Two Ethanol Pipelines Worth More Than $1 Billion Each to Be Constructed in Brazil

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Researched by Industrial Info Resources (Sugar Land, Texas)--Two companies are developing projects to construct ethanol pipelines in 2010, in the southeastern region of Brazil, where most sugarcane-based ethanol plants are located. The objective is to transport fuel ethanol to distribution centers that supply the internal market and to port facilities for the external market. The projects are worth more than $1 billion dollars each.

One of the companies, PMCC Projetos de Transporte de Alcool S.A. (Sao Paulo, Brazil), is a joint venture composed by state oil company Petroleo Brasileiro SA (NYSE:PBR) (Rio de Janeiro), Mitsui & Company Limited (TYO:8031) (Tokyo, Japan) and the Brazilian engineering firm Camargo Correa S.A. (Sao Paulo). The other company, Uniduto Logistica S.A. (Sao Paulo), was established by the owners of 88 sugarcane plants and represents one-third of the national ethanol production.

Both projects involve construction of several hundred kilometers of ethanol pipelines, collection centres, distribution terminals, ports and offshore facilities. Transportation is to be performed through a network of railways, waterways and highways, as well as through the ethanol pipelines. Together, PMCC and Uniduto Logistica expect to capture the ethanol produced in several states, including Parana, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Goias and Sao Paulo. The combined transport capacity is estimated to be about 40 billion liters of fuel per year.

PMCC and Uniduto Logistica are both awaiting licenses to begin construction. If these permits are awarded by the first quarter of this year, the projects could be operational by mid-2011. Given the similarities in the outlines of the undertakings, there has been some discussion on whether the companies should combine their projects, but no agreements have been reached yet.

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