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Oil & Gas Journal

Eric Watkins
Senior Correspondent

LOS ANGELES, July 3 -- Brazilian ethanol producer Copersucar, eyeing increased export potential and growing competition, has signed an agreement to supply 200 million l./year of ethanol exports to Japan Biofuels Supply LLP (JBSL).

Copersucar's ethanol will be turned into ethyl tertiary butyl ether and will serve as a fuel additive in Japan, which allows fuel retailers to mix a 3% ethanol blend in nationally sold gasoline.

JBSL, which began marketing biogasoline in April 2007, is comprised of Idemitsu Kosan Co., Tonen General Sekiyu KK, Taiyo Oil Co., Fuji Oil Co., Cosmo Oil Co., Kyokuto Petroleum Industries Ltd., Kyushu Oil Co., Showa Shell Sekiyu KK, Nippon Oil Corp., and Japan Energy Corp.

JBSL plans to import 360,000 kl. of bioethanol from fiscal 2010. If Japan expands its blending of ethanol or ethyl tertiary butyl ether in its national gasoline as is expected in the coming years, Brazilian ethanol exports, which reached nearly 3.1 billion l. from the 2007-08 season, could nearly double.

Copersucar, one of the top sugar and ethanol groups in Brazil along with Cosan Industria e Comercio and Crystalsev, has increased its cane crushing capacity to 70 million tonnes this season, up from 65 million tonnes in 2007-08.

The group, which controls 33 cane mills, expects to produce 3.9 million tonnes of sugar—up 10% from last season—and 3.7 billion l. of ethanol, up 14% on the year.

Pipeline project
Earlier this month Cosan Industria e Comercio, along with Copersucar and Crystalsev, began building an ethanol pipeline linking the sugarcane milling area of Ribeirao Preto to the Santos port terminal.

A total of 1.6 billion reais is going to be invested in the project, which will become operational within 4 years, according to Cosan director Paulo Diniz.

Meanwhile, according to a Copersucar executive, Brazilian ethanol exports from the south-central region could rise this season by at least 50% over last year's crop as US demand for the biofuel surges.

"Total exports could reach 4.5-5 billion l.…due mainly to the increase in US ethanol prices," said Soren Jensen, international trading manager at Copersucar. "Exports this season will rise by at least 50%, possibly 60% or 70%," he said during an agribusiness seminar in Sao Paulo.

Brazil is the world's largest ethanol exporter, and the US currently is its main customer. However, Brazil's Petroleo Brasileiro SA (Petrobras) is expanding into the Japanese market and likely sees an opportunity to expand its sales of ethanol made from sugarcane.

The Brazilian firm brought the Okinawa-based Nansei Sekiyu KK, a supplier of fuel oil to Tepco, under its umbrella in April and plans to start selling gasoline blended with bioethanol in Japan within the year (OGJ, Apr. 7, 2008, Newsletter).

Contact Eric Watkins at hippalus@yahoo.com.