Eric Watkins
Senior Correspondent
LOS ANGELES, Apr. 28 -- BP PLC and biofuels production specialist Amyris Biotechnologies, Emeryvill, Calif., will form separate joint ventures with Brazilian firms to step up production and distribution of biofuels in Brazil.
BP said it will take a 50% stake in Tropical BioEnergia SA, an existing JV established by Brazilian companies Santelisa Vale and Maeda Group, which will each hold 25%. The JV is constructing a 435 million l./year ethanol plant in Edeia, Goias State, Brazil, and plans to build a second plant, investing a total of $1.66 billion reais in the two facilities.
The agreement marks the first time the major international oil company has moved to being an upstream ethanol producer. "The [JV] team will be responsible for finding the distributors," said Philip New, president of BP's ethanol unit BP Biofuels.
Subject to government approval, BP will pay about $100 million reais for its stake and will provide funding for agreed future investment in line with its shareholding. The venture parties hope to complete the transaction by the end of June.
Tropical BioEnergia SA will focus on potential sugarcane production and the manufacturing and marketing of conventional ethanol, including the associated agricultural assets and cogeneration plants.
Operations at the first ethanol plant are expected to commence during second-half 2008, with full capacity anticipated by mid-2010. The plants will be positioned to supply the Brazilian ethanol markets, with potential to export to markets in the US, Europe, and Asia.
Amyris JV
The BP announcement followed an earlier report by Amyris Biotechnologies and Crystalsev, one of Brazil's largest ethanol distributors and marketers, to form a JV aimed at commercializing advanced renewable fuels made from sugarcane. The firm's first product, a renewable diesel, is targeted for commercialization in 2010.
Amyris will hold a 70% stake in the venture, to be called Amyris-Crystalsev Pesquisa e Desenvolvimento de Biocombustiveis Ltda., while Crystalsev will hold 30% and will contribute commercialization expertise.
Santelisa Vale, the second largest ethanol and sugar producer in Brazil and the majority owner of Crystalsev, has contracted to provide 2 million tons of sugarcane crushing capacity and plans to adopt new technology developed by Amyris at its flagship mill.
Santelisa Vale also will provide technical and engineering expertise to accelerate development and scale-up of the Amyris fuel. The Amyris-Crystalsev venture plans to bring other sugar producers into the fold as it launches its diesel fuel and progresses to other products.
Amyris-Crystalsev will market its renewable fuels worldwide, with the initial focus on Brazil and the US.
According to industry analyst estimates, global demand for petroleum diesel is growing at about 4%/year and is expected to exceed 600 billion gal by 2020. Meanwhile, the Brazilian biodiesel market is expected to grow to some 80 billion l. in 2020 from 45 billion l. in 2007.
Contact Eric Watkins at [email protected].