BP Buying Into Brazilian Biofuel

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BP is looking to go “beyond petroleum” via Brazilian ethanol, with an investment it calls the “largest made by an international oil company in the Brazilian ethanol industry.” This morning the British oil giant said it intends to pay about $60 million to take a 50 percent stake in Tropical BioEnergia, a Brazilian company that plans to build two ethanol refineries in Brazil.

Tropical BioEnergia is a joint venture between Brazil’s second largest ethanol and sugar producer, Santelisa Vale, and cotton producer Maeda Group. The company says it will spend $1 billion building two refineries: a 115-million-gallon-a-year ethanol refinery in Edéia, Goias State, that is expected to go online later this year, and a second refinery in a yet-to-be-announced location. BP expects the deal to close by June and says it will likely commit further investment in the JV.

Like the rest of the Brazilian ethanol market, Tropical BioEnergia will use sugarcane as a feedstock and will focus on producing sugarcane as well as making and marketing conventional sugarcane ethanol. The company says it could work with cellulosic ethanol and biobutanol in the future.

Interestingly, BP says the refineries will strive to produce ethanol for export to the United States, Europe and Asia. So all those U.S. ethanol makers that are already being squeezed by tight margins are going to love that. They’re already worried about Brazil getting into the nascent U.S. biofuel market, and backing from BP will leave them feeling even more nervous.

BP has said it will invest $8 billion dollars over the next 10 years in clean energy technologies. And it has been making investments in the U.S. biofuel industry, including the $500 million academic and industry collaboration the Energy Biosciences Institute and biofuel startups such as Craig Venter’s Synthetic Genomics.

Santelisa Vale has been making international friends all over the place on its own. Last year, Goldman Sachs said it would invest $210 million in Santelisa Vale. And just this week, biofuel startup Amyris said it would work with Santelisa Vale to make biodiesel from sugar cane.

8 Comments

Wendell

I see that the Brazilian government has finally decided to add some money to build up the greatest place on the face of teh earth to be. Today I read that the Brazil’s government plans to spend $152 billion to build housing for poor families in the next 15 years.

Finance Minister Guido Mantega says the measure aims to help poor Brazilians and also stimulate the economy by creating construction jobs.

Mike Cusack

It’s obvious that regardless of the form of energy (biodiesel or oil), the labor costs assosciated with its production will prove critical in the long run. Low labor cost economies is where the production facilities will be built.

Mike

Layla

It’s good to see big business buying into cleaner methods of transportation and other green avenues.

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