BP invests another $100 million in Brazilian ethanol

By Kris Bevill | September 15, 2011

BP Biofuels continues to expand its ethanol production activities in Brazil, recently announcing two separate deals to gain more control over three ethanol mills in southern Brazil.

On Sept. 14, BP announced it has agreed to pay approximately $25 million for an additional 3 percent share of sugar and ethanol producer Companhia Nacional de Açúcar e Álcool (CNAA). In April, BP paid about $680 million to acquire 83 percent of the company and began operating both of CNAA’s ethanol mills, which have a combined capacity of 450 MMly (approximately 118 MMgy) and are located in Goiás and Minas Gerais. Following the subsequent conversion of CNAA’s long-term debt to equity, BP’s latest investment will expand its ownership of CNAA to 99.97 percent.

BP has also agreed to buy out its partners in a joint venture known as Tropical BioEnergia, paying approximately $71 million to Maeda S.A. Agroindustrial and LDC-SEV Bioenergia S.A. for their combined 50 percent share of the company. The joint venture was initially launched in 2008, the same year the company began producing ethanol at its mill in Goiás. BP said it now intends to double that mill’s capacity to 450 MMly and will continue to develop other ethanol projects in the region. “We have a major growth agenda for our biofuels business in Brazil,” said Mario Lindenhayn, head of BP Biofuels in Brazil. “This transaction, together with our other recent acquisitions, gives us a strong platform from which to expand our capacity to supply both domestic and international fuels markets.”

BP’s biofuels segment is driven by the corporate belief that alternative energy will be the fastest growing energy sector over the next two decades and that biofuels production will triple by 2030. The company is strong proponent of sugarcane-based biofuels, stating that sugarcane is the most efficient source of biofuel currently available, is sustainable, and can also be used to produce other advanced biofuels. BP is also developing biofuels projects elsewhere in the world using other feedstocks, however, including in the U.S. where it is currently planting energy grasses at the site of a planned 36 MMgy cellulosic ethanol facility in Lorida, Fla., according to the company. That facility is expected to become operational in 2013.