Petrobras selling ethanol to Japan

Aug 13, 2008 02:00 AM

Brazil's state-owned oil company Petrobras has begun selling ethanol to industrial customers in Japan, and ultimately aims to sell into the gasoline pool when the country relaxes its restrictions on the use of ethanol for direct blending, a source close to the matter told.
The company first announced ambitious plans to export ethanol to Japan almost two years ago. Petrobras is selling the ethanol through a 50:50 joint venture with Japan Alcohol Trading, called Brazil-Japan Ethanol, which has so far sold 15,000 kiloliters (94,347 barrels), mainly to Japan Alcohol Corp for industrial use, the source said.

Brazil-Japan Ethanol plans to bring another 25,000 kl of ethanol from Brazil and sell it to Japan Alcohol Corp and a few other unidentified industrial customers in Japan by the end of the year, and aims to boost its sales to 100,000 kl in 2009, the source said.
Brazil-Japan Ethanol has secured storage tanks in Ulsan, in the southeast of South Korea, where the JV unloads ethanol from medium-range vessels, the source said. The JV can ship ethanol to its industrial customers in Japan on small-ranged vessels, the source added.

Senior Petrobras officials told in September 2006 that Japan's ethanol consumption could surge from minuscule amounts then to 6 bn to 7 bn litres/year by 2010-2011 if the country opted for 6 %-10 % ethanol content in gasoline. However, Japan's consumption of its 3 % ethanol-blended gasoline has been low due to limited availability of ethanol.
Most of the consumption is by government-funded pilot projects. Under current regulations, which date from 2003, refiners are allowed to blend up to 3 % ethanol into gasoline.

In July, Petrobras signed its first ethanol plant deal with Japan's Mitsui and Brazilian ethanol producer Italuma to build a 200 mm litres/year ethanol plant in Italuma in Goias State, Brazil. The partners will start initial production in late-2009, with an eye to bringing the plan to a maximized production level of 200 mm litres/year during 2013.
The companies intend to send all production from the plant to Japan, but that will only happen once the country expands its use of ethanol in gasoline blending, company officials have said. Separately, Petrobras and Mitsui agreed in February last year to conduct a feasibility study on a pipeline to carry ethanol from Brazil's south central interior states Minas Gerais and Goias through Sao Paulo to Petrobras' coastal export terminal at Sao Sebastiao.

Japan has agreed to reduce its greenhouse gas emissions by 6 % from 1990 levels, between 2008 and 2012, under the Kyoto Protocol.
At an April 2005 cabinet meeting, Japan also committed to consuming 500,000 kl/year crude equivalent in biofuels from fiscal 2010-2011 (April-March) to help meet its Kyoto commitments.

Market Research
Upcoming Conferences