Brazilian energy giant Petroleo Brasileiro S.A. (PBR), or Petrobras S.A. announced the purchase of interest in an ethanol plant for 150 million Brazilian reals ($84 million).

The acquisition consists of a 40.4% stake in the Total Agroindustria Canavieira-owned ethanol mill located in the municipality of Bambui (in the state of Minas Gerais), with a production capacity of 100 million liters of hydrated ethanol a year. The deal was struck by Petrobras’ fuel division, Petrobras Biocombustivel.

Following Petrobras’ entry, the plant’s capacity (to produce ethanol biofuel from sugar cane) will increase more than 100% to 203 million liters annually. The state-run firm is also looking to generate a surplus of 38.5 megawatts (MW) of electric power to market by using the sugar cane bagasse.

The transaction is part of Petrobras’ initiative to invest $2.4 billion in biofuels by 2013, with a target of churning out 3.9 billion liters of ethanol by that time. It intends to buy two or three more ethanol mills in 2010.

With minority interest in the Total Agroindustria Canavieira ethanol mill, Petrobras has firmly established its presence in the Brazilian ethanol market. Cane-derived ethanol biofuel has become big business in the Latin American country since the arrival of flex-fuel cars in 2003 that can run only on ethanol or gasoline or a mixture of both. Most of the new cars sold in Brazil have the flex technology.

Headquartered in Rio de Janeiro, Petrobras is the largest integrated energy firm in Brazil and one of the largest in Latin America. The company’s activities include: the exploration, exploitation and production of oil from reservoir wells, shale and other rocks, and in the refining, processing, trade and transport of oil and oil products, natural gas and other fluid hydrocarbons, in addition to other energy-related activities.

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