BP and Bunge confirm 50:50 joint venture for Brazilian ethanol

July 23, 2019 |

In the UK, BP has agreed to form a 50:50 joint venture with Bunge that will create a leading bioenergy company in one of the world’s largest fast-growing markets for biofuels. BP will combine its Brazilian biofuels and biopower businesses with that of Bunge to create a world-scale, highly-efficient producer of sugarcane ethanol in Brazil, BP Bunge Bioenergia. BP’s interest in the new venture will grow its existing biofuels business by more than 50%.

BP’s head of alternative energy told Reuters that the companies don’t expect to invest in further cane crushing capacity but to better use existing assets.

BP Bunge Bioenergia will have 11 biofuels sites in Brazil. With 32 million metric tonnes of combined crushing capacity per year, the joint venture will have the flexibility to produce a mix of ethanol and sugar. It will also generate renewable electricity – fuelled by waste biomass from the sugar cane – through its cogeneration facilities to power all its sites and sell surplus electricity to the Brazilian power grid. BP and Bunge’s assets are largely complementary, with sites in five Brazilian states including three in the key region of São Paulo.

In 2018, the two businesses produced a total of around 2.2 billion litres of ethanol equivalent and, after powering the sites, exported 1,200 gigawatt hours of low-carbon biopower to the national grid. Together the two businesses currently employ over 10,000 people in Brazil.

The combined business will be ranked the second largest player in the sugar cane ethanol biofuel industry in Brazil by effective crushing capacity. Under their agreement, BP and Bunge will each contribute their existing Brazilian biofuel, biopower and sugar businesses into the new, equally-owned, standalone joint venture.  On completion, BP will pay Bunge $75 million, subject to customary closing adjustments, and the joint venture will assume $700 million of non-recourse debt associated with Bunge’s assets. Subject to satisfaction of conditions precedent, including obtaining the necessary regulatory clearances and approval, the deal is expected to complete in the fourth quarter of 2019.

Category: Fuels

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