Monday, April 11, 2011

RPT-Brazil oil agency to regulate ethanol-report



RPT-Brazil oil agency to regulate ethanol-report

* Brazil's ANP to regulate ethanol production-report

* Brazil president eyes cutting ethanol mix in gas-paper

* Gov't may go as far as sugar export tax - paper

SAO PAULO, April 6 (Reuters) - Brazil's National Petroleum Agency will regulate the chain of production of ethanol, the country's president, Dilma Rousseff, decided this week, a local newspaper reported Wednesday.

The agency known as ANP will begin drafting regulations that will treat ethanol as a "strategic fuel" and no longer as an agricultural commodity, reported Valor Economico newspaper. The fuel currently falls more under the control of the agriculture ministry.

Rousseff passed the decision to her top ministers, the newspaper said, without citing sources.

President Rousseff could go as far as an eventual tax on sugar exports, with the intention of forcing mills to divert more cane to ethanol production, the paper said.

The government is worried about inflation in the fuels sector, with ethanol prices at their highest level in 5 years in nominal terms by last week. Gasoline demand is also peaking due to motorists' rejection of the high priced biofuel.

With the beginning of the cane crushing season, hydrous ethanol prices have started falling at the mill. Prices are expected to start falling at filling stations soon.

Rousseff also ordered studies done on how to "substantially" reduce the mix of ethanol in gasoline, the newspaper added.

All gasoline sold in Brazilian filling stations has a blend of 25 percent anhydrous ethanol. By law, the blend can fluctuate between 20 percent and 25 percent. To move the blend outside that range would require a change in the law.

Brazil also makes and sells 100 percent hydrate ethanol at filling stations for the flex-fuel car fleet.

Brazil has imported more than 150 million liters of U.S. ethanol this year as producers struggle to supply the local market during cane interharvest, the director of a large ethanol group estimated last month. [ID:nN16103736]

Petrobras (PETR4.SA), the state-run oil company, has also had to import cargoes of gasoline to meet booming demand for the petroleum-based fuel in the face of a booming economy and high ethanol prices. [ID:nRIA002116]

The two fuels more or less equally divide the non-diesel fuel market for automobiles in Brazil.

Rousseff's office was not immediately available for comment. (Reporting by Cesar Bianconi and Luciana Lopez; Additional reporting by Inae Riveras; Editing by Reese Ewing)

www.reuters.com/article/2011/04/06/brazil-ethanol-idUSN0619710520110406

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Biofuels are a wide range of fuels which are in some way derived from biomass.

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