The Abu Dhabi sovereign wealth fund’s investment arm, Mubadala Capital, plans to make a substantial investment in biofuels in Brazil, the Financial Times has reported, quoting the head of Mubadala’s Brazilian operations.
The $13.5-billion investment in biofuels is part of a broader investment plan for Brazil that may also include setting up a new stock exchange in the country, Oscar Fahlgren told the FT.
“It’s all about feedstock [which] in reality is agriculture. And Brazil is probably the best-placed country on the planet when it comes to agricultural proficiency because of the climate and the fertile soil,” Fahlgren explained. “Brazil is to agriculture what Abu Dhabi is to oil.”
The plan involves the construction of five processing units, each with a price tag of $2.7 billion and a capacity of 20,000 barrels of biofuel daily. The first of these units is expected to start operating by the end of 2026.
Part of the total biofuel investment will be used for the conversion of an oil refinery into a biofuel plant, the head of Mubadala’s Brazilian operations also said. The Emirati company bought the refinery, in Bahia, back in 2021.
“It’s a very important capital project,” Fahlgren noted. “I see tremendous opportunity to invest in the green energy transition space in Brazil.”
Brazil is the world’s biggest producer of bioethanol, accounting for a fifth of the global output. However, in recent years the biofuel industry in the country has seen some setbacks such as poor harvests of sugarcane, subsidies for gasoline, and financial problems.
Yet production has remained strong, at 409,000 barrels of oil equivalent daily in 2022, which was up from 391,000 barrels of oil equivalent a year earlier.
Mubadala has had a presence in Brazil for over a decade, across various industries. It is not doing it alone, either. According to the FT, two-thirds of Mubadala’s capital in Brazil comes from external investors.
By Irina Slav for Oilprice.com