Brazil sniffs out new global markets for growing ethanol output

Houston (Platts)--5Dec2006

Brazil, whose ethanol production should more than triple in the next five
years, is looking for new markets for some of that output in both Asia and
other markets closer to home, two top officials at state-run Petrobras said
Monday at a Houston conference.
The country now exports 44,000 b/d of the renewable fuel, mostly to Asia,
but those volumes are expected to grow to 140,000 b/d by 2012, Renato Bertani,
president of Petrobras America, told a one-day biofuels seminar sponsored by
the Brazil-Texas Chamber of Commerce.
He added Brazil is already looking for potential targets for that surplus
above what it sells domestically (story 1931 GMT). "The international markets
we're looking for are mostly in Asia," including China and Japan, Bertani
said, although he noted the country has sent some ethanol to Algeria on a spot
basis.
Bertani said Petrobras wants to expand its ethanol exports in those
countries as fuel demand grows, backed by increasing vehicle ownership.
"From time to time we look at opportunities in the US, but those are not
really easy to get because of tariff barriers" of $0.54/gallon, he said.
However, the Brazilian company is also eyeing Venezuela and Nigeria for
potential exports, particularly after 2010, Marcelino Gomes, director of
terminals and transportation for Petrobras' midstream unit TransPetro, told
Platts on the conference sidelines.
Gomes said Brazil exports about 20,000 cubic meters/month of ethanol to
Venezuela currently and a "small" unspecified amount to Nigeria, but continues
to gauge the potential for those countries to take more in the future.
"We're still growing our domestic market," Gomes said. "We'll consume
most of it in Brazil during the next five years. I'd say by about 2010, we'll
be ready to export larger volumes" internationally.
One reason for that, beyond sheer domestic production volume growth -- to
620,000 b/d by 2012 from 274,000 b/d today -- is that the company is expanding
its midstream network and tanker fleet, he said. The work, which will take a
few years to complete, will enable the country to export more ethanol.
By the end of the decade, close to 500,000 b/d of ethanol will be
consumed in the Brazil market, said Bertani.
But according to one long-time ethanol observer, the US is not likely to
join the list of purchasers of large quantities of Brazilian ethanol. Mario
Garnero, president of Brazilinvest, said the US "doesn't need to buy much"
ethanol from other sources. "It produces a lot on its own."
--Starr Spencer, starr_spencer@platts.com

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