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Houston Chronicle: Brazil’s Petrobras will export ethanol to U.S.

Deal comes week after agreement to promote use

Associated Press

SÃO PAULO, BRAZIL — An official from Brazil’s state-run oil firm Petroleo Brasileiro, or Petrobras, said the company plans to start exporting ethanol to the United States in 2007.

Silas Oliva Filho, manager of ethanol and oxygenates at Petrobras, said during a sugar and ethanol conference in São Paulo on Thursday that the company planned to enter the U.S. ethanol market for the first time in 2007.

The announcement comes a week after the U.S. and Brazil signed an agreement to join forces to promote more ethanol use.

But the U.S. charges a 54-cent-a-gallon U.S. tariff on imports of Brazilian ethanol made from sugar, a measure designed to help U.S. corn growers. Ethanol can be made from either crop, but ethanol made from sugar is much cheaper.

Oliva Filho didn’t provide any estimates of volume.

The U.S. is Brazil’s top ethanol export market, though Petrobras until now has stayed out of the trade. Last year, some of Brazil’s top ethanol exporters to the U.S. were Shell Brasil, the subsidiary of Royal Dutch Shell, and Cosan.

Petrobras said it should export around 850 million liters (224 million gallons) of ethanol in 2007 to markets including Nigeria and Venezuela, with test volumes to Japan of about 20 million liters.

Filho also said the company would start construction of a $750 million ethanol pipeline as early as August. The pipeline will take about two years to complete and have the capacity to transport 8 billion liters (2.1 billion gallons) of ethanol.

The pipeline “is a big risk for the company, because no one knows for sure when the market will come. It could take a few years after construction before we really have the buyers,” Filho said.

March 15, 2007, 11:55PM

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