Feb 02, 2010
Shell Entering Into Brazilian Ethanol Production
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The president of UNICA (the Brazilian Sugarcane Processors Association) announced yesterday that Shell International Petroleum is forming a joint venture with the Brazilian company Grupo Cosan to bring more Brazilian produced ethanol onto the world market. The joint venture, which is valued at R$ 12 billion, will increase the global scope of Brazilian ethanol, bring new technologies and efficiencies to Brazilian ethanol production, and aid in overcoming obstacles to the growth of international ethanol markets especially in countries with protectionist policies.
Shell officials stated their desire to join forces with Brazilian ethanol producers because they believe that ethanol produced from Brazilian sugarcane is the best alternative fuel to reduce greenhouse emissions. They also feel Brazil's sugarcane-based ethanol is the most efficient and sustainable method of producing ethanol and that Brazilian ethanol that is most commercially viable ethanol. For their part, the Brazilian sugarcane producers feel that Shell's international operations will aid in introducing Brazilian ethanol into world markets.
An additional aspect of the joint venture is the fact that two of Shell's subsidiaries, Iogen and Codexis, could aid in developing the next generation ethanol production. Iogen is a world leader in biotechnology specializing in cellulosic ethanol production and Codexis specializes in clean energy technologies. The synergies between the companies could offer opportunities to develop second-generation cellulosic ethanol production using sugarcane biomass.
Shell is the third oil company to invest in Brazilian ethanol production. The first was British Petroleum in 2008 and the second was Petrobras who made their first investment in Brazilian ethanol production in late 2009.