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BP expanding activities in Biofuels

Hydrocarbon Engineering,

BP has agreed is acquiring the remaining 50% of the Brazilian biofuel company Tropical BioEnergia S.A. from its current joint venture partners for approximately US$ 71 million.

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

BP will become the 100% 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.

Brazil currently produces 33% of global output of Ethanol. Ethanol is so prevalent now in Brazil that sugarcane ethanol represented 17.6% of the country's total energy consumption by the transport sector in 2008.

There are concerns though that the booming ethanol industry is contributing to deforestation but the agricultural land 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).

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."

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