UK oil company BP has reached an agreement to purchase Bunge‘s 50% interest in the bp Bunge Bioenergia joint venture (JV), a biofuels producer in Brazil, in a deal valued at approximately $1.4bn (7.64bn reais).
Upon completion, bp expects to be able to produce around 50,000 barrels per day of ethanol equivalent from sugarcane.
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Bioenergia has 11 agro-industrial facilities across five Brazilian states.
The deal stipulates that bp will assume Bioenergia’s debt and lease obligations totalling $1.2bn, resulting in a net cash payment of $800m to Bunge.
The JV’s business model encompasses the entire sugarcane production chain, from cultivation to the sales of ethanol and sugar.
BP’s acquisition is expected to meet the company’s bioenergy return threshold of over 15% and fits within its financial framework, including capital expenditure targets of around $16bn for both 2024 and 2025.
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By GlobalDataThe UK company anticipates that full ownership will enhance growth opportunities in the region and facilitate the development of new bioenergy platforms including next-generation ethanol, sustainable aviation fuel (SAF) and biogas.
Concurrently, bp said it is revising its strategy for new SAF and renewable diesel projects, pausing two potential projects at its Lingen refinery in Germany and Cherry Point refinery in the US, according to Reuters.
By 2025, bp aims to generate around $2bn in EBITDA from bioenergy and $3–4bn across all its transition growth engines.
BP executive vice-president of customers and products Emma Delaney said: “bp Bunge Bioenergia is widely recognised as a leader in the industry. I am excited by the opportunity for bp to now add further value from our trading and technology capabilities. bp was an early entrant into the bioenergy business in Brazil and we look forward to continuing to grow and develop here.
“Focusing our plans to develop new biofuels projects is also driven by value. 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.”
Recently, bp’s subsidiary, Archaea Energy, announced the start of operations at its largest renewable natural gas plant in Shawnee, Kansas, US.
Notably, the Shawnee facility is three-times larger than Archaea’s AMD [Archaea modular design] plant in Medora, Indiana, which began operations in October 2023.
