The acquisition is seen as yet another example of BP’s reshaping its energy portfolio in the wake of last year’s Gulf of Mexico oil spill.
Under the terms of the agreement, BP will acquire 83 percent of CNAA’s shares and will immediately refinance 100 percent of the Brazilian company’s existing long-term debt.
The deal is still subject to regulatory approval and agreed closing conditions, but once completed, BP will become the operator of two producing ethanol mills, located in Goiás and Minas Gerais states. A third CNAA mill is currently under development in Minas Gerais state.
“Low carbon energy will play an increasingly significant role in meeting world energy demand. BP is committed to producing biofuels to help meet this demand,” said Carl-Henric Svanberg, Chairman of BP.
“[This] transaction also fits BP's strategy of increasing our exposure to growing energy markets,” Svanberg said.
According to the recently published BP Energy Outlook 2030, alternative energy is expected to be the fastest growing energy sector over the next 20 years, with global bio-fuels production projected to more than triple.
“This strategic acquisition underlines BP’s commitment to building material businesses in growing economies and continued expansion in Brazil through exploration and production, as well as bio-fuels investments”, said Bob Dudley, BP Group Chief Executive.
“This is the biggest acquisition to date for BP Alternative Energy as we continue to build a leading low carbon fuels business,” Dudley said.
The total planned combined crushing capacity of all three mills, when fully developed, is expected to be 15 million tonnes of sugar cane a year.
At full capacity, each mill will have a production capacity of about 480 million litres of ethanol equivalent a year. Each mill will also have the capacity to supply about 340 GWh of electricity per year to the grid.
The move by BP is just the latest in a string of international investments in Brazil’s sugar and ethanol industry over the past two years.
BP already holds a 50 percent share in Tropical BioEnergia, which operates an ethanol mill with a production capacity of 435 million litres of ethanol per year.
Royal Dutch Shell and Cosan, Brazil’s biggest sugar and ethanol producer, teamed up last April to create the country’s second-largest fuel distributor. The joint venture, Raizen, is expected to generate annual sales of about $30 billion (€24.4 billion).
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