British multinational oil and gas company BP was considering buying stakes in biofuel feedstock producers and investing directly in farming ventures in a bid to secure supplies to meet rising global demand, a senior executive of the company told Reuters.
BP said it would triple its biofuel output by 2030 to 100,000 bpd (barrels/day) or approximately 4.5M tonnes/year, according to Reuters’ calculations.
The tripling was in line with forecasts from analysts at Barclays bank that forecast global biofuel demand to reach 30M tonnes by the end of the decade, compared with the current level of around 10M tonnes and today’s crude oil demand of around 102M bpd.
To reach its target, BP planned to build five biofuel plants processing waste feedstock by 2030, BP head of biofuels Nigel Dunn was quoted as saying in the 17 May report.
“They make perfect feedstocks for HEFA [hydroprocessed esters and fatty acids or HVO]. The problem is there's only so much of them in the world. And the more HEFA plants that get built, the more challenging the dash for those feedstocks is going to get,” Dunn said.
BP would “almost certainly need” to acquire stakes in feedstock manufacturers to secure supplies as competition intensified, he added.
“We are going to be in as an integrated chain... That’s our business today in fossil (fuel) and I think that's going to be the winning way.”
With the European Union (EU) banning biofuels produced from feedstock that could be used as food, BP was also considering investing directly in cover crop farming, Reuters wrote.
“Cover crops and novel feedstocks are going to need to be part of the mix if we're going to be successful,” Dunn added.
BP’s rival Eni has invested in building large feedstock farming operations in Kenya, the report said.
Globally, about 30M tonnes of waste are available as feedstock for biofuels, according to Joshua Stone, refining analyst at Barclays.
Due to a forecast tripling in demand for biofuel by 2030, Stone said the feedstock markets would be under pressure.
“The only ones who will come out well are those who have access to feedstock,” Stone was quoted as saying.
BP would decide by the end of this year if it was going ahead with construction of its first HEFA plant in Australia, with the aim of starting production in 2026, Dunn added.
