BP to Take Full Ownership of Brazilian Ethanol Joint Venture, Dial Back on New Biofuels Projects

Source: By Todd Neeley, Progressive Farmer • Posted: Sunday, June 23, 2024

LINCOLN, Neb. (DTN) — BP is expanding its ownership of Brazilian sugarcane ethanol production plants and dialed back on plans to build renewable diesel and sustainable aviation fuel plants, according to a news release from the company.

BP said it agreed to take full ownership of a Brazilian biofuels joint venture, BP Bunge Bioenergia S.A., by acquiring Bunge Global’s 50% interest.

That joint venture launched in 2019, combined both companies’ Brazilian bioenergy and sugarcane ethanol businesses that include 11 plants across southeastern, midwestern and northern Brazil.

BP’s acquisition of Bunge’s part of the joint venture is expected to happen in the fourth quarter of 2024.

“The enterprise value of the stake to be acquired is approximately $1.4 billion,” BP said in a news release.

“The acquisition will result in consolidation of 100% of the venture’s financial results, including net debt of approximately $0.5 billion and lease obligations of approximately $0.7 billion.”

BP said the acquisition will give the company the capacity to produce around 50,000 barrels a day of ethanol from sugarcane. BP operates with an integrated business model that covers the entire production chain through to sales of ethanol and sugar.

“BP believes ownership will also offer the potential to unlock further growth opportunities in the region, and to develop new platforms for bioenergy such as next-generation ethanol, sustainable aviation fuel and biogas,” the company said.

BP also announced plans to scale back plans for development of new sustainable aviation fuel and renewable diesel biofuels projects at its existing sites.

BP said it is pausing planning on two potential projects including one in Germany and one at its Cherry Point refinery in Washington state. In addition, BP said it was continuing to assess three other similar projects.

“Focusing our plans to develop new biofuels projects is also driven by value,” said Emma Delaney, BP’s executive vice president, customers and products.

“Taken together, these changes can enable us to deliver the growth and returns we expect from biofuels, but in a simpler, more focused way. This is fully in line with BP’s priorities of driving focus into the business and growing shareholder returns.”

The announcements are expected to support the continued growth of BP’s strategic bioenergy business which includes both biofuels and biogas, the company said.

BP said it expects to more than double biofuels co-processing volumes to 20,000 barrels per day by 2025.

Bunge’s CEO Greg Heckman said in a news release that the joint venture was no longer “core to Bunge’s long-term strategy” and the move will allow Bunge to focus and invest in our “core businesses” while also further strengthening our balance sheet.”

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