BP Exits Jatropha Biofuel Project to Focus on Ethanol

Bloomberg News
July 17, 2009,

BP Plc, Europe's second-largest oil company, will exit its jatropha biofuel project with D1 Oils Plc to focus on production of ethanol in Brazil and the U.S. and advance biobutanol development.

“To ensure the success of these investments, BP is concentrating new business development in these areas and will no longer be directly involved in the jatropha as a biofuel feedstock,” Sheila Williams, a London-based company spokeswoman, said today in an e-mail.

D1 Oils said today it agreed to acquire BP's 50 percent interest in their joint D1-BP Fuel Crops Ltd. venture, set up in June 2007 to develop jatropha, a drought-resistant tree whose seeds contain oil used mainly in biodiesel production.

BP and D1 Oils had failed to find a third investor for the project. They began talks this year on dissolving the venture and bringing planting and plant-science operations under D1's control. London-based D1 said last month it would be able to maintain the business at lower cost until market conditions allowed the injection of new capital.

The partners had planned to plant 1 million hectares of jatropha over four years, of which 220,000 hectares had been planted by April.

BP Alternative Energy has earmarked $8 billion for project investment in the decade through 2015. BP, which expects biofuels to account for 11 percent to 19 percent of the world's transport-fuel market by 2030, supplied about 10 percent of global biofuels last year, according to company estimates.

The British oil producer is cooperating with U.S. universities to spend about $500 million over 10 years on biofuels research. It's also working with DuPont Co., the third- largest U.S. chemicals maker, to develop biobutanol, a gasoline- like fuel made from biomass.

BP last year agreed to invest in Brazilian ethanol venture Tropical BioEnergia SA and plans to spend $5 billion to $6 billion to boost production over 5 to 10 years. Brazil's Santelisa Vale SA and Grupo Maeda Ltda each hold 25 percent of Tropical BioEnergia, while BP has 50 percent.

“We believe that biofuels will make a major contribution to road transport fuels, reducing carbon emissions and diversifying supply,” Williams said.

BP and the U.S.'s Verenium Corp. agreed in February to set up a venture to produce cellulosic ethanol, which, unlike sugar- cane ethanol, is derived from non-food crops such as switchgrass, corn cobs and wood waste.

Last year, BP teamed up with Associated British Foods Plc and DuPont to start building a $450 million wheat-based ethanol plant in Hull, northeast England. The partners may complete construction in the second or third quarter of next year, Philip New, head of biofuels at BP, said on March 17.

Europe's largest oil company is Royal Dutch Shell Plc.