Tags: BP | Brazil | biofuels

BP on the Move in Brazil

By Meghan Sapp   |   Tuesday, 17 May 2011 01:10 PM

BP Plc (BP) has fallen in love with Brazil and it’s hard to see why it wouldn’t. As one of the world’s up-and-coming economies, the company has been making strategic investments that will very soon begin paying off in serious dividends.

A lot of the focus has been on BP Biofuels’ increasing interest in the country’s ethanol industry, one of the largest producers in the world — just after the United States — with the largest domestic market on the planet.

Brazil is the only major ethanol exporter, meaning that in order to secure the entire fuel supply chain from the United States to Europe, and indeed even in Brazil, BP is building up resources, and in a hurry.

Last month BP paid $680 million for 83 percent of one of Brazil’s main sugar and ethanol producers, Companhia Nacional de Açúcar e Álcool (CNAA), just three years after paying $560 million for another major cane producer, Santelisa Vale.

BP has just gotten approval from the country’s national oil regulator, the National Petroleum Agency (ANP), to secure the other end of the supply chain. The ANP has given the company the nod to buy 10 oil exploration and production blocks from Devon Energy (DVN), a deal that’s been in the works since March 2010.

Waiting out the news

It seems that the ANP was waiting to see how BP was going to handle the cleanup from the Gulf of Mexico oil spill disaster before giving the company the thumbs up to go exploring in its own waters. The agency seems to have been satisfied enough to give the go ahead.

With the $7 billion deal going forward — including Devon’s operations in Azerbaijan that has already gotten off the ground and some blocks in the U.S. part of the Gulf of Mexico — analysts tracked by Trefis expect BP to reach upwards of $53, a premium of roughly 20 percent over current trading.

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BP Plc (BP) has fallen in love with Brazil and it s hard to see why it wouldn t. As one of the world s up-and-coming economies, the company has been making strategic investments that will very soon begin paying off in serious dividends. A lot of the focus has been on BP...
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2011-10-17
 

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