- BP Plc will become the sole owner of the sugarcane and ethanol business at the industrial level.
- The acquisition meets BP’s expected return threshold of more than 15 per cent for bioenergy.
British energy major BP Plc will become the sole owner of the industrial-scale sugarcane and ethanol business, enabling BP to accelerate value creation through integration with BP’s trading and technology capabilities.
BP has agreed to acquire Bunge’s 50 per cent holding interest in its BP Bunge Bioenergia S.A. joint venture, one of Brazil’s leading biofuels-producing companies.
The enterprise value of the stake to be acquired is approximately $1.4 billion. The acquisition will consolidate 100 per cent of the venture’s financial results, including net debt of approximately $0.5 billion and lease obligations of approximately $0.7 billion.
The acquisition meets BP’s expected return threshold for bioenergy of more than 15 per cent and is fully accommodated within BP’s disciplined financial framework, including capex targets of around $16 billion in 2024 and 2025.
Following completion, BP can produce around 50,000 barrels a day of ethanol equivalent from sugarcane through bp Bunge Bioenergia’s 11 agro-industrial units across five Brazilian states. The company operates with an integrated business model that covers the entire production chain through the sales of ethanol and sugar.
BP believes ownership will also offer the potential to unlock further growth opportunities in the region and develop new platforms for bioenergy, such as next-generation ethanol, sustainable aviation fuel (SAF), and biogas.
Emma Delaney, BP’s executive vice president of customers and products, said BP was an early entrant into the bioenergy business in Brazil, and we look forward to continuing to grow and develop her.
He noted, “Focusing our plans to develop new biofuels projects is also driven by value. These changes can enable us to deliver the growth and returns we expect from biofuels 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.“ This acquisition and focus on key biofuel production projects are expected to support the continuing growth of BP’s strategic bioenergy business, including biofuels and biogas.