UK-based oil and gas company BP has agreed to form a 50:50 joint venture with Bunge, an agribusiness and food company, to create a bioenergy company in Brazil.

As part of the joint venture, the two companies would combine their biofuels and biopower businesses in Brazil, aiming to create a highly-efficient producer of sugarcane ethanol in the country,, BP Bunge Bioenergia.

Equally owned by the two firms, the new joint venture is expected to boost its BP’s existing biofuels business by more than 50%.

BP Bunge Bioenergia will have biofuels sites in Brazil

BP Bunge Bioenergia is designed to have 11 biofuels sites in Brazil, with 32million metric tonnes of combined crushing capacity per annum. The joint venture is expected to have the flexibility to produce a mix of ethanol and sugar.

In addition, the company is expected to generate renewable electricity through firing biomass wastes from the sugar cane processing to power all its facilities and sell surplus electricity to the Brazilian power grid.

BP group chief executive Bob Dudley said: “This is another large-scale example of BP’s commitment to play a leading role in a rapid transition to a low carbon future.

“Biofuels will be an essential part of delivering the energy transition and Brazil is leading the way in showing how they can be used at scale, reducing emissions from transport. This combination will unlock new possibilities for improved efficiency and future growth in this key market.”

The assets of BP and Bunge are said to be complementary, with sites in five Brazilian states including three in the key region of São Paulo.

The combined business is set to be ranked the second-largest player in the sugar-cane based ethanol biofuel industry in Brazil, in terms of effective crushing capacity.

The transaction is expected to be closed in the fourth quarter of 2019, subject to customary conditions, including receipt of required regulatory approvals.

Bunge Chief Executive Officer Gregory A. Heckman said: “This joint venture with BP, one of the world’s leading energy companies, represents a major portfolio optimization milestone for Bunge. We are proud of what our team has done to evolve our sugar and bioenergy business as an industry leader.

“I am confident that this team, and the strong commitment from a global leader such as BP, will create even greater shareholder value.”