Petrobras, Mitsui form JV to produce ethanol for Japan, electricity for Brazil

In Brazil, state oil giant Petrobras and Japanese bank Mitsui will form a joint venture to produce ethanol for export to Japan and electricity for the domestic Brazilian market. The company will be based in Brazil, but capacity was not disclosed with the announcement. Each partner will own 50 percent of the venture, which will produce fuel from sugar cane and use the bagasse to produce electricity.

Petrobras has formed a joint venture with Mitsui and Camargo Correa to construct an ethanol pipeline connecting Senador Canedo in Goias state, to the Atlantic harbor of Sao Sebastiao, in Sao Paulo state. The pipeline, which will have an annual capacity of 3.17 billion gallons of ethanol per year, will also link the Petrobras refinery in Paulina, Sao Paulo, the Tiete-Parana channel, and an existing pipeline from Sao Paulo to Rio de Janeiro. The Sao Paul-Rio pipeline will be converted to ethanol-only usage, and connects Sao Paulo to Petrobras export port in Rio harbor. Private companies will be able to use the Petrobras pipeline.

Petrobras, the state oil company and Cosan, the largest ethanol group, have been at odds over Petrobras’ state-owned pipeline plan. “If Petrobras has the logistics, it will have control of the sector and this we don’t want,” said Rubens Ometto Silveira Mello, Cosan’s controlling shareholder and chief executive officer, told Agencia Estado. The proposed ethanol pipeline will run from Goias state to Sao Paulo. Private industry has been studying construction of its own pipeline, which is expect to cost $1.6 billion.

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