BP has agreed to purchase Bunge’s 50% stake in their joint venture, BP Bunge Bioenergia S.A., a leading biofuels producer in Brazil. This acquisition will make BP the sole owner of the industrial-scale sugarcane and ethanol business, allowing BP to enhance value creation through integration with its trading and technology capabilities.
The enterprise value of the stake to be acquired is approximately $1.4 billion. The deal includes the consolidation of 100% of the venture’s financial results, encompassing net debt of around $0.5 billion and lease obligations of approximately $0.7 billion. This acquisition aligns with BP’s bioenergy returns threshold of over 15% and fits within its disciplined financial framework, including capex targets of around $16 billion for both 2024 and 2025.
Post-acquisition, BP will have the capacity to produce about 50,000 barrels per day of ethanol equivalent from sugarcane through BP Bunge Bioenergia’s 11 agro-industrial units across five Brazilian states. The company operates an integrated business model covering the entire production chain, from production to sales of ethanol and sugar.
BP sees this ownership as a gateway to unlocking further growth opportunities in the region and developing new bioenergy platforms such as next-generation ethanol, sustainable aviation fuel (SAF), and biogas.
In conjunction with this acquisition, BP is scaling back plans for new SAF and renewable diesel biofuels projects at its existing sites, pausing planning for two potential projects while continuing to evaluate three others for progression. This move is in line with BP’s strategy to simplify its portfolio and focus on value and returns.
Emma Delaney, BP’s Executive Vice President of Customers and Products, remarked, “BP Bunge Bioenergia is widely recognized 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.”
Delaney added, “Focusing our plans to develop new biofuels projects is also 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.”
The acquisition and focus on key biofuels production projects are expected to support the ongoing growth of BP’s strategic bioenergy business, which includes biofuels and biogas. These initiatives contribute to BP’s unchanged 2025 targets of delivering around $2 billion EBITDA from bioenergy and $3-4 billion across all its transition growth engines.
Pending regulatory approvals, the transaction is anticipated to close by the end of 2024.
