On 25 August oil company Shell and Cosan S.A., one of the world’s largest ethanol companies based in Brazil, signed binding agreements to form a $12 billion (€9.44 billion) joint venture, which will see the production and commercialisation of ethanol from sugarcane.
Should the partnership be formed it will become the world’s third largest producer of ethanol with a yearly output capacity of 2 billion litres.
The JV would also generate electricity from sugarcane bagasse in cogeneration plants. Ten cogeneration plants are already in operation.
With total annual sales of approximately 18 billion litres of fuels, the proposed JV will have a competitive position in the Brazilian fuels distribution market built upon a network of about 4,500 retail sites.
The inclusion of Shell’s equity interests in Iogen Energy and Codexis would enable the partnership to deploy next generation biofuels technologies in the future.
The signing comes after the two firms signed a non-binding memorandum of understanding back in February.
‘The proposed joint venture is set to pool our complimentary businesses, enhance our growth prospects in ethanol production globally and support our growth platform for our retail and commercial fuels businesses in Brazil,’ Shell downstream director Mark Williams said.
Rubens Ometto Silveira Mello, Cosan’s chairman of the board and non-executive Chairman-elect of the proposed joint venture commented: ‘While there is still plenty of integration planning to do before we launch the proposed joint venture, this is an important milestone in our effort to create one of the world’s most competitive sustainable biofuels companies.’