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Summary
- Shell stepped back from the waste-to-jet fuel project Altalto Joint Development Agreement, Velocys revealed.
- The Immingham Altalto project would continue according to its existing development plan.
Velocys PLC (LON:VLS) announced that Shell International Petroleum Company Limited has withdrawn from the waste-to-jet fuel project, Altalto Joint Development Agreement, by mutual consent of the parties.
A consortium of three UK companies was formed to build the first large-scale plant in Europe to produce jet fuel from domestic and commercial waste. Oil and gas major Royal Dutch Shell PLC (LON: RDSA), International Consolidated Airlines Group SA (LON: IAG), and fuel technology company Velocys PLC (LON:VLSV) came together in 2019 to develop the plant which could use the jet fuel produced to power aeroplanes by 2024.
In a statement, Velocys said that the project would continue as per the existing development plan since there were no immediate funding calls. The company, along with British Airways, will carry on working together to secure funds for the plant and will keep up with the ongoing talks with potential sources, which have been in progress for the last few months.
The consortium has been continuously working on policy development with the government so as to support the production of Sustainable Aviation Fuel in the UK.
The government funding for the Altalto Immingham project has also been prepared for application. Though there is no assurance that the funding would be provided or not, Velocys, however, believes that the project is well positioned to achieve its target.
Shell’s contribution and support in the initial stages of the Altalto project were well appreciated by the rest of the partners. Now, Shell will lose an option over shares, along with all other rights or obligations in the Altalto project, following its withdrawal. However, these changes will not affect Velocys financially.
(Image source: ©Kalkine Group 2020)
About the project
British Airways and Shell, the subsidiary company of Velocys, Altalto Immingham, had submitted a planning application on 20 August 2019 to the local authorities in North East Lincolnshire in the UK for the development of the plant.
The officers from the North East Lincolnshire Council (NELC) gave a go-ahead to the project on 21 May last year. The UK Department for Transport also welcomed the planning permission that the consortium had secured.
The Altalto plant is spread on an 80-acre site in the Humber estuary and is worth £500 million ($600 million). The project will help in creating jobs and would employ around 130 permanent workers. The jet fuel that will be produced from the plant will result in net savings of the greenhouse gas by approximately 70 per cent compared to each tonne of the conventional fuel. It will also contribute towards reducing the particulate matter from aircraft engine exhausts by up to 90 per cent and decrease the sulphur oxide particles by 100 per cent.
Stock Performance
The shares of Velocys dived in Monday’s trading session by 27.18 per cent. The stock was trading at GBX 7.50 on 18 January at 1:18 PM GMT.
