Jamaica: Brazil courting Jamaica as ethanol hub

By John Myers Jr.
September 19, 2007, The Gleaner, Jamaica

Brazil’s Petrobras is in talks with Petrojam on the possibility of using the refinery’s Kingston port as a hub for the distribution of ethanol to other Caribbean and Central American countries.
Refinery boss Winston Watson said Petrojam was open to the partnership with Petrobras, but noted that the discussions were still at the preliminary stage. Brazil’s Ambassador Cezar Amaral told Wednesday Business that the distribution hub was among the issues discussed by his country’s president, Luiz Inacio Lula da Silva during his state visit to Jamaica last month.
The cooperation agreement between the two countries expires at the end of September.
They negotiated a new one that included cooperation for construction and technology for the regasification of liquefied natural gas (LNG) and also the proposal to PCJ to constitute here in Kingston for the distribution of ethanol,” said Amaral.
Petroleum Corporation of Jamaica (PCJ), the parent company to Petrojam, has also struck a cautious tone on the deal, though it has signalled that it considers it a ‘good idea’. “The idea was introduced to us by Petrobras and this is something that we will now have to get some further (details on) to see what volumes we are talking about, what land (space) will be required,” said PCJ group managing director Dr Ruth Potopsingh. “We need some more details. It is a good project idea, and I believe that it is something that we could look forward to in the future.”
Ambassador Amaral said the biofuel hub was potentially viable given Jamaica’s proximity to the United States; existing infrastructure in the form of a modern port and facilities at the Petrojam refinery; as well as the local thrust into ethanol production. He said that the rising price of oil on the international market – which climbed to a new high above US$81 per barrel on Tuesday – would make ethanol a cheape energy source for countries in the region.
Ethanol prices on the world market are running just above US$1.60 per U.S. gallon.
I think that the (market) potential is much bigger than the present. It could be multiplied by 20 because the difference in price between ethanol and oil is so immense,” Amaral said. “We consider Kingston a very strategic place, considering the broader markets for the United States, Central America and the Caribbean.
Petrojam, which is government-owned, is also involved in ethanol production and export. It has an existing partnership with the Brazils’ Coimex, through Petrojam Ethanol Limited (PEL) to manufacture and sell ethanol to the United States under the Caribbean Basin Economic Recovery Act which allows Jamaica to export the biofuel duty free. PEL produces 20 million gallons of ethanol per year on average – half the plant’s capacity – from feedstock supplied by Coimex.
Brazil is the world’s largest producer of ethanol, outputting some 21 billion litres of fuel grade ethanol annually, which it hopes to double to 44 billion litres by 2016.
Jamaica is also building up its sector, with the newest entrant being JB Ethanol Limited, a subsidiary of poultry producers Jamaica Broilers Group, whose 60-million plant at Port Esquivel was commissioned in July. JB Ethanol, PEL and another player, Jamaica Ethanol Processing Limited have a combined capacity of over 150 million gallons annually.
PEL has generated US$92.5 million ($6.29 billion) in sales from export of 45.2 million gallons of ethanol since the processing facility was established in 2004. The venture, according to its owners, has proven to be profitable and there are plans to add another 60-million-gallon plant to boost production capacity to about 100 million gallons annually.
Newcomer, JB Ethanol – which was officially opened by Brazil’s President Lula on August 9 – has already exported its first shipment to the US.
Another company, Global Energy Ventures Limited, has been granted a permit to construct a new 60 million gallon plant at Port Esquivel.
Petrobras is among the top 20 largest oil companies in the world, and is recognised for having some of the most advanced technologies in deep water oil exploration and extraction.
According to 2002 figures, the Brazilian owned company generated revenues in excess of US$22 billion annually, with daily crude oil production reaching 1.53 million barrels and 44 million cubic metres of natural gas.
Jamaica’s participation in the sector is fairly recent, dating back to 2004.
With the new hub, Ambassador Amaral said the Kingston harbour would have to be dredged to accommodate the huge tankers that are expected to sail in and out of the port. The deal would require Petrojam to upgrade its facilities, said Amaral.

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