Cosan-Shell boosts ethanol in the world
Folha de S. Paulo
British-Dutch oil company Shell and Cosan have announced the execution of a memorandum of understanding for the creation of two subsidiaries in Brazil within six months. The two joint ventures, whose names are yet to be defined, will have estimated income of R$ 40 billion (US$ 21.3 billion) a year, which places them among the 15 biggest earnings in the country. The deal represents a historic step for the Brazilian sector of sugar and alcohol and offers Shell the possibility of diversification toward the sector of the economy referred to as low carbon sector.
With the operation, estimated at US$ 12 billion, Shell marks an unprecedented entrance in the market of production of fuel alcohol, something the Brazilian State oil company Petrobras and BP (British Petroleum) do timidly. At the same time, the deal will offer the Brazilian the position of the third largest distributor of the country, one of the biggest networks of distribution abroad, perspectives to increase the exports and projects of development of cellulose-based ethanol, the new generation of biofuels.
"That was the last step to turn ethanol into a global commodity", said Rubens Ometto, Chairman of the Board of Directors of Cosan. For him, the union with Shell shall provide conditions for the company to become the world leader in renewable fuels.
According to the agreement, two companies will be created and they will have their control shared by Shell and Cosan S.A.. The first one will gather the sugar and alcohol plants; the second one, the fuel distribution assets.
Cosan - that in 2009 acquired the assets and the right to use the Esso brand in Brazil - will perform the merger of such structure with that of Shell. This new company - that will respond for nearly 80% of the earnings of the joint venture - will have 4,470 gas stations and distribute 17 billion liters of fuel. The participation of each company in both the subsidiaries is not defined and may not be equivalent, but the management will be divided.
The Unica (Union of the Sugarcane Industry) considered the deal a step towards the knocking down of tariff barriers against the Brazilian ethanol. "The partnership generates scale, efficiency and technology, which contributes for the Brazilian ethanol to gain more room in the international market", said Marcos Jank, President of Unica.