Petrobras makes its biggest move in the ethanol market
Valor Econômico
The purchase of 45.7% of the share capital of Açúcar Guarani, from the French group Tereos, by Petrobras, announced Friday evening, was seen by the market as the biggest investment ever made by the State Company in the Ethanol market. For some time Petrobras had been rehearsing a firmer placement in such market, but the operation was so far restricted to a minority share of 40% in a plant in Minas Gerais, acquired at the end of 2009. With the operation, Petrobras joins the fourth largest plant in operation in Brazil. Guarani has capacity to process 17.4 million tons of sugarcane - the same capacity of the Paraná-based Santa Terezinha - and in the 2010/11 harvest, it should produce 1.3 million tons of sugar and 430 million liters of ethanol, besides 300 GWh of energy.
The admission of Petrobras in Guarani takes place only two months after the announcement of the partnership between Cosan and Shell, which have teamed up to produce ethanol, sugar and energy, and supply, besides operating in the distribution of fuels in Brazil. This is the second major business involving Guarani in less than two months. In late March, Tereos decided to transfer its assets from Europe and from the Indian Ocean region - estimated at € 1 billion - to join them with Guarani, in an operation that amounts to € 1.7 billion. With that, Tereos International is in the process of total absorption of Guarani. The goal, with the operation, was to start the process of preparation of the company for the consolidation of the sugar and alcohol sector, from Brazil. Another reason for the merger of the operations is the possibility of bringing a more stable cash flow to the volatile sugar and alcohol business.
One of the changes that may be noticed by the entry of Petrobras Biocombustíveis in the capital of Guaraní is the profile of production of the company. Currently, the plant allocates 60% of the processing of sugarcane to the production of sugar and 40% to ethanol. The expectation is that the fuel starts having greater importance in the mix of production of the plant. Jacyr Costa Filho, President of the company, said that, initially, the first funds received from the State Company will be intended for the organic growth, to increase the production by 3 million tons still in 2010. According to the 2009-2013 US$ 174 billion strategic investment plan of Petrobras, US$ 2.8 billion was intended for the segment of biofuels.
The project of Petrobras in ethanol, however, goes beyond the purchase and investments in plants. The State Company has plans to build an alcohol pipeline in partnership with Mitsui and Camargo Corrêa, in PMCC. The company that will be created has plans to develop a project of logistics for the ethanol, through pipelines, from the Midwest to the South coast, with a length of nearly one thousand kilometers and investments of nearly R$ 2 billion (US$ 1.1 billion). The alcohol pipeline is scheduled to be implemented in phases and, when it is concluded, it will go from Paulínia (SP) to Senador Canedo (GO). The plan has had its basic design concluded and is in phase of environmental licensing - no segment has begun being built yet.