Shell Brasil, the local subsidiary of oil major Royal Dutch Shell Plc, has said it has begun exporting Brazilian cane-based ethanol to the United States where the fuel additive is selling at a premium.

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Reuters reported that Shell, one of the large fuel distributors in Brazil, has closed deals and begun shipping 30m litres to units of its own group in the United States – the first shipment of anhydrous ethanol left Brazil last week for the US.


“We understand Brazil to be a strategic supply source for biofuels on the world level,” the director of supply at Shell Brasil, Adriano Dalbem, told Reuters.


“At this time, we are focusing on the US. The great appeal is the substitution of MTBE,” he said, referring to methyl tertiary-butyl ether, a once widely used petroleum-based oxygenate that is being phased out as a petrol additive in the US due to water pollution caused by its refining.


Speaking from Rio de Janeiro, Dalbem reportedly said Shell plans to export 150m litres of Brazilian ethanol to the US by April 2007, the end of the current 2006/07 centre-south sugar cane crop in Brazil.

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“When we enter the next crop (2007/08) we should have a definition of the new volume (of cane) which will be related to the velocity at which the blend is implemented in (global) markets,” Dalbem told the news agency, which noted that Shell will be the first of the oil majors to begin shipping ethanol from Brazil. Dalbem reportedly said the company began studying the possibility in 2005.


Currently Brazil’s state-run oil and gas company Petrobras, large sugar and ethanol producers such as Crystalsev, Copersucar and Cosan and traders such as Cargill and Coimex ship ethanol from Brazil, the report said.


Local market sources told Reuters that Texaco is also shipping ethanol from Brazil but the local spokeswoman for the company denied that the company was exporting the fuel.