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BP to Invest $48.5M in Chinese Biofuels Amid SAF Mandate Talks
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BP plc (BP - Free Report) has announced a significant investment of Yuan 353 million ($48.54 million) to acquire a 15% stake in Lianyungang Jiaao New Energy, a leading producer of renewable diesel and sustainable aviation fuel (SAF), owned by Zhejiang-based Jiaao Enprotech. This strategic move, reported by S&P Global on Wednesday, marks BP's commitment to enhancing its portfolio in renewable energy.
Lianyungang Jiaao New Energy, under its parent company Jiaao Enprotech, boasts a production capacity of 100,000 metric tons of SAF per year. This deal aligns with the increasing anticipation of China introducing SAF mandates, which could significantly boost the demand for sustainable aviation fuel in the near future.
In 2023, global consumption of SAF surged to 450,000-500,000 tons, almost double the previous year’s level. However, this still represents a mere 0.1% of total jet fuel consumption. Projections suggest that by 2050, total jet fuel consumption will reach 2.1 million barrels per day, with SAF displacing nearly a quarter of global jet fuel demand.
Despite this investment, BP has been scaling back its plans for new SAF and renewable diesel projects at its existing sites. This includes halting the development of new biofuel projects at its Lingen refinery in Germany and Cherry Point refinery in Washington state, and reassessing three other projects.
BP’s investment in Jiaao New Energy represents a strategic move to position itself ahead of anticipated SAF mandates in China. As global demand for SAF continues to rise, driven by policy support and the urgent need for sustainable aviation solutions, BP’s investment could play a crucial role in the evolution of the biofuel market.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.28. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.95. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past seven days.
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BP to Invest $48.5M in Chinese Biofuels Amid SAF Mandate Talks
BP plc (BP - Free Report) has announced a significant investment of Yuan 353 million ($48.54 million) to acquire a 15% stake in Lianyungang Jiaao New Energy, a leading producer of renewable diesel and sustainable aviation fuel (SAF), owned by Zhejiang-based Jiaao Enprotech. This strategic move, reported by S&P Global on Wednesday, marks BP's commitment to enhancing its portfolio in renewable energy.
Lianyungang Jiaao New Energy, under its parent company Jiaao Enprotech, boasts a production capacity of 100,000 metric tons of SAF per year. This deal aligns with the increasing anticipation of China introducing SAF mandates, which could significantly boost the demand for sustainable aviation fuel in the near future.
In 2023, global consumption of SAF surged to 450,000-500,000 tons, almost double the previous year’s level. However, this still represents a mere 0.1% of total jet fuel consumption. Projections suggest that by 2050, total jet fuel consumption will reach 2.1 million barrels per day, with SAF displacing nearly a quarter of global jet fuel demand.
Despite this investment, BP has been scaling back its plans for new SAF and renewable diesel projects at its existing sites. This includes halting the development of new biofuel projects at its Lingen refinery in Germany and Cherry Point refinery in Washington state, and reassessing three other projects.
BP’s investment in Jiaao New Energy represents a strategic move to position itself ahead of anticipated SAF mandates in China. As global demand for SAF continues to rise, driven by policy support and the urgent need for sustainable aviation solutions, BP’s investment could play a crucial role in the evolution of the biofuel market.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like Hess Corporation (HES - Free Report) , Sunoco LP (SUN - Free Report) and SM Energy Company (SM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess is a leading oil and natural gas exploration and production company that made several world-class oil discoveries in the Stabroek Block, located off the coast of Guyana. The company is currently in the process of being acquired by supermajor Chevron in an all-stock deal worth $53 billion. The merger will likely result in the creation of an energy behemoth with a massive portfolio of producing assets.
The Zacks Consensus Estimate for HES’ 2024 EPS is pegged at $10.28. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Sunoco is a leading wholesale motor fuel distributor in the United States, boasting a vast distribution network spanning 40 states. With long-term contracts servicing more than 10,000 convenience stores, it distributes over 10 fuel brands, ensuring a stable revenue stream. SUN currently has a Value Score of A.
The Zacks Consensus Estimate for 2024 and 2025 earnings per unit is pegged at $7.29 and $7.17, respectively. The partnership has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.
SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.
The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $6.95. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2025 in the past seven days.