have decided to retain 10pc of our production to meet spot demand or to supply the local market," ECB chief executive Erasmo Battistella told Argus.
He added that the company is now focusing on signing long-term contracts for the company's green naphtha production, which is used in the production of green plastics and other low-carbon goods, for the petrochemicals sector.
Although ECB is one of the largest biodiesel producers in Brazil, the company decided to invest in Paraguay because of the availability of low-cost electricity from the Itaipu hydroelectric complex as well as ample feedstock availability.
Paraguay is the world's fifth largest soybean producer, with production forecast to reach 6.3mn metric tons (t) in the 2020-21 harvest, according to the USDA.
In a statement, Shell's vice president for products trading and supply for the Americas Odeh Khoury said the deal will help ECB supply its green fuels to global clients, while reiterating the importance of biofuels in achieving net-zero emissions in the future.
Once completed, Omega Green is expected to have a total capacity to produce a combined 20,000 b/d of HVO, bio-jet fuel - known as synthetic paraffinic kerosene (SPK), and green naphtha.
ECB is expected to start construction on Omega Green later this year.
