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Brazilian Ethanol Giant Cosan Buys ExxonMobil Brazil

Esso Brasileira de Petróleo, in Brazil Brazil's sugar and alcohol sector giant Cosan announced today, April 24, the purchase of 100% of Esso Brasileira de Petróleo for US$ 826 million. According to a press release issued by the company, the deal was closed yesterday with ExxonMobil.

Brazilian oil company Petrobras was also considering the purchase of Esso's assets in the country.

Under the agreement, Cosan will retain the right to use the Esso brand. According to the company, there are more than 1,500 points of service operating under the brand in 20 states.

In addition to wholesale and retail distribution and sales, the contract includes ExxonMobil's Brazilian operations in fuel supply to airlines and sales of lubricants. Cosan is taking on debts of US$ 163 million and credits of US$ 35 million.

According to the Cosan, one of the factors that led to the deal's closing is expansion of the Brazilian ethanol market, which it manufactures in large amounts.

According to the National Petroleum, Natural Gas and Biofuel Agency (ANP), the volume of alcohol sold in February was 1.434 billion cubic meters, as against 1.409 billion cubic meters of gasoline.

The total includes hydrated alcohol, which is used directly as fuel, and anhydrous alcohol, which is mixed with gasoline to function as a carburant.

According to the company, ethanol consumption in Brazil posted an average annual growth of 30.2% between 2003 and 2007, whereas the average increase in gasoline sales was only 2.8%.

"Placing Cosan in a relevant position in the fuel distribution sector is an important step towards consolidating ethanol as the main fuel in the Brazilian market, and the possibility of a faster and more precise market analysis is increasingly strategic," says the press release issued by the company.

Another factor listed by the company is the expansion of vehicle sales in the country, which reached 2.4 million units last year, growth of 14.4% over 2006, according to the National Association of Vehicle Manufacturers (Anfavea).

Still according to Anfavea, more than 85% of light vehicles sold in the last 12 months were bi-fuel, that is, run on alcohol, gasoline or any mix of the two.

Anba

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