BP is set to acquire the remaining 50 percent stake in its BP Bunge Bioenergia joint venture, a biofuels-producing company in Brazil, from Bunge for approximately $1.4 billion.
BP will become sole owner of the sugarcane and ethanol business, enabling BP to accelerate value creation through integration with BP’s trading and technology capabilities. For the year-end 2023, BP Bunge Bioenergia adjusted EBITDA was ~$0.8 billion.
The acquisition meets BP’s expected returns threshold for bioenergy of more than 15 percent and is fully accommodated within BP’s disciplined financial framework, including capex targets of around $16 billion in each of 2024 and 2025.
BP will have the capacity to 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 to sales of ethanol and sugar.
BP believes ownership will also offer the potential to unlock further growth opportunities in the region, and to develop new platforms for bioenergy such as next generation ethanol, sustainable aviation fuel (SAF) and biogas.
In parallel to this acquisition, BP is scaling back plans for development of new SAF and renewable diesel biofuels projects at its existing sites, pausing planning for two potential projects while continuing to assess three for progression.
Emma Delaney, BP’s executive vice president, customers and products said: “BP Bunge Bioenergia is widely recognised as a leader in the industry. BP was an early entrant into the bioenergy business in Brazil and we look forward to continuing to grow and develop here.”
This acquisition and focusing on key biofuels production projects are expected to support the growth of BP’s strategic bioenergy business which includes both biofuels and biogas. They contribute to BP’s unchanged 2025 targets of delivering around $2 billion EBITDA from bioenergy and $3-4 billion across all its transition growth engines.
In addition, BP expects to more than double biofuels co-processing volumes to ~20 thousand barrels per day (mbd) by 2025, with co-processing investment plans unchanged.
BP is in action to grow its bioenergy businesses. By 2025 BP is targeting to grow its biofuels production and biogas supply to ~50mbd and ~40 thousand barrels of oil equivalent per day (mboed) respectively. By 2030, BP aims to grow its biofuels production and biogas supply to ~100mbd and ~70mboed respectively.