Norwegian oil and gas player Statoil has signed a letter of intent with SEB Venture Capital to purchase a 42.5% interest in Mestilla, which is currently building the biggest biodiesel factory in the Baltic States. The owners of Lithuanian agricultural company Linas Agro will be the other shareholder, with a 57.5% interest.

<p>Construction of the factory, which is located in the free economic zone near the coastal town of Klaipeda, Lithuania, started in spring 2006. Production at the facility is expected to commence in the autumn of 2007 and the plant will have a capacity of just over 100,000 tonnes of biodiesel per year.<br /><br />The raw material used to produce the biodiesel will be vegetable oil and the factory will have its own crusher so that it can make vegetable oil directly from oil seed rape supplied by farmers. The raw materials will be sourced from Ukraine, Belarus and Russia. Linas Agro will be responsible for the raw material supply, while Statoil will be the sole marketer of the biodiesel product.<br /><br />Sjur Haugen, Statoil&#0039;s sector manager in the manufacturing and marketing business area, said that the collaboration between the companies would be a strategic one: While Linas Agro possesses expertise on sourcing raw materials, Statoil has broad experience with sales, distribution and marketing of automotive fuels.<br /><br />Mr Haugen added: The plant is close to the port, and the good export possibilities make it an efficient supplier to the European market. Statoil is also working to develop market opportunities both in the Baltic States and Poland, with road and rail delivery.<br /><br />The closing of the transaction depends on the approval of the Lithuanian competition authority.</p>