Feb 03, 2010
Petrobras Expresses Interest In Building Its Own Ethanol Pipeline
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
In recent years, Petrobras has been moving aggressively into the Brazilian biofuels market. They are already a major player in Brazil's biodiesel market and now they are setting their sites on the ethanol industry. Recently they announced plans to construct an ethanol pipeline to transport the fuel from the interior of Brazil to ports in southeastern Brazil. If they follow through on their plans, the new pipeline would be in direct competition with one already proposed by a consortium of sugar mill operators.
The private consortium is composed of 88 individual sugar mill operators and they created a company called Uniduto to construct and operate the pipeline. Their plan is to collect the ethanol from the interior of Sao Paulo and transport it to the city of Sao Paulo and the Port of Santos.
Petrobras has joined together with Mitsui and Camargo Correa to build the second pipeline. Their goal is to not only collect ethanol from the interior of Sao Paulo, but to extend their collection points into the state of Minas Gerais and the center-west region of Brazil. Each of these projects is expected to cost approximately R$ 2 billion.
To many in the industry it seems highly unlikely that two ethanol pipelines need to be built in the same region to carry the same product. Speculation is that these two enterprises will eventually be merged into one, but there are no current plans to combine the two projects, at least not yet.
Petrobras is a late entry into the Brazilian ethanol industry. Since they had no prior expertise in producing ethanol, last December they purchased a 40% stake in an existing ethanol plant in Bambui, Minas Gerais. Even though many other companies have a head start in the ethanol industry, Petrobras plans an aggressive approach to producing ethanol and they anticipate a 10% market share of Brazil's ethanol industry by 2013.