Petrobras and Cosan lock horns over Brazilian ethanol pipeline; Cosan fears a lock-out if the pipeline proceeds

In Brazil, Petrobras, the state oil company and Cosan, the largest ethanol group, are at odds over a Petrobras plan to build a state-owned pipeline to transport ethanol. “If Petrobras has the logistics, it will have control of the sector and this we don’t want,” said Rubens Ometto Silveira Mello, Cosan’s controlling shareholder and chief executive officer, told Agencia Estado. The proposed ethanol pipeline will run from Goias state to Sao Paulo. Private industry has been studying construction of its own pipeline, which is expect to cost $1.6 billion.

The state pipeline will be financed by the Japan Bank of International Cooperation, and the Inter-American Development Bank. Petrobras’ has planned a second pipeline from Goias to Paranagua, a major commodities port.

IDB President Moreno recently spoke at the Americas Conference in Miami on regional growth, but did not speak specifically on the subject of biofuels. At thej same conference, former Brazilian agricultural minister Roberto Rodrigues, a colleague of Moreno at the Internatioal Ethanol Commission, suggested that he believed the Petrobras project would be built.

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