SAO PAULO (Dow Jones)-Brazilian companies and other investors are likely to invest an estimated 17.4 billion Brazilian reals ($8.1 billion) in the country’s biofuels sector over the next four years, which should yield a confirmed 77 new ethanol mills and 46 new biodiesel plants by 2010, said the Energy Ministry on Monday.
“By the end of 2010, Brazil should have the industrial capacity of producing 23.3 billion liters of ethanol, and the industrial capacity of producing 3.34 billion liters of biodiesel,“ said a Mines & Energy spokesman in a phone interview with Dow Jones Newswires.
If these investments come through, Brazil is set to produce about 33% more ethanol in four years’ time than the roughly 17.5 billion liters of ethanol the country is expected to produce in its 2006-07 sugarcane season (May-April).
At the same time, the country is also on track to produce four times more biodiesel by 2010, compared to the roughly 840 million liters of biodiesel that local companies are set to deliver to state-owned oil firm Petrobras SA by the end of this year.
The majority of the BRL17.4 billion to be invested will come from the private sector, said the spokesman.
“These are projects that are confirmed - they have either started construction already or have the financing all set,“ he said.
This amount also includes two possible ethanol pipelines spanning a combined total of 1,150 kilometers currently under discussion by Petrobras, he added.
The first of these pipelines is an ethanol-dedicated pipe running from the center-south state of Goias to Sao Sebastiao port in Sao Paulo state.
The second is a proposed pipeline that would carry ethanol as well as other fuels which would begin in the Mato Grosso state capital of Cuiaba and run to the country’s No. 2 port of Paranagua in the southern state of Parana.
In addition to these pipelines, Petrobras has also committed to investing BRL570 million ($266 million) in three biodiesel plants with the combined capacity of producing 150,000 tons of biodiesel per year, with additional plants possibly underway.
Moreover, the company plans to invest BRL150 million ($70 million) to make its novel, vegetable oil-diesel blend called H-Bio in four refineries in the states of Minas Gerais, Parana, Rio Grande do Sul and Sao Paulo in 2007, Petrobras added in an official press note on Monday.
Brazil currently has over 300 sugarcane mills that can produce ethanol, as well as a handful of biodiesel plants.
The country is also one of the world’s leading producers and exporters of biofuels, principally of sugarcane-based ethanol.
However, local traders have warned in recent months that lower world sugar prices, dropping world petroleum prices, and climbing oilseed and grain prices could force some companies to reconsider the economic viability of ramping up investments in this sector.
Source: Grace Fan Dow Jones Newswires 5511 3145 1489 brazildowjones.com