August 24, 2012

Petrobras to Triple Production of Nitrogen Fertilizers in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The recent delays in unloading fertilizers at the Port of Paranagua illustrates Brazil's dependence on foreign sources of fertilizers for its booming agricultural sector. The federal government launched a program several years ago with the goal of becoming self-sufficient in fertilizer production by the year 2020 and Petrobras is one of the main companies involved in this effort.

In order to help reach that goal, Petrobras has launched an ambitious program to greatly expand its nitrogen production capabilities. According to Jose Alcides Santoro, the director of gas and energy at the company, Petrobras will more than triple its production of nitrogen fertilizers with the opening of two new plants that are under construction. Currently the company produces 1.1 million tons of nitrogen fertilizers per year and that is expected to increase to more than 3 million tons when the two new plants come online. By the year 2016, they hope to be producing 70% of Brazil's nitrogen fertilizer needs.

When Petrobras's plant at Tres Lagoas in the state of Mato Grosso do Sul, is fully functional in late 2014, it will be the largest nitrogen fertilizer production facility in Latin America producing 1.2 million tons of urea and 70,000 tons of ammonia per year. This would double the production of urea in Brazil which currently imports 59% of the urea consumed in the country.

A second plant being built by Petrobras is located at Laranjeiras in the state of Sergipe in northeastern Brazil. This facility is expected to come online early in 2013 and produce 303 thousand tons of ammonia sulfate per year. By the year 2016, Petrobras hopes to be producing more than 800 thousand tons of ammonia sulfate per year, which would make Brazil self-sufficient in this fertilizer.

Brazil is already one of the leading agricultural producing countries in the world, but the lack of infrastructure development and its reliance on imported fertilizers makes it one of the more expensive countries to grow agricultural commodities. Becoming self-sufficient in nitrogen fertilizer would help to bring down the cost of production in Brazil making their commodities more competitive in world markets.