Under the agreement, Sapio is entering into a minimum purchase order commitment for multiple Xebec biogas upgrading plants for a total value of €33 million ($39 million)) to be delivered over three years.
Sapio Group is the largest industrial gas company in Italy with over 1,800 employees and revenues of over €500 million ($590 million). Its business model includes the production and distribution of bio-liquefied natural gas (bio-LNG) throughout Italy.
After an extensive supplier evaluation process, Sapio chose Xebec as its biogas upgrading partner for bio-LNG facilities to be built by Sapio. The companies are anticipating 30 to 40 bio-LNG facilities will be built over the next 3 to 5 years. Xebec will provide the biogas upgrading units, including a CO2 reduction module, that will lower the CO2 content in the product gas down to 50 ppm (parts per million), allowing for on-site liquefaction of the renewable natural gas (RNG) and conversion into bioLNG.
Italy is on its way to becoming one of the largest biogas upgrading markets in the world. The Italian Government recently identified the transportation sector as a primary end user for renewable natural gas (RNG) in the form of bio-CNG and bio-LNG. On March 1, 2018, the European Commission under EU State aid rules approved an Italian support scheme for the production and distribution of advanced biofuels, including advanced biomethane, in the amount of €4.7 billion ($5.5 billion)). On March 2, 2018, the day after the EU cleared the program, Italy's Economic Development Ministry (MISE) signed two new energy decrees which include measures to aid large gas consumers as well as incentives for biomethane in transport. By March 15, 2018, Italy’s Gas Operator, Snam, had received more than 500 requests from potential biomethane producers to connect their upcoming biomethane production sites to the existing gas grid.
“We are very excited about our opportunities in Italy. We have an outstanding partner in Sapio who will work diligently on broadening their own bio-LNG projects and, along with our collaboration to commercialize Xebec’s biogas upgrading systems to third parties, we expect to gain significant market share overall. This strategic alliance with Sapio could allow us to become one of the market leaders for biogas upgrading in Italy,” Kurt Sorschak, President, Xebec Adsorption Inc.
