Shell and Cosan beef up sugarcane ethanol JV in Brazil

Oil giant Shell and Brazilian bioethanol company Cosan have reached an agreement to strengthen their sugarcane ethanol joint venture (JV), Raízen, in Brazil, through a change in its contractual structure.

The partners have agreed to remove the mutual time-bound buyout options included in the original JV agreement, signed in June 2011, and in doing so have transformed Raízen from a temporary to a permanent joint venture.

John Abbott, Shell’s downstream director, said: “Low-carbon, sustainable biofuels play an important role today and will be required long term for heavy duty and long distance transport. We are pleased with Raízen’s strong performance.

“This commitment reaffirms the stability of Shell and Cosan’s partnership, and our shared view of the long-term objectives and value of the business.”

Marcos Lutz, Cosan CEO, added: “Transforming Raízen into a permanent joint venture strengthens the partnership we built with Shell over the last five years, while paving the way to continue our successful journey in Brazil.

“Our partnership with Shell is instrumental to being recognised for excellence in the development, production and marketing of sustainable energy.” 

Raízen is the world’s largest individual producer of sugarcane, producing more than four million tonnes of sugar, more than two billion litres of ethanol and 2.2 gigawatt hours of cogenerated energy in 2015.

It also operates a network of more than 5,800 Shell-branded service stations in the country. According to Shell, the combination of Shell and Cosan’s retail experience and technical expertise have contributed to Raizen’s strong financial and operational performance since the venture was established.

 This story was written by Liz Gyekye, editor of Biofuels International.