Following months of speculation D1 Oils and BP have announced plans to establish a global joint venture, D1-BP Fuel Crops Limited, to develop jatropha as a sustainable energy crop. Overall the joint venture has a funding requirement of approximately $80 million over the next five years. Initial contributions from the two copompanies break down to the planting to date and planting business from D1 with BP putting in working capital of $31.75 million through equity in the joint venture. The new company plans to plant one million hectares of jatropha in the next four years.

Under the terms of the Joint Venture Agreement signed today (29th June), but subject to D1 shareholder approval, D1 and BP will work together exclusively on the development of jatropha as a sustainable energy crop, including the planting of trees, harvesting jatropha grain, oil extraction and transport and logistics. Production of jatropha oil for refining into biodiesel is expected to begin in 2008.

D1 Oils Plant Science Limited, D1's plant science business, will act as the exclusive supplier of selected, high yielding jatropha seeds and seedlings to the Joint Venture. The strategy for the Joint Venture sees it planting Elite seed in greater quantities than D1's stand alone plan.

With the conclusion of this transaction D1 will comprise, in its upstream business, its wholly owned plant science operations together with the IP in plant science, in addition to 50 per cent. of a global planting joint venture with BP. In its downstream operations, the business will include, as it does now, its wholly owned interests in refining and trading.

Commenting on the move Elliott Mannis, Chief Executive Officer of D1 Oils plc, said: "This is a transforming event for D1. BP's decision to join us in this new venture is a significant endorsement of our strategy to develop jatropha for the production of sustainable biodiesel. It shows we have come a long way. BP's proven logistical, managerial and financial support will enable a significant enhancement and acceleration of the scope and pace of jatropha planting."

Philip New, Head of BP Biofuels, said: "As jatropha can be grown on land of lesser agricultural value with lower irrigation requirements than many plants, it is an excellent biodiesel feedstock. D1 Oils' progress in identifying the most productive varieties of jatropha means that the joint venture will have access to seeds which can substantially increase jatropha oil production per hectare."