10 February 2012 16:55 [Source: ICIS news]
BOGOTA (ICIS)--Brazilian state-run oil company, Petrobras, invested less than expected in 2011 amid supply issues during the year, CEO Jose Sergio Gabrielli said on Friday.
Petrobras investments fell 5.1% to reais (R)72.5bn ($42bn, €32bn) in 2011 from R76.4bn in 2010.
Gabrielli said the problem was not in the oil industry but in the ethanol sector.
Falling biofuel output has caused demand for crude to spike, which strained refining capacity. As a result, it caused the company to import more gasoline than anticipated, he said.
Brazil’s cane ethanol industry produces the biofuel for the country's millions of flexible-fuel vehicles, and drivers switch between ethanol and gasoline when prices make one or the other a better value for money.
Brazil ethanol production in the centre-south region dropped 19% from a year earlier to 20.6bn litres in the 2011-2012 crop year, according to the latest figures from Brazilian sugarcane group Unica.
The drop resulted from lower sugarcane yields and a reduction in sugarcane production.
Centre-south sugarcane production in the 2011-2012 harvest totalled 492.70m tonnes, an 11.5% drop from 556.94m tonnes in the previous year.
The centre-south accounts for around 90% of Brazil's ethanol production.
Brazil imported 790m litres of anhydrous ethanol in 2011, according to Unica figures, or 10% of the total 7.87bn litres that were produced by centre-south mills last year, to stave off a potential supply shortage after the end of the harvest.
The shortage, however, did not materialise and the imports have created supply length, leading to significant price pressure in recent weeks.
Additional reporting by William Lemos
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($1 = €0.75)
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