BP expands ethanol output with acquisition of Brazil's Tropical BioEnergia

British Petroleum (BP) is set to expand its Brazilian ethanol output with its full acquisition of biofuel firm Tropical BioEnergia S.A. Set to take effect immediately, BP will acquire the remaining 50 percent of Tropical BionEnergia from existing joint venture partners for $71 million.
Those current joint venture partners in Tropical BioEnergia include Maeda S.A. Agroindustrial and LDC-SEV Bioenergia S.A. (each which owned 25 percent). After the deal is approved, BP will assume 100-percent ownership of Tropical BioEnergia and become the sole operator of the firm's two ethanol production sites.

In the near future, BP intends to double operations at Tropical BioEnergia, reaching a capacity of five million tons of crushed sugarcane – 119 million gallons of ethanol – annually. This acquisition will ALSO take the number of sites in BP's Brazilian ethanol portfolio to three, all of which are located in the nation's Center-South region.
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BP to Expand Activities in Biofuels, Buying Out Remaining Shares in Brazil's Tropical Bioenergia S.A.

Release date: 14 September 2011

BP announced today that it has agreed to increase its share in Brazilian biofuel company Tropical BioEnergia S.A. to 100 per cent, by acquiring the remaining 50 per cent of the company from its current joint venture partners for a total cash consideration of approximately US$71 million.

BP's current joint venture partners in Tropical BioEnergia S.A. are Maeda S.A. Agroindustrial (25 per cent) and LDC-SEV Bioenergia S.A. (25 per cent).

After the deal is completed, subject to regulatory approval and agreed closing conditions, BP will become the 100 per cent owner of Tropical BioEnergia S.A. and operator of its producing ethanol mill, located in Edéia, Goiás state. BP intends to double the size of the operations at Tropical BioEnergia to a capacity of five million tonnes of crushed cane, or 450 million litres of ethanol equivalent, per year and also to expand operations in the region.

This acquisition takes the number of producing mills in BP's Brazilian ethanol portfolio to three, all of which are located in Goiás and Minas Gerais states in the centre-south of the country.
Philip New, Vice President of BP Biofuels, commented, "This is another significant milestone in BP's global biofuel strategy as we expand our operations base and demonstrate our genuine commitment to Brazil's ethanol industry, which can deliver sustainable and competitive biofuels into the global market."

Mario Lindenhayn, who heads BP Biofuels in Brazil, continues: "We have a major growth agenda for our biofuels business in Brazil. This transaction, together with other recent acquisitions, gives us a strong platform from which to expand our capacity to supply both domestic and international fuels markets."

Key facts about the acquisition

BP has agreed to pay a total of approximately US$71 million in cash to acquire 50 per cent of the shares in Tropical BioEnergia S.A from Maeda S.A. Agroindustrial and LDC-SEV Bioenergia S.A.. In addition, BP will also refinance Tropical's existing debt.

Following the acquisition, BP will own and operate Tropical BioEnergia's mill in Edéia, Goiás state. BP also operates mills in Itumbiara, Goiás and Ituiutaba, Minas Gerais.

The mill will be able to supply both Brazilian and international markets with ethanol.
The agricultural land used for sugarcane cultivation related to all BP's operations in Brazil is within the areas permitted under Brazil's proposed Agro-Ecological Zoning of Sugarcane (Zoneamento Agroecológico da Cana-de-açúcar).

The total planned combined crushing capacity of Tropical BioEnergia when fully developed, is expected to be five million tonnes of sugar cane per year. At full capacity, the mill will have a production capacity of about 450 million litres of ethanol equivalent per year. The mill will also have the capacity to supply approximately 250GWh of electricity per year to the grid.

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