Statoil takes Baltic biodiesel stake

  • 2007-08-29
  • By Mike Collier

FUEL FACTORY: A large proportion of Mestilla's output will come from Baltic biomass (Photo: Mestilla)

STAVANGER 's Norwegian oil giant Statoil is to take a substantial stake in one of the Baltic states' leading biodiesel companies.

Provided competition watchdogs give their assent, Statoil will take a 42.5 percent share of Mestilla, which runs the Baltics' largest biodiesel production plant. Statoil's purchase is backed by SEB Venture Capital.

"Investment by an international corporation will consolidate Mestilla's market position and facilitate further development," said Darius Zubas, Mestilla chairman.

The Mestilla plant is located within the KlaipÄ—da free economic zone and is currently conducting test runs. "Biodiesel production is scheduled to begin in September, and our annual output is to be over 100,000 tonnes of biodiesel," said Zubas. The intention is to increase capacity to over 200,000 tonnes next year. Around 70 percent of rape crops necessary for biodiesel production will be sourced from farmers in the Baltic region.

The controlling interest in Mestilla is held by Linas Agro, one of the largest agricultural groups in the Baltic states.

"The plant is close to the port, and the good export possibilities make it an efficient supplier to the European market," said Sjur Haugen, Statoil's manufacturing and marketing manager.

"Moreover, the plant is located in an area of Europe where raw materials are readily available at competitive prices," added Hagen.

"Our aim is to create a strong supply value chain meeting common sustainability criteria to the benefits of our customers. By being close to the market and being involved in the whole production process we have improved our ability to deliver the right quality biodiesel at the right time to them."

"It is unusual that an agricultural and oil company are collaborating this way in the biodiesel industry," said Hagen.

Statoil representatives will take responsibility for sales and export of Mestilla's production. Linas Agro will supply raw materials for biodiesel production and cooperation with farmers, while Mestilla will look after production.

"We appreciate the opportunity to work with Linas Agro Group on such a large-scale greenfield investment as the Mestilla project. This investment is one of several industrial greenfield investments carried out in Lithuania in the last few years. We believe that the partnership between Statoil and Linas Agro Group at the Mestilla plant will give the latter an extra competitive edge," commented Andrejus Biocovas of SEB Venture Capital.

The value of the deal has not been disclosed, but a total of LTL 130 million has already been invested in the plant since construction started in 2006.

Biodiesel is an ecologically-friendly fuel for diesel engines. It can be produced from various types of biomass, but rapeseed oil is the most common source. In diesel-run engines biodiesel may be used in a pure form or mixed with conventional diesel fuel.