REUTERS

SAO PAULO (Reuters) – Royal Dutch Shell and Brazilian sugar and ethanol giant Cosan signed on Wednesday a binding agreement to create a global ethanol business, looking to benefit from growing demand for biofuels.

The joint venture, with estimated annual sales of $21 billion, was modified since its initial announcement in February to include all of Cosan’s energy generation business and 500 million reais ($283.6 million) in debt owed to Brazilian development bank BNDES.

Cosan, the world’s largest sugar and ethanol producer, also said in a securities filing that the initial accord was changed to make the venture a global biofuels provider. As a result of that, Cosan and Shell are barred from competing with the new entity.

($1=1.763 reais)

(Reporting by Elzio Barreto; Editing by Derek Caney)

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Crude oil futures fell below $51 a barrel as the market reacted to the IEA’s bearish oil-demand forecast, Bloomberg reports.

And the demand picture is indeed weak, especially in the U.S., where gasoline demand apparently peaked in 2007 and won’t return. That’s due to a cocktail of higher fuel-efficiency, shifting transportation habits, and the growing role of biofuels, in the WSJ. Speaking of which, the University of Texas boasts what could be the world’s largest collection of algae, suddenly in demand as a biofuel feedstock, also in the WSJ.

Chinese oil companies may partner with Shell to make a bid for oil development in Northern Iraq, the WSJ reports. As well as Kazakhstan—Bloomberg reports China will loan the Central Asian country $10 billion in exchange for a stake in its oil company. The supply outlook is grimmer in the North Sea: Tanking oil prices have led to a steep decline in oil exploration, which could halve the remaining life of North Sea oil reserves, in the FT.

The Obama administration has largely stayed on the sidelines of the debate over climate legislation, notes the NYT: “Has the administration scaled back its global-warming goals, at least for this year, or is it engaged in sophisticated misdirection?” One big question is the role the EPA will have in regulating greenhouse-gas emissions.

This year, at least, that EPA regulation is likely to be limited to the auto industry, which will be a big test of whether imposing tougher environmental regulations on a struggling industry will jumpstart a revival or instead be the last nail in the coffin, in the WSJ.

One way out for the auto industry lies with electric cars. General Electric thinks so at any rate, upping its stake in battery maker A123 Systems, because even a 5% share of the U.S. auto market is a massive opportunity, in the WSJ.

The Pentagon has plenty of alternative-energy ideas for its $300 million in stimulus money, from building better biomass generators to roll-up solar panels and hybrid-powered combat vehicles, in the WaPo.

If cars display fuel-economy statistics, why don’t houses display their energy efficiency? The secretary of Housing and Urban Development wants to tweak the mortgage market to put energy efficiency at the forefront of home-buying decisions, in the L.A. Times.

Finally, just six months after a landmark deal with the U.S., India’s plans for a massive nuclear-energy revival are looking tarnished. The economic meltdown and cheaper traditional energy prices have dented nuclear power’s appeal there, reports UPI.

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BP is further along than its rivals in pursuing biofuels, but other large oil companies are paying attention. Exxon Mobil Corp. Chief Executive Rex Tillerson said in a speech this week that the company’s executives have “turned our attention to next-generation biofuels” through in-house research. Royal Dutch Shell has taken small equity stakes in several fledgling biofuels companies.

Today, burning crops like corn, soybeans and sugar cane for fuel is policy in the U.S., Brazil and the European Union — while almost 1 billion of the world’s 6.8 billion people are hungry, the most in a generation.

Mr. Routs talked with the WSJ’s Neil King about the world’s thirst for oil, the challenges facing Detroit and the U.S. transportation sector, and where oil prices are heading.

Last week, the Monash Energy venture, a $5 billion project sponsored by Royal Dutch Shell and Anglo American to convert coal from Victoria’s Latrobe valley into cleaner liquid fuel was suspended because of rising costs.

Royal Dutch Shell and Anglo American yesterday became the latest natural resources companies to shelve a clean energy scheme. Their joint A$5bn project in Australia to convert coal into liquid fuels may go ahead, eventually, but not with development costs this high and an oil price this low.

Cosan is the world’s largest producer of ethanol from sugar cane.