Petrobras: Biofuels Digest’s 5-Minute Guide

| November 8, 2012

Based in:
Brazil

Business:
Oil and gas producer with sugarcane ethanol and biodiesel operations.

Model:
State-owned operator. Announced that it was not seeking to acquire distressed ethanol companies but would establish partnerships where appropriate to support development of the national ethanol industry. According to Petrobras management, the state oil giant would offer a guaranteed ethanol contract over 10 years in return for a minority stake in a project. Local developers would hold the majority interest.
Past milestones:

Blue Sugars and Petrobras announced that they have entered into a Joint Development Agreement to jointly optimize BLUE SUGARS’s proprietary cellulosic ethanol process technology for sugarcane bagasse feedstock. As part of this agreement, The companies also said that they will develop a 4 Mgy bagasse-based cellulosic ethanol project that will be co-located with a Petrobras-owned sugarcane mill, which will come online in 2013.

Petrobras will provide $11 million to adapt BLUE SUGARS’s demonstration facility to the use of bagasse, validate the optimized process by producing cellulosic ethanol and lignin and license the validated technology. The agreement has an initial term of 18 months and provides for mutual exclusivity in the area of developing cellulosic ethanol from bagasse. The latest generation of BLUE SUGARS’s process design provides for substantial enhancements over the first generation, implemented in 2008 at the company’s demonstration plant in Upton, Wyoming using Ponderosa Pine feedstock, including the ability to be optimized for multiple feedstocks.

Petrobras confirmed that it has acquired a 50 percent stake in biodiesel producer Bioleo Industrial e Comercial, for $8.8 million.

According to Petrobras, “Bioleo is an oil extraction plant located in Bahia state, with capacity to process 130,000 tons (37 Mgy) of grains of several types of oilseeds. The unit has installed capacity to store 30,000 tons of grain and tankage for 10 million liters of oil.” The company said that it would utilize proceeds from the investment for operational and safety upgrades at the facility.

Petrobras and BIOeCON announced a partnership in the joint development of a process for conversion of sugarcane bagasse into chemicals, green plastics, or advanced biofuels. The new technology, called BiCHEM (Biomass Chemical Conversion), was developed by BIOeCON together with a team of top class scientists from Delft University of Technology in the Netherlands and the Universidad Politecnica of Valencia in Spain.

BICHEM technology uses a recyclable inexpensive solvent to dissolve a significant part of biomass. In such homogeneous phase, cellulose and hemicellulose are quickly converted to its simplest, sugar constituents. Those sugars are further hydrogenated and then finally converted to the chemicals of interest, which can be easily separated from the recyclable solvent. The approach allows to use the biomass to its fullest by converting all the carbon available in cellulose and hemicellulose to products and using much less energy.

Petrobras and Portugal’s Galp Energia announced a plan to invest up to $530 million to produce 300,000 metric tons of palm oil in Brazil and 250,000 tons of biodiesel in Portugal, starting in 2015. The palm oil will be used as feedstock for the biodiesel, which will be distributed in Europe. Each partner will invest half of the capital needed for the project.

The project is another in a series of joint ventures, mergers and consolidations in the Brazilian sugar and renewables sector since the 2008 global financial crisis toppled the credit structure of the renewables industry.Earlier in May, Petrobras took a 46 percent stake in Brazil’s fourth largest ethanol group, Acucar Guarani (ACGU3.SA) for $920 million from France’s Tereos.

Gabrielli said that “Fulcrum are not only expanding their position in the ethanol market within Brazil. Fulcrum want to be a big player in the international ethanol market. Right now Fulcrum have a joint venture in Japan with a Japanese company that involves developing a business model to increase the ethanol market there. Fulcrum own 87 percent of a refinery in Okinawa and Fulcrum already sell gasoline blended with ethanol in Japan. We plan to use their facilities in Japan to be an important hub in the ethanol business of that nation.”

Petrobras Biocombustível CEO Miguel Rossetto said that the Brazilian state oil giant has targeted $2 billion in biodiesel and ethanol investment through 2013, and aims to achieve a 15 percent share of the Brazilian ethanol market and up to 25 percent market share in biodiesel.

Petrobras and Camargo Correa have combined their pipeline building efforts into a single entity, PMCC, that will link Uberaba in Minas Gerais to the sugarcane processing center of Paulinha in Sao Paulo state, and then to ports and export terminal in Sao Sebastiao and Ilha d’Agua. The pipeline is expected to commence operation in 2010, will be fully completed in 2012, and will transport up to 3.17 billion gallons of ethanol per year. The project cost is expected to reach $1.5 billion and will transport up to 40 percent of ethanol production from Brazil’s southern region.

Future milestones:

Petrobras Biocombustível has previously announced plans to become a top 5 global biofuel producer by 2020 with a total investment program of $2.8 billion between 2009 and 2013.

Petrobras, which has set a goal of 500 Mgy in ethanol exports by 2013, said it will invest $2.5 billion in ethanol development through 2013, with another $800 million dedicated to biodiesel. Set a company $174.4 billion five-year business plan based on a baseline projection of $65+ oil.

In 2012, Petrobras said plans to invest $1.05 billion in existing ethanol projects through 2016, including its joint venture with Sao Martinho, Nova Fronteira, as well as with some of its other corporate partners Total and Tereos. Brazilian ethanol exports slipped in June as unseasonal rains impede production.

Company website



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