bp has agreed to purchase Bunge’s 50% stake in bp Bunge Bioenergia S.A., a prominent biofuels producer in Brazil.
Upon completion, bp will become the sole owner of this industrial-scale sugarcane and ethanol business. This acquisition will enable bp to enhance value creation by integrating its trading and technology capabilities.
The stake’s enterprise value is approximately $1.4 billion. Upon acquisition, bp will consolidate 100% of the venture’s financials, which include about $0.5 billion in net debt and approximately $0.7 billion in lease obligations.
The acquisition meets bp’s financial criteria for bioenergy returns of more than 15% and aligns with its disciplined financial framework, including capex targets of around $16 billion annually for 2024 and 2025.
Post-acquisition, bp will have the capacity to produce approximately 50,000 barrels per day of ethanol equivalent from sugarcane across bp Bunge Bioenergia’s 11 units in Brazil. The company operates an integrated business model covering the entire production chain from cultivation to ethanol and sugar sales.
bp expects this ownership to unlock growth opportunities in the region, including advancements in bioenergy such as next-generation ethanol, sustainable aviation fuel (SAF), and biogas.
Concurrently, bp is adjusting its biofuels development strategy by scaling back plans for new SAF and renewable diesel projects at existing sites. While two projects are on pause, bp continues to evaluate three others for potential progression, aiming to streamline its portfolio for enhanced value and returns.
Emma Delaney, bp’s executive vice president of customers and products, emphasized the strategic importance of bp Bunge Bioenergia, noting the company’s leadership in the industry and bp’s commitment to leveraging its trading and technology expertise to drive further value.
These strategic moves are expected to bolster bp’s bioenergy business, supporting its 2025 targets of achieving approximately $2 billion EBITDA from bioenergy and $3-4 billion across all transition growth engines.
Pending regulatory approvals, the transaction is anticipated to close by the end of 2024.
