Brazil Signs Pact to Send Japan 800 Million Gallons of Ethanol a Year

An old poster touting Brazilian ethanol Brazil's state-controlled oil company Petrobras and the Japan Bank for International Cooperation signed Monday, March 5, in Rio do Janeiro a memorandum of understanding on biofuels announced Petrobras.

The Brazilian oil company and JBIC plan to evaluate financing possibilities for biofuel projects to be developed jointly by Petrobras and Japanese companies, both inside and outside Brazil.

Projects include the production and sale of ethanol and biodiesel, electric power plants using sugar cane bagasse (the woody material left after squeezing all the sugar out of the cane). as raw material and carbon credit opportunities, reported Petrobras in an official statement.

Petrobras Chief Executive Sergio Gabrielli and JBIC Executive Director Hiroshi Saito signed the memorandum in Rio de Janeiro.

"The world is growingly aware of the problems linked to global expansion, but also to those related to the Kyoto Protocol and the need to develop alternative sources of energy", said Gabrielli.

JBIC CEO Hiroshi Saito said the agreement signed in Rio do Janeiro is targeted to "build a wide relation having in mind the export, marketing and sale of biofuels to the Japanese market" and Petrobras "is the best and largest associate for biofuel projects since they dominate the technology and have a huge transport structure".

According to the contract by 2011 Petrobras should be exporting to Japan 3 billion liters of ethanol annually to be used as transport fuel in Japan in a 3% proportion. In Brazil the current percentage is 23%.

Petrobras ethanol strategic long term project contemplates investments of US$ 2.4 billion until 2012, which will be mainly destined to the construction of an ethanol pipeline linking different southeast, center-west and Southern states with the main terminal in Paulí­nia, São Paulo.

The plan also includes having Petrobras acquire a participation in 40 new ethanol plants and deposits for the shipping of the biofuel to Japan.

Petrobras estimates that if ethanol exports by 2011 reach eight billion liters per year, double the current data, the company would consider constructing a second pipeline.

The partnership to help supply Brazilian ethanol to the Japanese market is estimated to cost US$ 8 billion, daily O Estado de S. Paulo reported.

Brazil exported a total of 900 million gallons of ethanol in 2006, of which Japan received less than 7% or 60 million gallons, according Brazil's Agriculture Ministry

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