BP Australia has signed an agreement to buy the entire output from a new $100 million ethanol plant to be built in Kwinana, just south of Perth.The Memorandum of Understanding will see the construction of Australia's first wheat-based ethanol plant that will produce 80 million litres of ethanol a year to be sold across Australia as BP's "e 10" product from 2008.That level of production is enough to add 10 per cent ethanol to every litre of petrol sold in WA.The deal with New South Wales company Primary Energy Pty Ltd is part of a three pronged BP strategy, covered by two contracts and a Memorandum of Understanding, to provide over 200 million litres of biofuels a year by 2008.The e 10 fuel blended in WA will be sold at BP's site in Perth, to other suppliers in Perth and across Australia. It will use about 200,000 tonnes of Australian wheat as a feedstock. The Kwinana plant will also generate renewable electricity from biomass as part of the process. BP e10, which the company began marketing in Queensland in 2001, delivers a similar engine performance to that of traditional petrol, with the added benefit of lower emissions. BP has sold more than 20 million litres of e10 in Australia without recording a vehicle complaint. Together, the renewable fuel and renewable electricity will result in a reduction in greenhouse gases to the order of 200,000 tonnes a year. BP President, Mr Gerry Hueston, said its announcement signaled the early delivery by a single company of over half the Federal Government's national target of 350 million litres. He said BP would invest in refining and distribution infrastructure, and secure product to enable biofuels to play a role in the future of Australia's petroleum supplies. Besides the Kwinana plant, the new BP initiatives include the production of 110 million litres a year of biodiesel extracted from tallow at BP's Bulwer Refinery in Queensland from 2007. BP also has a two year contract to buy 23 million litres of ethanol from CSR's Sarina distillery near Mackay to produce e10 that will be sold into the Queensland market later this year.
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