BP Forms Ethanol JV in Brazil

Oil and gas giant BP plc and New York-based agricultural commodities business Bunge Ltd. are combing their ethanol and sugar operations in Brazil.

Dubbed BP Bunge Bioenergia, the 50:50 biofuels joint venture will encompass 11 cane processing plants in Brazil with capacity to crush 32 million metric tons of cane per year. The deal, expected to be completed in the fourth quarter, will grow BP’s biofuels business by more than 50%.

Under terms of the agreement, BP will pay Bunge $75 million. The joint venture will assume $700 million of Bunge’s debt.

BP Bunge Bioenergia can produce a mix of ethanol and sugar. Last year, the partners produced a combined 580 million gallons of ethanol.

The production process also generates renewable electricity—fueled by waste biomass from the sugar cane—through cogeneration systems. Last year, BP and Bunge provided 1,200 gigawatt hours of biopower electricity to Brazil’s national grid.

More than two-thirds of vehicles on the road in Brazil are capable of running on ethanol, according to BP. The biofuel generates 70% less greenhouse gas emissions than petroleum fuels.