Petrobras to bid farewell to biofuel production

Petrobras, Brazil’s state-led oil company, intends to exit the biofuels business as part of the company’s plan to cut spending and reduce its debts.

Part of Petrobras’ 2017-2021 strategic plan, dropping biofuels – along with other cuts in LPG, fertiliser, and petrochemical sectors – will see the company’s spending fall from $98.5 billion (€88.3bn) in 2015-2019 to $74.1 billion.

The company’s biofuels division Petrobras Biocombustiveis reported losses of $23.3 million in the second quarter of 2016, compared to $20.2 million in the same period a year back.

CEO Pedro Parente told Reuters that the company is seeking to cut its $125 billion of debt, amassed after years of state-directed policies overstretched the company.

"This plan should start bearing fruit within two years, when we expect to have strong metrics that will allow us to return to the good situation of a few years back," said Parente.

Petrobras has minority stakes in seven ethanol plants in Brazil with milling company Guarani, and in plants controlled by Sao Martinho and Bambui Bioenergia.

The company has the capacity to produce 860 million litres a year of biodiesel, much of which is going unused, reports Argus Media.

Petrobras runs its own biodiesel plants in Bahia state, Monte Claros in Minas Gerais state, and Quixada in Ceara state.

The decision to abandon biofuels production comes in the aftermath of the ousting of Brazil’s biofuels-supporting former President Dilma Rousseff, who was removed from office in August on accusations of breaking budget laws.

This article was written by Ilari Kauppila, deputy editor at Biofuels International