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U.S. oil refiner Phillips 66 PSX-N and grain trader Archer-Daniels-Midland ADM-N are discussing a biofuels joint venture with an aim toward producing lower-carbon jet fuel, three people familiar with the matter said.

The oil and corn-based ethanol industries, which were at odds for years over blending mandates, have increasingly become allies amid a series of partnerships aimed at securing crop feedstocks to produce lower-carbon biofuels without costly refinery upgrades.

The two companies are discussing putting ADM’s dry corn mill operations into a venture that would convert grain-based alcohol to jet fuel, the people said.

ADM, an ethanol pioneer and for years the top U.S. producer, has sought to downscale its role in the business in recent years. It put the dry corn mills up for sale in 2016 and, after failing to find a buyer, spun off the assets into a wholly-owned subsidiary called Vantage Corn Processors.

ADM sold its Peoria, Illinois, dry mill in 2021. Its two remaining dry mills in Columbus, Nebraska, and Cedar Rapids, Iowa, are among the country’s largest, with a combined capacity to produce 613 million gallons of ethanol a year, according to Renewable Fuels Association data.

Meanwhile, Houston-based Phillips next year plans to start making renewable fuels at a Rodeo, California refinery converted from crude oil to processing fats, used cooking oils and soybean oils into 50,000 barrels per day of renewable diesel, gasoline and jet fuel.

Several U.S. states, led by California, have set up low-carbon fuel markets that reward fuel producers for developing motor fuels that emit less carbon. They can earn credits for producing fuels with lower carbon intensity compared with refining crude oil.

Phillips declined to make an executive available for comment and both ADM and Phillips 66 declined to comment. Potential value of the deal could not be immediately learned.

Axens SA, which provides technology to convert oil and biomass to lower-carbon fuels, in May agreed to provide its ethanol-to-fuels conversion technology to Phillips, ADM or a joint venture. The deal was a carve out between Paris-based Axens and Gevo Inc, which had an exclusive license for the ethanol conversion technology.

The carve out gave Axens rights to directly license its technology for a dry mill in Cedar Rapids, Iowa, and a dry mill and co-generation plant in Columbus, Nebraska, according to a Gevo company filing.

The agreement could result in payments of least $125 million to Gevo, the report said.

Axens and Gevo did not respond to requests for comment.

ADM already formed a joint venture in 2021 with top U.S. oil refiner Marathon Petroleum Corp to churn out renewable diesel from soybeans. Their jointly-owned Green Bison Soy Processing crush plant in North Dakota is set to begin processing soybeans later this year.

Top oilseed processor Bunge and Chevron last year formed Bunge Chevron Ag Renewables to make renewable fuels from soybeans and canola. As part of one deal, Chevron invested $600 million in the joint venture, helping double processing capacity at two Bunge soybean crushing facilities.

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