BP (NYSE: BP) announced that it intends to take a 50% stake in Tropical BioEnergia SA, a joint venture established by Brazilian companies Santelisa Vale and Maeda Group, which is constructing a 115 million gallons a year ethanol refinery in Edéia, Goias State, Brazil.
The joint venture, in which Santelisa Vale and Maeda Group would each hold 25%, also will pursue plans to build a second ethanol refinery, investing a total of approximately R$1.66 billion (US$1 billion) in the two refineries.
Assuming all the required approvals are received, BP will pay around R$100 million (US$59.8 million) for the 50% stake, subject to working capital adjustments, and provide funding for agreed future investment in line with its shareholding. The parties said that they hoped to be able to complete the transaction before the end of June 2008.
"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," commented Phil New, head of BP Biofuels.
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.
Operations at the first refinery are expected to commence during the second half of 2008, with full capacity anticipated by mid-2010. The refineries will be positioned to supply the Brazilian ethanol markets with the potential to export to the markets of U.S., Europe and Asia.
Besides developing sustainable biofuels, the refineries are expected to be able to sell surplus electricity, with each of them exporting at least 30 megawatts (MW) of surplus power from integrated bagasse cogeneration facilities. The facilities are also intended to offer a potential platform for deploying future technologies such as lignocellulosics and biobutanol.
The Maeda Group is one of the largest cotton producers in the world.
Santelisa Vale Group is the second-largest sugar cane crusher in Brazil and the first in energy cogeneration from bagasse. Santelisa Vale already operates a number of ethanol refineries.
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