Brazil's Petroleo Brasileiro SA is opening a biofuels unit next week to oversee $1.5 billion of investments over five years as it seeks to tap growing global demand for alternative energy, an executive said.
Alan Kardec Pinto, the new unit's chief, said he aims for annual ethanol output of 4.75 billion liters (1.3 billion gallons) by 2012 at 23 joint ventures focused on exporting as much. So far Petrobras has established one partnership with Japan's Mitsui Co. to share a minority stake in a mill, out of 40 projects the companies said they would study last year.
“It's a difficult challenge,'' Kardec, an adviser to Petrobras Chief Executive Officer Jose Sergio Gabrielli, said in an interview yesterday at his office in Rio de Janeiro. “I believe we'll get there.''
Petrobras may fall short of its targets as countries including Japan, which the company counts on to buy most of its biofuel exports, delay plans for mandatory blending of ethanol into gasoline, Lucas Brendler of Banco Geracao Futuro Investimentos said.
“There's a big gap between the goal and what has been done so far,'' Brendler, an analyst at the Porto Alegre, Brazil-based bank, said in a telephone interview. “There are many issues that can delay their plans.''
Seeking Foreign Investment
Petrobras Biocombustivel, as the new unit was named, will seek agreements with foreign investors to buy minority stakes in ethanol projects in Brazil and abroad, aiming at ensuring supplies for Petrobras's export contracts, Kardec said.
In Petrobras's first partnership with Mitsui, Japan's second-largest trading company, each bought 10 percent of a mill in the center-south of Brazil that will start producing about 200 million liters of ethanol annually in 2009.
Petrobras Biocombustivel will also oversee three plants that will start processing oils from soybeans, sunflower seeds and other vegetables into diesel this year, Kardec said. The plants, which cost a combined 295 million reais ($188 million) will each produce 57 million liters of biodiesel annually, he said.
Last year Petrobras exported about 800 million liters of ethanol that it bought from other producers, Kardec said. By 2012, Petrobras expects most of its exports will come from the mills where it holds minority stakes, he said.
