
UK-based oil major BP has announced that it has agreed to buy Bunge’s 50% stake in BP Bunge Bioenergia, which would bring the biofuel joint venture into BP’s full ownership.
BP, which also makes the Castrol lubricant and metalworking range, says that Bunge’s interest is valued at around $1.4 billion. On completion, BP will become the sole owner of one of the largest companies producing biofuels in Brazil, giving it the ability to transform sugarcane into ethanol equivalent at a rate of 50,000 barrels a day through 11 agro-industrial units.
BP says this will enable it to speed up the creation of further value by integrating the venture with its extensive technology and trading capabilities.
BP has a target of achieving $2 billion EBITDA (earnings before interest, taxes, depreciation and amortisation) from biofuels by 2025, with it expecting a returns threshold in excess of 15% from such operations. The company says the acquisition is in line with these objectives, as well as the firm’s strict financial framework.
The executive vice president at BP for products and customers, Emma Delaney, said the Brazilian bioenergy venture:
“…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.”
The acquisition is expected to complete by the end of the year, subject to approval from regulators.