MB Civic

BP signs second biofuel deal in a week – FT
By Andrew Jack

Published: June 29 2007 09:35 | Last updated: June 29 2007 09:35

BP is to invest at least £32m in a joint venture with D1 Oils, the quoted UK based alternative fuels company, to develop the inedible oilseed Jatropha as a biodiesel.

The move is the latest escalation of BP’s move into alternative fuels, following its $400m investment in a joint bioethanol plant with Associated British Foods and DuPont announced earlier this week.

BP will provide working capital into the new 50:50 joint venture, D1-BP Fuel Crops, through an initial £32m equity investment, while D1 provides 1.9 per cent of its net assets. BP has options to buy a further 16 per cent for a further £30m.

The plan is to invest £80m over five years with accelerated planting of jatropha, which grows in tropical and sub-tropical areas, on wasteland and marginal land. D1 will provide exclusive use of its Elite jatropha seeds and seedlings, for which it will receive a premium price.

Iain Conn, chief executive officer of BP’s refining and marketing business, said: ”This joint venture is a further milestone in our strategy to develop real avenues to contribute to global energy supplies in ways that are sustainable and progressive.”

Elliott Mannis, chief executive officer of D1 Oils, said: ”This is a transforming event for D1. BP’s decision to join us in this new venture is a significant endorsement of our strategy to develop jatropha as a global raw material for the production of sustainable biodiesel.”

D1 has already planted or obtained rights to 172,000 hectares of jatropha, in India, Southern Africa and South East Asia. It also has 32,000 tonnes of processing capacity at its factory in Middleborough, with plans to add a further 100,000 tonnes this year. The company posted pre-tax losses of £12.6m on sales of £1.6m in 2006.

BP said it would also be bringing to the joint venture knowledge from its existing demonstration project at The Energy Resources Institute in India.