Kate Mackenzie BP’s jatropha venture: In case you were wondering…

BP has formally pulled out of its jatropha-planting joint venture with UK-based D1 Oils:

D1 Oils plc (“D1″ or “the Company”) announces that it has reached a conditional agreement with BP International (“BP”) to acquire BP’s 50 per cent interest in D1-BP Fuel Crops Limited (“D1-BP Fuel Crops” or “the Joint Venture”), its joint venture with BP for the planting of Jatropha curcas, and thereby to take back into D1′s sole ownership the global planting assets and interests of the Joint Venture.

D1 signalled in late June that BP was considering leaving the joint venture, but that it planned to maintain some stake in future revenues. This is actually going to take the form of deferred per-tonne payments to BP for the stake in the joint venture (on its current position, D1 is only cash-positive until the end of 2010) in addition to an immediate £500,000 cash payment to BP:

D1 has also agreed to pay BP, by way of deferred consideration, £30 for every tonne of the first 20,000 tonnes of CJO, up to maximum of £600,000, produced by the D1 group and sold to third parties. To the extent not already paid, the £600,000 deferred consideration is payable by D1 at the latest by 31 December 2014.

D1′s chief executive Ben Good said last month that BP’s exit would allow D1 to bring its planting business (D1-BP) together with its plant sciences business. The company also plans to sell more animal meal, which is says it profitable.

And BP? It is focusing its biofuel efforts on ethanol in Brazil and the US, and developing biobutanol. Jatropha, which is mostly used for biodiesel, has some advantages over corn and sugar crops ethanol in that it does not compete with food crops, but has recently fallen from favour because of its water use.

Related links:

Back to petroleum (FT, 07/07/09)
BP’s jatropha interest continues to wane
(FT Energy Source, 23/06/09)