Brazil’s Petrobras says to exit biofuels production

Source: By Marcelo Teixeira, Reuters • Posted: Thursday, September 22, 2016

Brazil’s state-controlled oil company Petróleo Brasileiro SA said on Tuesday it will exit the biofuels sector, as the heavily indebted company seeks to prioritize investment in crude oil and gas production.

Petrobras, as the company is known, said biofuels would be one sector it plans to unload as part of sweeping asset sales plan. The company reaffirmed a $15.1 billion in asset sales for the 2015-2016 period and fetch an additional $19.5 billion through divestments and partnerships between 2017 and 2018.

Petrobras has a significant portfolio in biofuels. No specifics were provided on what years the sales were planned for.

Its largest asset is a 45.9 percent stake in Guarani Tereos Açúcar e Energia Brasil, which owns seven mills with a combined production capacity of 1.7 million tonnes of sugar and 900 million liters (237.8 million U.S. gallons) of ethanol per year.

Petrobras also owns 49 percent of Boa Vista mill in Goias state, a joint venture with Brazilian sugar and ethanol company Sao Martinho, and a 40 percent stake in the Bambui mill in the Sao Paulo state.

Reuters reported last year that Petrobras was trying to sell its stake in Guarani Tereos, but talks hit a snag regarding price.

Other media reports said Petrobras was also trying to sell stakes in the other mills, but the company never confirmed this.

Petrobras also fully owns three biodiesel plants in Minas Gerais, Bahia and Ceara states and has a 50 percent stake in local biodiesel producer BSBIOS, which manages two large plants in the states of Parana and Rio Grande do Sul.

Sugar and ethanol prices have recovered strongly since Petrobras since the media began reporting the company planned to leave the biofuels sector early last year. Raw sugar prices hit the highest level since 2012 on Monday in New York, lifted by expectations of at least two years of a global supply deficit.

(Reporting by Marcelo Teixeira Editing by W Simon)