Shell and Cosan agree to permanent Raízen joint-venture
Shell and Cosan have announced an agreement to permanent Raízen joint-venture (JV) in Brazil, through a change in its contractual structure. Low carbon sustainable biofuels will be required long term for heavy duty and long distance transport.
Global oil major Shell and Cosan, a Brazilian conglomerate producer of sugar, ethanol, energy and foods have reached an agreement to strengthen the Raízen joint-venture (JV) in Brazil, through a change in its contractual structure. Raízen is the world’s largest individual producer of sugar cane, producing more than four million tonnes of sugar, more than two billion litres of ethanol and 2.2 gigawatt hours (GWh) of cogenerated energy in 2015. It also operates a network of more than 5 800 Shell-branded service stations in the country.
The partners have agreed to remove the mutual time-bound buyout options from 2021 included in the original 50-50 JV agreement and replace them with event triggered options. Event triggered options are a common feature in JV agreements and are designed to address specific risks that may arise during the life of the JV. The changes have transformed Raízen from a temporary to a permanent JV.
– 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, said John Abbott, Downstream Director for Shell.
– 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 recognized for excellence in the development, production and marketing of sustainable energy, said Marcos Lutz CEO, Cosan.