Norton Rose Fulbright advises BP on bioenergy joint venture in Brazil

Global August 2019

Global law firm Norton Rose Fulbright has advised BP on a joint venture to create a bioenergy company in Brazil with US agricultural trader Bunge. BP and Bunge will combine their Brazilian biofuels and biopower businesses to create BP Bunge Bioenergia, a world-scale, highly-efficient producer of sugarcane ethanol.

The combined business will be ranked the second largest player in the sugarcane ethanol biofuel industry in Brazil by effective crushing capacity. BP Bunge Bioenergia will have 11 biofuels sites in Brazil. With 32 million metric tonnes of combined crushing capacity per year, the joint venture will have the flexibility to produce a mix of ethanol and sugar. It will also generate renewable electricity through its cogeneration facilities – fuelled by waste biomass from the sugarcane – to power all its sites and sell surplus electricity to the Brazilian power grid. BP and Bunge’s assets are largely complementary, with sites in five Brazilian states including, three in the key region of São Paulo.

The London-based Norton Rose Fulbright team advising on the deal was led by corporate partners Chris Grieves and Hussain Kubba, with assistance from counsel Ilya Kuznetsov, senior associate Lily Kotsana and associate Matthew Eccles. Competition advice was provided by partner Ian Giles.

Ethanol produced from sugarcane is one of the most carbon-efficient biofuels available globally, with lifecycle greenhouse gas emissions around 70% lower than conventional hydrocarbon transport fuels. Brazil is the world’s second largest and most integrated market for ethanol as a transportation fuel, with demand forecast to grow rapidly. The majority of vehicles in Brazil – around 70% - are already able to run on ethanol, and the country’s demand for ethanol is estimated to increase by around 70% in the next 10 years.

Subject to satisfaction of conditions precedent, including obtaining the necessary regulatory clearances and approval, the deal is expected to complete in the fourth quarter of 2019.

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