May 18, 2010
Proposed Ethanol Pipeline Inching Toward Realization
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
One of the potential biggest advances for ethanol production in Brazil over the next few years is the proposed construction of an ethanol pipeline from the interior of the state of Sao Paulo to the Port of Santos. The pipeline would be 570 kilometers long and cost approximately R$ 3 billion to build. The cost of the project would be divided between 80 ethanol producers. The pipeline would be able to transport 16 billion liters per year and is expected to be completed in 2013. The company that has been set up to build and operate the pipeline is currently conduction environmental impact studies and trying to secure funding.
The finished pipeline is projected to have four collection points and three distribution points. The collection point furthest into the interior of Brazil would be on the border of the states of Sao Paulo and Mato Grosso do Sul. Ethanol produced in the states of Mato Grosso do Sul and Mato Grosso could be trucked or railed to a collection point and then transferred to the pipeline. There will be three distribution points for the ethanol, two in the greater Sao Paulo area and one at the Port of Santos.
Currently, the majority of Brazil's ethanol is transported by tanker trucks with the remainder by rail cars. Transportation costs are very high in Brazil and the proposed pipeline is a way to reduce those costs. Three other feeder pipelines are also being proposed through separate funding, but nothing as yet has been decided.
The pipeline company is going to conduct a series of presentations outside of Brazil in November in an attempt to attract outside investors especially pension funds. In the meantime, the company is in negotiations with the National Economic Development Bank of Brazil (BNDES) concerning funding.