Pumelled by the slowing economy, BP is refocusing on its oil & gas business.
Biofuel producer D1 and BP, which in June 2007 had announced a partnership to produce biofuels, have said that they are halting expansion plans and looking for new investors to join the venture.
In a statement on Wednesday, D1 announced that it would “tighten the business’ geographic focus, reduce the overhead base
and contain short term cash requirements,” of this relatively young business.
D1 develops and produces oil from jatropha, a plant that can be grown on land unsuitable for food crops.
In June 2007, at the height of the biofuel buble, (remember ethanol…?), BP formed a 50-50 joint venture with D1 and took an option for a 16 percent stake in the company.
The joint venture had set out to plant 1m hectares (2.47 m acres) of jatropha by the end of 2011. So far about 257,000 hectares of the energy-rich plant is under cultivation, the majority in north East India.
But now with oil prices plumetting — in the words of BP chief executive Tony Hayward – “every dollar counts” and so the oil major is shifting away from biofuels and using its dollars to propup the company’s core exploration and production oil and gas business.
D1 chief executive Ben Good said that over the next few years the company would work with farmers to increase yields, which so far have not met expected targets. It would also look for a third partner to invest in the venture.
After experiencing an unprecedented growth, BP’s clean energy portfolio is poised for a slowdown. This past year the company has shut down a solar planel manufacturing plant in Australia and has said that it will end its wind business outside the U.S., where generation capacity has surged 55 percent in the past 12 months.
BP reins in D1 alternative energy plans (Financial Times)
D1 press statement