BP takes 50-per cent stake in $1-billion Brazilian bio fuel venture, Tropical BioEnergia

Even as the debate over bio fuel cultivation fuelling world hunger through diversion of croplands for fuel plant cultivatiom rages, British energy major BP plans is takinng a 50-per cent stake in a joint venture by Brazilian companies sugarcane crusher Santelisa Vale and cotton producer Maeda Group, to constructing a 435 million litre a year ethanol refinery in Edéia, Brazil. The two Brazilian companies will hold a 25-per cent stake each in the joint venture.

BP will invest $59.8 million in the joint venture Tropical BioEnergia SA, through which it will invest approximately $500 million, towards a $1-billion investment in two bio fuel refineries. The companies say they hoped to be able to complete the transaction before the end of June 2008.

Operations at the first refinery are expected to commence during the second half of 2008, with full capacity anticipated by mid-2010. The refineries will supply the Brazilian ethanol markets to export to the demand markets of US, Europe and Asia.

The joint venture will focus on potential sugarcane production and the manufacturing and marketing of conventional ethanol, including the associated agricultural assets and cogeneration plants. Sugarcane is the most efficient source of biofuel currently available.

In 2007 BP's sales of biofuels accounted for about 10 per cent of the global biofuels market. In the US, BP has blended and distributed 763 million (US) gallons of ethanol and about 1 million gallons of biodiesel, while in Europe it sold 344 million liters of ethanol and 847 million liters of biodiesel in 2007.

"This investment, which is the largest made by an international oil company in the Brazilian ethanol industry represents a significant step in delivering BP's strategy for biofuels which centres around sustainable feedstocks which do not impact on food supplies and investing in research work to develop the technologies required to produce advanced biofuels," commented Phil New, head of BP Biofuels.

BP says sugarcane lends itself to further improvement through the use of advanced biofuels technology and will therefore be a compelling source of renewable fuel for the foreseeable future. It provides a greenhouse gas emissions reduction of up to 80 per cent.

Besides developing sustainable biofuels, the refineries are expected to be able to sell surplus electricity, with each of them exporting at least 30 MW of surplus power from integrated bagasse cogeneration facilities. The facilities are also intended to offer a potential platform for deploying future technologies such as lignocellulosics and biobutanol.

The Maeda Group is one of the largest cotton producers in the world. "BP's decision to join Tropical Bioenergia in this new venture is significant," said Jorge Maeda, chief executive officer of Maeda Group. "Today we are demonstrating how Maeda's unique agriculture expertise, attendant network of relationships, and knowledge of the region's soils, climate and rural labor conditions combined with Santelisa Vale's sugarcane expertise can provide sustainable renewable and reliable solutions for fuel."

Santelisa Vale Group is the second-largest sugar cane crusher in Brazil and the first in energy cogeneration from bagasse and already operates a number of ethanol refineries, with experience across the entire value chain of ethanol / sugar production.