Paraguay HVO project to supply BP

Brazilian biofuels producer ECB Group signed a five-year sale contract to supply BP with more than 1bn liters (6.29mn bl) of hydrotreated vegetable oil (HVO) green diesel from its biorefinery project in Paraguay.

Production of the low-carbon biofuel at ECB's $800mn Omega Green biorefinery is slated to begin in 2024.

The contract is equivalent to roughly 40pc of Omega Green's production capacity. The company plans to announce additional supply contracts in coming weeks, with the expectation that it will secure buyers for 90pc of its installed capacity, ECB Group chief executive Erasmo Battistella told Argus.

In a statement, BP's executive vice president of trading and shipping Carol Howle said the purchase of the "significant volume of advanced biofuel in South America" was in line with its strategy to "offer low-carbon fuel to clients in the transport and aviation sectors."

Although the plant will have capacity to supply roughly one-third of Paraguay's diesel demand, all of the production will be exported.

Paraguay's government recently granted free-trade zone status to the project for up to 60 years.

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, which is used in the production of green plastics and other low-carbon goods.

ECB is expected to start construction on Omega Green early this year. The project is forecast to take 30 months to complete.

Despite its base in Brazil, ECB decided to invest in Paraguay because of the availability of feedstock and low-cost energy from the Itaipu hydroelectric plant.

"At the moment, we have no plans to invest in HVO in Brazil," Battistella said, adding that the company is still waiting for the Brazilian government to announce a regulatory framework for advanced biofuels. Once those new regulations are released, Battistella said the company will reassess its investment plan and make that decision.