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bp Acquires Bunge’s 50% Stake in Bioenergia for $1.4B, Streamlines Biofuels Strategy

bp Acquires Bunge’s 50% Stake in Bioenergia for $1.4B, Streamlines Biofuels Strategy

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Key Impact Points:

  • Strategic Acquisition: bp acquires Bunge’s 50% stake in bp Bunge Bioenergia, gaining full ownership.
  • Refocused Development: Pauses two new biofuels projects while assessing three others.
  • Growth Target: Aims for ~$2bn EBITDA from bioenergy by 2025.

Executive Summary:

bp has acquired Bunge’s 50% stake in bp Bunge Bioenergia, becoming the sole owner of the biofuels joint venture. This strategic move allows bp to fully integrate its trading and technology capabilities, enhancing value creation. The acquisition, valued at $1.4 billion, includes the consolidation of financial results and net debt. Simultaneously, bp is scaling back plans for new biofuels projects, pausing two while continuing to assess three, in line with its strategy to simplify the portfolio and focus on high-return opportunities. This acquisition supports bp’s goal of achieving ~$2bn EBITDA from bioenergy by 2025.

bp has agreed to acquire Bunge’s 50% interest in the bp Bunge Bioenergia S.A. joint venture, making bp the sole owner of one of Brazil’s leading biofuels-producing companies.

Strategic Acquisition This acquisition, valued at approximately $1.4 billion, allows bp to consolidate 100% of the venture’s financial results, including net debt of about $0.5 billion and lease obligations of around $0.7 billion. Upon completion, bp will have the capacity to produce approximately 50,000 barrels a day of ethanol equivalent from sugarcane through bp Bunge Bioenergia’s 11 agro-industrial units across five Brazilian states.

Emma Delaney, bp’s executive vice president, customers and products, stated: “bp Bunge Bioenergia is widely recognised 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.

Refocused Development In parallel to this acquisition, bp is scaling back plans for the development of new biofuels projects, pausing planning for two potential projects while continuing to assess three others for progression. This decision aligns with bp’s strategy to simplify its portfolio and focus on value and returns.

Emma 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 acquisition and the refocusing of key biofuels production projects are expected to support the growth of bp’s strategic bioenergy business, which includes both biofuels and biogas. These efforts contribute to bp’s unchanged 2025 targets of delivering around $2bn EBITDA from bioenergy and $3-4bn across all its transition growth engines.

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Subject to regulatory approvals, the transaction is anticipated to close by the end of 2024.

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