BP (BP.L) agreed on Wednesday to buy Clean Energy Fuels Corp's (CLNE.O) biomethane production assets for $155 million, expanding its huge gas supply portfolio in the United States and showing its shift to less carbon-intensive projects.
BP will take over Clean Energy's existing and two new biomethane production sites as well as supply contracts from third parties, the companies said. As part of the deal, the U.S. company has also signed a long-term contract to purchase biomethane from BP.
Clean Energy captures biomethane gas emitted from landfill waste sites and then processes and purifies it to pump through pipelines. It is mainly used as a fuel for transport.
The U.S. company retains its green gas downstream business and will continue supplying biomethane gas at its almost 600 fuelling stations.
Shares in Clean Energy were up as much as 17 percent at 1620 GMT, while BP shares were up 2.4 percent, outperforming the European sector index .SXEP that traded 1.8 percent higher.
"Demand for renewable natural gas is growing quickly and BP is pleased to expand our supply capability in this area," Alan Haywood, chief executive officer of BP's supply and trading business, said.
Clean Energy said it would continue to collect environmental credits on gas purchased from BP and sold to end-consumers.
Clean Energy sold 60 million gasoline gallon equivalents of the biomethane fuel last year to customers including logistics firm UPS and the City of Santa Monica's transit agency, it said.
BP said in a strategy update on Tuesday that it was exploring new investments in low-carbon forms of energy, a part of the industry in which it sees significant future business potential.
SOURCE: www.reuters.com | LAST UPDATED: 2-March-2017 at 5:32 AM