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BP buys into Brazilian biofuels

2nd May, 2008

UK-based Energy giant BP will join forces with Brazil-based cotton producer Maeda Group (MG) and sugarcane crusher Santelisa Vale (SV). The three will enter a joint venture under the name Tropical BioEnergia, with BP paying $60 million (€38.6 million) for a 50% stake.

MG and SV will own a 25% stake each in the venture.

Tropical BioEnergia will invest over $1.1billion in two ethanol/sugarcane refineries. The first refinery, being built in Edéia in the Goias state, northwest of São Paolo, will open in Q2 2008 and produce 435 million litres of ethanol while a second factory, due to start producing in 2010, will raise capacity to 1 billion litres a year.

The refineries will be positioned to supply the Brazilian ethanol markets with the potential to export to the demand markets of US, Europe and Asia. The facilities are also intended to offer a potential platform for deploying future technologies such as lignocellulosics and biobutanol.

Brazil is the second largest ethanol producer in the world, harvesting 528 million tonnes of sugarcane and refining 21 billion litres of ethanol a year.

'This investment, which is the largest made by an international oil company in the Brazilian ethanol industry represents a significant step in delivering BP's strategy for biofuels which centres around sustainable feedstocks which do not impact on food supplies and investing in research work to develop the technologies required to produce advanced biofuels,' Phil New, head of BP Biofuels, says.

The joint venture will focus on potential sugarcane production and the manufacturing and marketing of conventional ethanol, including the associated agricultural assets and cogeneration plants. BP says sugarcane is the most efficient source of biofuel available, providing greenhouse gas emissions reductions of up to 80%.