Petrobras signs $250 million contract for 20 ethanol barge trains

Brazil's state-led oil company Petrobras said Friday that it chose a
Brazilian shipyard to build a reais 432.3 million ($251 million) fleet of 20
river-barge trains to cut the cost of shipping ethanol to refiners and export
terminals.

The 20 pusher-tugs and 80 ethanol barges will be built by Estaleiro Rio
Tiete for use on the on the country's Parana-Tiete river system, which runs
through the center of the country's main sugarcane and ethanol producing
region, the Rio de Janeiro-based company said in an e-mailed statement.

Transpetro, the Petrobras unit that will operate the barge-trains said it
expects to sign a final contract by October with shipyard construction
beginning in early 2011. The first units to be delivered by late 2011 and
operation of the system is expected to start in 2013, when barge trials and
port facilities are complete, the company said in response to questions.

Petrobras and the country's ethanol producers are looking to waterways to
help slash the high-cost of transport, dominated in Brazil by trucks and
highways. Every unit of fuel used on the Parana-Tiete Waterway can move a unit
of cargo five times further than a truck can pull it on a Brazilian highway
and 50% further it can be moved by rail, Transpetro's press office said in
response to questions.

When fully operational in 2015, the system will emit a quarter of the
carbon dioxide and use twenty times less fuel than would be used to move the
same amount of ethanol by highway, Transpetro said.

The one-tug, four-barge trains will have the capacity to carry 7.6
million liters (2 million gallons) each, Transpetro, the Petrobras unit that
will run the system said. Estaleiro Rio Tiete will begin construction of the
units in early 2011 and deliver its first train by the end of the year,
Transpetro said.

The entire 20-train system will be able to move as much as 4 billion
liters of the biofuel, or more than a sixth of total 23.7-billion-liter output
in the most recent 2009-2010 harvest year according to Transpetro and Unica, a
group representing sugarcane, sugar and ethanol producers in Brazil's
south-central region.

The system will carry ethanol from producers in Brazil's interior to the
Paulinia oil refinery in Sao Paulo state, where it can then be sent by ethanol
pipeline to the Port of Sao Sebastiao, and the Port of Ilha da Agua in Rio de
Janeiro for transport by ship to other Brazilian cities and for export,
Transpetro said.

The Estaleiro Rio Tiete is a joint venture between Rio Maguari SA, SS
Administracao and Estre Petroleo, which won the tender bidding process,
Transpetro said.

As part of the bid, 70% of the content of the barges must be sourced from
companies and suppliers with operations in Brazil.

source: platts