The transaction will create a 50:50 joint venture combining BP and Bunge’s biofuels businesses in the fast-growing Brazilian market.
The combination of assets and experience creates value through scale and efficiency and positions the new business for growth in biofuels and biopower.
BP Bunge Bioenergia will have 11 biofuels sites and the production capacity of 32 million metric tonnes of sugarcane a year, making it the second largest player in the sugarcane ethanol biofuel industry in Brazil.
Bob Dudley, group chief executive
Dev Sanyal, chief executive of BP Alternative Energy, said: “In one step, this will allow BP to significantly grow the scale of our business in one of the world’s major growth biofuels markets. With a shared commitment to safety and sustainability, bringing together our 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 support Brazil’s increasing demand for both low carbon biofuels and biopower.”
BP has a 10-year history of operating a successful biofuels business in Brazil, the world’s second largest and most integrated market for ethanol as a transport fuel. It’s a business in which BP has invested and is now achieving among the best operating efficiency and safety performance in the sector. This has given BP the confidence to grow it further.
BP’s existing biofuels CEO and head of country for Brazil, Mario Lindenhayn, will become the executive chairman for the new JV, in addition to retaining head of country accountabilities. The JV CEO will be Geovane Consul, the current head of Bunge’s Brazilian biofuels business. Marcus Schlosser, currently CFO for BP Biofuels, will be appointed CFO.
The BP Bunge Bioenergia joint venture
How the biofuels business works: the digital technology and more
The deal announced today will grow BP’s existing biofuels business by more than 50% and better positions the business in a country already geared up for biofuels, with 70% of vehicles capable of running on ethanol. And the market is set to grow, with rapid demand for ethanol predicted in the next 10 years, helped by government backing.
New rules in Brazil coming into force in 2020 mandate additional sales, encourage market growth and support further development of the sugarcane ethanol industry.
As well as being good business for BP, the move marks another step in the organization’s commitment to advance a low carbon future.
It also underscores the importance of biofuels as an alternative ground transportation fuel. Based on last year’s figures, BP Bunge Bioenergia’s combined ethanol production would have avoided GHG emissions equal to almost a million fewer European cars on the road in a year.
BP Bunge Bionergia, based in Brazil, is subject to regulatory approval