BP, Bunge form biofuels joint venture in Brazil

Bunge Limited, a U.S. headquartered agribusiness and food company, and U.K. oil and gas company BP plc are joining forces to establish a bioenergy company in Brazil.

Headquartered in Sao Paulo, the 50/50 joint venture BP Bunge Bioenergia will operate on a stand-alone basis, with 11 mills across the Southeast, North and Midwest regions of Brazil, Bunge announced today.

The new company will produce a mix of ethanol and sugar, with a combined crushing capacity of 32 million metric tonnes of per year. Cogeneration facilities fuelled by sugar cane waste will power all its sites, with surplus electricity sold to the Brazilian power grid.

BP and Bunge currently have assets in five Brazilian states, including three in the key region of São Paulo.  The combined business will be ranked the second largest player in the industry in Brazil by effective crushing capacity.

Dev Sanyal, chief executive of BP Alternative Energy, said in a news release Brazil is leading the scale up of the biofuels industry. “In one step, this agreement will allow BP to significantly grow the size, efficiency and flexibility of our biofuels business in one of the world’s major growth markets. With our shared commitment to safety and sustainability, the combination of BP and Bunge’s assets and expertise will allow us to improve performance, develop options for growth and generate real value. BP Bunge Bioenergia will be well-placed to play a significant part in meeting Brazil’s growing demand for both biofuels and biopower,” Sanyal said.

The transaction is expected to close by the end of the year, subject to customary conditions, including receipt of required regulatory approvals.