BP taking stake in Brazil biofuel

London's BP (LSE: BP) announced that it plans to take a 50 percent stake in a sugarcane biofuels project building two large refineries in Brazil.

BP said it would pay $60 million for the stake in Tropical BioEnergia, a joint venture established by Santelisa Vale, a Brazilian sugar and ethanol producer, and Maeda Group, which grows cotton and manufactures vegetable oil.

The venture is constructing a 115 million gallon per year ethanol refinery in Edéia, according to BP, with plans for a second facility.

"This investment, which is the largest made by an international oil company in the Brazilian ethanol industry represents a significant step in delivering BP's strategy for biofuels which centers around sustainable feedstocks which do not impact on food supplies and investing in research work to develop the technologies required to produce advanced biofuels," said Phil New, head of BP Biofuels.

BP said the venture expects to invest a total of $1 billion in the two refineries. Santelisa Vale and Maeda Group will each hold 25 percent of the venture once BP's investment is complete.

BP said they hope to close the transaction before the end of June 2008.

The oil giant said operations at the first refinery are expected to start during the second half of this year, with full capacity anticipated by mid-2010.

In addition to developing biofuels, BP said the refineries are expected to be able to sell surplus electricity, with each of them exporting at least 30 megawatts of surplus power from integrated bagasse cogeneration facilities.

BP said the plants are also intended to offer a potential platform for deploying future technologies such as lignocellulosics and biobutanol.