BP announced today that it intends to take a 50 per cent stake in Tropical BioEnergia, a joint venture established by Brazilian companies Santelisa Vale and Maeda Group.

Tropical BioEnergia is constructing a 435 million litre (115 million gallons) a year ethanol refinery in Edéia, Goias State, Brazil.

The joint venture, in which Santelisa Vale and Maeda Group would each hold 25 per cent, also intends to progress plans to build a second ethanol refinery, investing a total of approximately $1bn in the two refineries.

Assuming all the required approvals are received, BP will pay around $59.8m for the 50 per cent stake, subject to working capital adjustments, and provide funding for agreed future investment in line with its shareholding.

The parties said that they hoped to be able to complete the transaction before the end of June 2008.

The joint venture will focus on potential sugarcane production and the manufacturing and marketing of conventional ethanol, including the associated agricultural assets and cogeneration plants.

Operations at the first refinery are expected to commence during the second half of 2008, with full capacity anticipated by mid-2010. The refineries will be positioned to supply the Brazilian ethanol markets with the potential to export to the US, Europe and Asia.

Besides developing sustainable biofuels, the refineries are expected to be able to sell surplus electricity, with each of them exporting at least 30MW of surplus power from integrated bagasse cogeneration facilities.