Brazilians will consume more ethanol than gasoline by 2020 when flex-fuel cars will dominate the country’s car fleet, according to the chief executive of state-run oil firm Petroleo Brasileiro SA ( PBR), or Petrobras
“Gasoline consumption in Brazil won’t fall – it will increase. But the consumption of other (fuel) sources will rise even faster,” Sergio Gabrielli said at a transport seminar held Friday.
The rapid rise in the sale of flex-fuel cars, which can run on any mixture of gasoline and ethanol, is the main reason behind the expected jump in ethanol sales, Gabrielli said. Ethanol made from sugar cane is cheaper than gasoline across most of Brazil.
Flex-fuel cars were introduced by carmakers in Brazil in 2003, but sales have shot up and now represent 85% of new car sales. By 2020, Petrobras expects flex- fuel cars to make up 71.5% of Brazil’s light-vehicle fleet, up from 12.8% in 2006. The fleet of gasoline cars is headed in the opposite direction, and is expected to shrink to 13.4% from 70.8% in the same period.
Considering a likely continuation of price advantages for ethanol in the Brazilian market, ethanol will represent 57% of the consumption of flex-fuel cars in 2020, Gabrielli added.
Petrobras is actually “announcing the shrinking” of its core business of selling oil products, Gabrielli said. “The fuel market will change, so we will search for alternatives (to oil),” Gabrielli said.
The company recently said it plans to enter ethanol production and will buy stakes in up to 40 Brazilian ethanol mills. The company has already laid out plans to become a major ethanol exporter.
Brazil is the world’s second-largest producer of ethanol behind the U.S., and is the world’s largest exporter. It also has the highest usage of biofuels of any country, accounting for almost 18% of liquid transport fuel needs, Energy Minster Nelson Hubner said Thursday.
Petrobras expects Brazil to consume 29.6 billion liters of ethanol in 2020, up from 12.5 billion from the 2006-2007 harvest season, Gabrielli said. The country’s ethanol exports in the same period are expected to jump to 16.5 billion liters from the current 3.4 billion.
Despite the increasing use of ethanol among light vehicles, Petrobras estimated diesel fuel will retain its position as Brazil’s most widely used transport fuel across all vehicle types, accounting for 50.5% of automotive fuels consumed in Brazil in 2020, down slightly from 52.5% in 2006.
The government has mandated that diesel, used mainly by trucks and buses, must be mixed with 2% biodiesel from 2008, rising to a 5% blend from 2013. Biodiesel, made from plants such as soy, castor beans or sunflower seeds, is expected to represent 2.6% of automotive fuel sales in 2020.
Compressed natural gas, or CNG, will increase its market share from 4.3% in 2006 to 7.4% in 2020, Petrobras reckons. Brazil and neighboring Argentina currently have the world’s largest fleets of vehicles running on CNG.
Petrobras also expects hybrid vehicles to gain a foothold in the Brazilian market early in the next decade, but doesn’t think they will start playing a significant role in Brazil for a long time. Hybrid vehicles combine combustion engines running on fuels with electric motors in order to save fuel and reduce emissions of greenhouse gases.
Dow Jones Newswires
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