Oil giant BP has announced its “major expansion” into the renewable energy marketplace with a new partnership in the biopower sector.

The firm has formed a 50/50 joint venture with US-headquartered agricultural commodities company Bunge to form new venture, BP Bunge Bioenergia.

Under the agreement, BP will combine it’s Brazilian biopower and biofuels business with Bunge to create a business that produces sugarcane ethanol in Brazil.

The deal will see BP pay £60 million to Bunge and assume more than £650m debt in Bunge assets. BP Bunge Bioenergia will also create 11 biofuels sites in Brazil.

It claims almost 70% of vehicles in Brazil currently run on ethanol and it expects the country’s demand for ethanol to increase by around 70% by 2030.

Bob Dudley, BP group chief executive, said: “This is another large-scale example of BP’s commitment to play a leading role in a rapid transition to a low carbon future.

“Biofuels will be an essential part of delivering the energy transition and Brazil is leading the way in showing how they can be used at scale, reducing emissions from transport.

“This combination will unlock new possibilities for improved efficiency and future growth in this key market.”