Repsol Chairman Antonio Brufau signed an agreement with Fernando Senderos Mestre, his counterpart at Mexican company KUO Group, to create a joint venture dedicate to developing biofuels in Mexico.
The joint company, called Kuosol, will harvest Jatropha curcas, a non-edible evergreen shrub, for its naturally occurring oils.
The joint company will use lots left vacant by the pork business and use recycled water from nearby farms to cultivate 10,000 hectares of the shrub in Yucatan, Mexico.
Repsol said it would be able to harvest more than 10 million gallons of biofuels from the Jatropha crop.
"Biofuels will be a key part of the company's future growth," said Brufau in a statement. "The creation of Kuosol is an important step in the development of Repsol new energy strategy."
Industrial production at the facility is expected to launch in 2013.