bp to buy out Bunge’s stake in Bunge Bioenergia in $1.4bn deal

British multinational oil and gas company, bp plc, has agreed to acquire Bunge Ltd.’s 50% interest in their joint venture, bp Bunge Bioenergia S.A., for an enterprise value of approximately $1.4 billion. This acquisition will position bp as the sole owner of one of Brazil’s leading biofuels-producing companies, significantly enhancing its industrial-scale sugarcane and ethanol business operations.

The transaction includes taking on the venture’s net debt of approximately $0.5 billion and lease obligations of around $0.7 billion. This acquisition, expected to generate returns exceeding bp’s 15% threshold for bioenergy investments, aligns with the company’s disciplined financial framework. bp’s capital expenditure targets remain steady at around $16 billion annually for 2024 and 2025, ensuring this acquisition fits well within its financial strategy.

bp’s acquisition of Bunge’s stake in bp Bunge Bioenergia enhances its bioenergy strategy in Brazil, promising growth and high returns.

Post-acquisition, bp will control the entirety of bp Bunge Bioenergia’s operations, which include 11 agro-industrial units spread across five Brazilian states. This control will enable bp to fully integrate the venture with its own trading and technology capabilities, thereby accelerating value creation. The total capacity to produce approximately 50,000 barrels per day of ethanol equivalent highlights the significant scale of operations. bp also sees potential for unlocking further growth opportunities in the region, particularly in developing new platforms for next-generation bioenergy products like sustainable aviation fuel (SAF) and biogas.

In parallel with this acquisition, bp is streamlining its development plans for new biofuels projects. This includes pausing planning for two potential projects while continuing to assess three others for progression. This refocusing aligns with bp’s strategy to simplify its portfolio and enhance shareholder returns, underscoring its commitment to bioenergy as a critical component of its growth strategy.

“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,” said Emma Delaney, bp’s executive vice president of customers and products. “These changes can enable us to deliver the growth and returns we expect from biofuels, but in a simpler, more focused way.”

Subject to regulatory approvals, the transaction is anticipated to close by the end of 2024. This acquisition and strategic refocus are expected to bolster the continuing growth of bp’s strategic bioenergy business, contributing significantly to its 2025 targets of delivering around $2 billion EBITDA from bioenergy.