London, UK – bp has announced an agreement to acquire Bunge’s 50% interest in the bp Bunge Bioenergia S.A. joint venture, making bp the sole owner of one of Brazil’s largest biofuels-producing companies. The acquisition, valued at approximately $1.4 billion, includes the consolidation of net debt and lease obligations amounting to roughly $1.2 billion.
Strategic Synergies and Value Creation
With full ownership, bp aims to leverage its extensive trading and technology capabilities to unlock significant synergies and drive value creation. The acquisition allows bp to integrate the entire production chain of the industrial-scale sugarcane and ethanol business, from cultivation to sales of ethanol and sugar. This integration is expected to enhance operational efficiencies and optimize production processes, ultimately contributing to bp’s strategic bioenergy business growth.
Emma Delaney, bp’s executive vice president, customers and products, stated, “bp Bunge Bioenergia is widely recognised as a leader in the industry. I am excited by the opportunity for bp to now add further value from our trading and technology capabilities. bp was an early entrant into the bioenergy business in Brazil and we look forward to continuing to grow and develop here.”
Capacity Expansion and Market Potential
Post-acquisition, bp Bunge Bioenergia will have the capacity to produce approximately 50,000 barrels per day of ethanol equivalent across its 11 agro-industrial units located in five Brazilian states. This substantial production capability positions bp as a major player in the region’s biofuels market, aligning with Brazil’s ambitions to advance sustainable energy sources.
“Focusing our plans to develop new biofuels projects is driven by value. Taken together, these changes can enable us to deliver the growth and returns we expect from biofuels, but in a simpler, more focused way,” said Emma Delaney, EVP, customers and products, bp.
The acquisition aligns with bp’s disciplined financial framework, maintaining capex targets of around $16 billion for 2024 and 2025 while meeting expected returns thresholds for bioenergy of more than 15%. This high-returning transaction is anticipated to support bp’s goal of delivering around $2 billion EBITDA from bioenergy by 2025.
Refocusing Biofuels Development Plans
In conjunction with this acquisition, bp is recalibrating its biofuels development strategy by pausing two potential SAF and renewable diesel projects while continuing to assess three others. This strategic shift reflects bp’s commitment to simplifying its portfolio and focusing on high-value projects that promise substantial returns.
“Focusing our plans to develop new biofuels projects is driven by value. Taken together, these changes can enable us to deliver the growth and returns we expect from biofuels, but in a simpler, more focused way. This is fully in line with bp’s priorities of driving focus into the business and growing shareholder returns,” added Delaney.
Future Growth and Market Leadership
Ownership of bp Bunge Bioenergia opens new growth opportunities in the region, allowing bp to explore next-generation ethanol, SAF, and biogas production. The move aligns with bp’s broader bioenergy strategy, which includes targeting biofuels production of around 50 thousand barrels per day by 2025 and expanding biogas supply to about 40 thousand barrels of oil equivalent per day.
Subject to regulatory approvals, the transaction is expected to close by the end of 2024. This strategic acquisition and the refocused biofuels development plans are poised to support bp’s ambitious bioenergy targets and reinforce its position as a leader in the global transition to sustainable energy.
