Petroleo Brasileiro, or Petrobras has agreed on a partnership that will see the state owned firm and its partners form a joint venture firm. Petrobras and five partners agreed to form create a firm that will invest an estimated $3.61 billion for the construction of a pipeline and waterway system to transport ethanol from Brazil’s sugarcane producing areas. The ethanol is mainly meant for export.

Petrobras SA, Cosan SA Industria e Comercio, Copersucar SA and Odebrecht Transport Participacoes SA each will hold 20 per cent stakes in the new company, Logum Logistica SA. Camargo Correa Oleo e Gas SA and Uniduto Logistica SA will hold 10 per cent each. The new company's initial capital will be BRL100 million, Petrobras said in a statement Tuesday.

Logum Logistica SA will set up a multimodal transport and storage and shipping terminal system that will extend over some 1,300 kilometers, linking the main ethanol-producing regions in the Brazilian states of Sao Paulo, Minas Gerais, Goias and Mato Grosso to the Paulinia Refinery, also known as Replan, in Sao Paulo state, Petrobras said.

Construction of a first section of an ethanol pipeline between Ribeirao Preto in Sao Paulo state and the refinery began last November when initial service contracts were awarded, the oil producer said. This section will be integrated into an existing waterways system using barges and other craft. The delivery system will include coastal port terminals in Sao Paulo and Rio de Janeiro states, Petrobras said.

Most of the system will be constructed along existing pipeline routes to minimize environmental impact, according to Petrobras. Upon completion, expected by 2020, the project will have an installed transport capacity of up to 21 million cubic meters per year of ethanol, the company said.

Just recently, Petroleo Brasileiro SA received an environmental license to transport natural gas from Brazil’s largest oil field, paving the way for the state-run producer to boost output from the deep-water deposit. The license allows Petrobras to connect pipelines from the Lula field, formerly known as Tupi, to the Mexilhao field in shallower waters, Brazil’s Ibama.

Petrobras currently burns off the gas it produces now as a byproduct of oil output at Lula. Petrobras was waiting for a way to transport the fuel before expanding operations because it can’t boost oil production without also tapping the natural gas.
Petrobras  is a semi-public Brazilian multinational energy company headquartered in Rio de Janeiro.

6 March 2011