BP announced that it has agreed to acquire majority control of the Brazilian ethanol and sugar producer Companhia Nacional de Açúcar e Álcool (CNAA). The investment is expected to increase BP’s overall Brazilian production capacity to around 1.4 billion litres of ethanol equivalent per year (nine million barrels).

Under the terms of the investment, BP will pay approximately US$680 million for 83 per cent of the shares of CNAA and to refinance 100 per cent of CNAA's existing long term debt. Post the acquisition, which is subject to regulatory approval and other closing conditions, BP will become the operator of two producing ethanol mills, located in Goiás and Minas Gerais states. A third CNAA mill is currently under development in Minas Gerais state.

Carl-Henric Svanberg, Chairman of BP, noted that low carbon energy will play an increasingly significant role in meeting world energy demand. BP is committed to producing biofuels to help meet this demand, he stated. The transaction also fits BP's strategy of increasing its exposure to growing energy markets, Svanberg said.

BP’s Energy Outlook 2030 forecasts that alternative energy will be the fastest growing energy sector over the next 20 years, with global biofuels production projected to more than triple.

Bob Dudley, BP Group Chief Executive said the strategic acquisition of CNAA underlines BP’s commitment to building material businesses in growing economies and continued expansion in Brazil through exploration and production, as well as biofuels investments. This is the biggest acquisition to date for BP Alternative Energy as the firm continues building a leading low carbon fuels business, said Dudley.

But Vice President of BP Biofuels, Philip New, added that the acquisition is a key milestone in BP’s strategy of building a leading position in sustainable and scalable biofuels. According to New, it will provide a solid growth platform for BP’s business.

Since 2008, BP has held a 50% share in Tropical BioEnergia S.A., which operates an ethanol mill in Goiás state with a production capacity of 435 million litres of ethanol per year. The ownership and operation of this mill is not impacted by this acquisition however, said BP.

BP is of one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items.

12th March 2011