Brazil’s state-run oil company Petrobras has announced it has signed a deal with global agribusiness giant Bunge for the supply of raw material used in the production of R5 diesel.

The agreement involved the supply of refined soyabean oil for the production of R5 diesel at the Getúlio Vargas Refinery (Repar), in Paraná, Brazil, the company said on 2 August.

Diesel R5 is produced from the co-processing of vegetable oils, in this case refined soyabean oil, with petroleum diesel oil. The fuel leaves the refinery with about 95% mineral diesel (derived from petroleum) and 5% renewable diesel, also called green diesel. Distributors would add the 10% biodiesel ester, as established by current legislation, Petrobras said.

The company said R5 diesel production was expected to begin in September.

Around 1.5M litres would be used in commercial tests of the product to check market reaction to the new fuel, the company said.

Petrobras said it planned to expand its renewable diesel production to two more refineries in the southeast of the country and, in the future, to have a unit dedicated to the processing of renewable raw material.

The company said it would invest a total of US$600M by 2026 towards this objective, through the Biorefino Program.