Brenco, Lyondell Basel agree on ethanol sale

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Oct. 19 -- Brazil Renewable Energy Co. (Brenco) has signed a long-term agreement to sell sugar cane-based ethanol to refiner Lyondell Basell, Rotterdam, for export to the US.

Brenco trading and logistics vice-president Rogerio Manso said his firm signed a multiyear deal to regularly supply ethanol to the US and that shipments will start next year.

Manso said the Brazilian ethanol will be turned into ethyl tertiary butyl ether (ETBE) in the US and will then be reexported to Japan for use a gasoline additive.

Brenco is building its first two ethanol mills, which will come on line in 2009, producing 340 million l. of sugar cane-based ethanol in its first year of operation.

Some 60 million l. will be sent to Lyondell Basell initially. That will be increased to 250 million l.—about 25% of total production—when Brenco's two mills begin producing 1 billion l.

In August, Brazil's Valor Economico newspaper reported that Brazil's national development bank BNDES was financing $1.2 billion reais for construction of four sugar & alcohol units for Brenco.

Valor Economico said the facilities would be located at Alto Taquari (Mato Grosso state), Costa Rica (Mato Grosso do Sul state) and two at Mineiros (Goias state). It said the projects would require some $1.8 billion reais in total financing, with BNDES holding a 15-20% stake. Each will have a capacity to crush 3.6 million tonnes of sugar cane.

Brenco, which has no mills operating at present, also plans to invest $1 billion to build an ethanol pipeline by 2011 extending 1,100-km from Mato Grosso to the port of Santos. It would have a 4-million l. throughput capacity.

Brazil's ethanol export terminals, including Santos, are near the saturation point, according to Fabio Abrahao of International Logistics and Supply Chain consultants (OGJ Online, Sept. 24, 2008).

Brazil is the world's leading ethanol exporter, and the Union of Sugarcane Industries (Unica) expects that US and European demand—about 3.9 billion l. in 2008-09—will increase exports by 27%. Unica estimates that some 24.3 billion l. of ethanol will be produced in 2008-09.

Contact Eric Watkins at hippalus@yahoo.com.

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