Chevron aims to invest $600 million (€505 million) in two soybean crushing facilities owned by US agricultural commodities trader Bunge.
The investment will result in a 50/50 joint venture, under the memorandum of understanding.
US refiners have been ramping up their production of renewable fuels and are seeking to secure guaranteed access to vegetable oils, animal fat and used cooking oil, which some refiners say are already difficult to source.
Refiners are eyeing partnerships with agricultural producers to source and process vegetable oils so they can produce green fuels such as renewable diesel.
Chevron and Bunge's proposed joint venture will include expanding Bunge's facilities in Destrehan, Louisiana, and Cairo, Illinois, to nearly double their capacity by 2024.
The facilities currently crush 7,000 tons of soybeans per day, which can produce roughly 330,000 to 340,000 gallons of soy-based diesel.
Vegetable oil can then be treated in refining units such as hydrotreators, which currently yield mainly diesel and jet fuel.
"Given Chevron has extensive hydroprocessing capacity, we see the possibility to produce renewable diesel or even sustainable aviation fuel in the future," Chevron downstream executive vice president Mark Nelson told Reuters.
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