Top Trader Vitol Strikes Deal to Buy Oil Liquids Made from Tires
Top Trader Vitol Strikes Deal to Buy Oil Liquids Made from Tires
(Bloomberg) -- Vitol Group, the world’s biggest independent oil trader, is betting on a new technology to produce hydrocarbon liquids from recycled car and truck tires.
The trading giant unveiled a 10-year offtake agreement on Friday to buy and sell naphtha, distillates and bunker fuel produced by Norwegian startup Wastefront AS. The products will be produced at a tire recycling plant in Sunderland, U.K., starting in 2023.
The agreement, for which financial details weren’t disclosed, marks the latest foray by big energy merchants seeking greener alternatives to traditional sources of oil. Vitol has already invested in a company turning plastics into oil liquids as well as another that is using coal waste to produce fuels.
Vitol has been in talks with Wastefront for about two years, providing advice to the startup as to how best to use its technology and ensure it had a commercial outlet, Chris Bake, a senior executive at the trading house, said in an interview.
“It’s to help make sure it happens,” he said. “Within our desire to look at sustainability we’re willing to take some of these risks.”
It’s also another move by Vitol to stake out a fresh position in the life-cycle of transportation vehicles. The trading house recently took a surprise leap into the used car business with a startup called Vava Cars.
Under the agreement with Wastefront, Vitol will “buy all available liquid hydrocarbons,” from the plant, the companies said in a statement.
The recycled tire oil products will amount to about 30,000 metric tons a year -- the equivalent of about 220,000 oil barrels. That’s a drop in the ocean compared to Vitol’s total daily traded volumes that topped 8 million barrels a day in 2019.
More to Come
Still, there could be much more oil liquids from tires to come. The two companies have also struck a framework agreement for other offtake deals from any future tire recycling plants developed and built by Wastefront.
The startup venture, whose board is led by former oil and gas executive Maria Moraeus Hanssen, has developed what it says is a proprietary process to recycle granulated tires and extract hydrocarbon liquids and other by products with minimal environmental impact.
There is plenty of source material. Wastefront says about 29 million tons of tires come to the end of their roadworthy life-cycle each year.
“The idea is to deal with old tires, and turn them into something that can fit into a circular economy,” Chairwoman Moraeus Hanssen said in an interview in June.
Most waste tires in Europe are exported for re-use or recycling in developing countries. Wastefront plans to build more plants beyond Sunderland and source local supplies that it expects won’t be in short supply for some time.
“Even Tesla-owners need car tires,” Moraeus Hanssen said.
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