After Joining Japanese Brazil Looks for More Partners for Ethanol Pipes

Petrobras to build ethanol pipes Besides ensuring the Brazilian self-sufficiency in oil, Petrobras is also working to contribute to the renewable fuels sector, including investments in logistics. According to the New Businesses manager at Petrobras' Corporate Supply Department, Gilberto Ribeiro de Carvalho, the state-owned company is seeking partners to invest in the construction of two ethanol pipes by 2010.

"We are going to do it by means of partnerships, and we will sell shares in these projects," said Carvalho during the o 6th Brazilian Agribusiness Congress (CBA), held by the Brazilian Association of General Aviation (Abag), on August 27th and 28th, in the southeastern Brazilian city of São Paulo.

According to the manager, the project that had its study phase concluded is the alcohol pipe that will link the city of Senador Canhedo, in the midwestern Brazilian state of Goiás, to the Port of São Sebastião, in the southeastern Brazilian city of São Paulo. The pipe will cut through the upper portion of the Tietê River (Alto Tietê) and will count on a storage terminal for the bio-fuel in the municipality of Guararema.

"For the construction, we have already closed a partnership deal with the Japanese group Mitsui, and now is a good time for us to find new partners in Brazil," said the manager. "By 2020, this alcohol pipe will have capacity for transporting 12 million cubic meters per year," said Carvalho.

The second alcohol pipe will connect the city of Campo Grande, capital of the midwestern Brazilian state of Mato Grosso do Sul, to the Port of Paranaguá, in the southern Brazilian state of Paraná. "This pipe is still at an early study phase. We are now going to outline its business plan," he explained.

Last week, the president at Petrobras, José Sérgio Gabrielli, confirmed, during an interview in London, a US$ 1.6 billion investment in the two alcohol pipes. With the construction of the pipes, the company seeks to reduce its distribution costs. If ethanol is transported through pipes instead of by trucks, transportation costs can easily be lowered by 20% to 30% per cubic meter, according to estimates by the São Paulo Sugar Cane Agroindustry Union (Unica).

According to the manager, as biofuels are going to play an important role in the market of fuels for transportation, the company wants to meet businessmen in the sector, in order to strengthen what is already being done domestically, to approach the foreign market later on.

"It is important for our customers abroad to see Brazil's conditions for producing agro-energy. If possible, we can even participate in this production, but always with a minority stake," he stated.

Research

Petrobras also invests in research for the development of new technologies, at the Petrobras Research Center (Cenpes). On May 2006, two pilot biodiesel production units were inaugurated in Guamaré, in the northern Brazilian state of Rio Grande do Norte. The differences between the two units are their technology and bio-diesel production capacity.

One of the experimental plants uses conventional technology and makes biodiesel from vegetable oils. The unit has a daily production capacity of up to 600 liters of biodiesel, which can be increased to 20,000 liters/day. The other plant, using technology developed by Petrobras, makes biodiesel directly from oleaginous plants' grains and uses ethanol as a reagent. This plant already has capacity to produce 5,000 liters of biodiesel per day.

At both units, Petrobras is prioritizing the development of national technology for producing biodiesel from castor oil, either pure or mixed with other oils. A by-product to both processes is glycerine, which has many different industrial uses.

Plants

Since last year, Petrobras is developing its first three projects for industrial production of biodiesel in the municipalities of Candeias, in the state of Bahia (Northeast), Montes Claros, in Minas Gerais (Southeast), and Quixadá, in Ceará (Northeast). The aim of the units is to cater to the demand of Petrobras' Distributing Company (BR) in northeastern Brazil, which currently sells biodiesel in more than 4,000 gas stations across Brazil.

The raw material consists of various vegetable oils and animal fat, and each plant will have a production capacity of 50 million liters per year. Total investment will be approximately 227 million Brazilian reais (US$ 114.3 million). "The beginning of operation at the three units is forecasted for January 2008," said Carvalho.

The preferential source of raw material for biodiesel production will be family agriculture, at least in the amount needed to obtain the Social Fuel Seal (Selo Combustí­vel Social). Granted by the Brazilian federal government, the Seal warrants biodiesel producers the right to benefit from specific public policies that foster the social inclusion of family farmers into the biodiesel production chain.

The sector still has much potential to develop. Estimates by Petrobras show that sugar cane bagasse and straw waste would be sufficient to nearly double the Brazilian alcohol production, with the inclusion of more than 13 billion liters/year.

Nevertheless, in order to accomplish that, a challenge must be overcome, namely to consolidate technologies for processing the lignocellulose fibre. One of the answers might be to use enzymes produced by fungi, which are currently being researched by Petrobras.

"Petrobras should keep investing on developing the domestic ethanol market, improving infrastructure and logistics, and researching new technologies for ethanol production," said the manager.

Anba

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