Shell, Cosan plan Brazil biofuels JV
1 Feb 2010
London – Shell International Petroleum Co. Ltd and Cosan SA have signed a non-binding memorandum of understanding (MoU) to form a circa $12bn joint venture in Brazil for the production of ethanol, sugar and power, and the supply, distribution and retail of transportation fuels. Under the deal, both companies would contribute certain existing Brazilian assets to the JV, with Shell to contribute a total of $1.625bn in cash, payable over two years.
“The JV would enable Shell and Cosan to establish a scalable and profitable position in sustainable biofuels - one of the most realistic commercial solutions to take carbon out of the transport fuels sector over the next twenty years - by building a market-leading position in the most efficient ethanol producing country in the world,” said a joint press statement.
With annual production capacity of about 2bn litres and significant growth potential, the JV would be one of the world’s largest ethanol producers, according to Shell. In addition, it added, the inclusion of Shell’s equity interests in Iogen and Codexis would potentially enable the JV to deploy next generation biofuels technologies in the future.
The deal would also enhance both companies’ growth prospects and market position in the retail and commercial fuels businesses in Brazil. With a network of about 4,500 retail sites and a total annual throughput of about 17bn litres, the JV would have a leading position in the fuels retailing market in Brazil, with strong potential for synergy capture and future growth.
