Petrobras to build $200 million ethanol plant in Niger Delta to help alleviate crisis

The Brazilian government has urged the new president of Nigeria to include a biofuel development plan for the troubled Delta region in his program. President Umaru Yar´Adua, who takes office today, has indeed done so and has announced that solving the social crisis in the Niger Delta is his priority.

Oil companies and local elites extract vast oil wealth from the Delta, whereas the local population lives in dire poverty. This has caused a social and political crisis, with youngsters and local militias turning against the oil companies, often in violent clashes. Kidnappings of oil workers have become a routine, and local 'volunteer armies' have warned for 'total war'. The crisis has so far led to a reduction of as much as 25% of Nigeria's crude oil output, with a spike in global petroleum prices as a result.

Biofuels for development
Now, in a very interesting turn of events, Brazil's state-owned oil company Petrobras is taking the courageous step to build an ethanol plant right in the middle of this troubled region [*Portuguese]. According to Brazil's state news agency, the aim is to make biofuel from sugar cane and to boost prices for the crop grown by the local people. By strengthening the incomes of local farming communities and by providing jobs, the company hopes it can contribute to solving the Delta crisis, mainly driven by poverty.

Petrobras signed the agreement with the Nigerian National Petroleum Corporation to build a US$200 million ethanol plant on the shore of the Niger River. The goal is to supply the local market and help Nigeria to introduce 10% ethanol in its gasoline supply.

Brazil and Nigeria have seen a boost in their bilateral relations over the past years. Energy production and energy security form the kernel of the good relations, with Nigeria being Africa's largest oil producer, whereas Brazil is the world's largest biofuel producer. Both flows are now being joined in what is seen as a mutually beneficial relationship. Brazil's ambassador in Abuja, Pedro Luiz Rodrigues, says the agreement is yet another step towards the creation of a strong energy relationship.

The agreement with Petrobras was negotiated in february, with outgoing president Olusegun Obasanjo. The country's new leader, Yar´Adua, has welcomed the deal. The Nigerians will own a 70% stake in the venture, but Petrobras has announced this is just a first step in its plans to expand ethanol production in Nigeria. Over the coming months, the company will export ethanol from Brazil to Nigeria, to kickstart local blending and keep facilities operational until the new project comes online.

Roberto Giannetti da Fonseca, of the Relações Internacionais e Comércio Exterior da Federação da Indústria do Estado de São Paulo (Fiesp), who helped negotiate the deal, says this first step will allow Nigeria to blend 10% of ethanol in its gasoline supply, as planned. Even though Nigeria is the sixth largest crude oil exporter, it imports all of its gasoline because it has no refinery. Blending gasoline with locally produced ethanol will make the fuel cheaper to Nigerians:
bioenergy :: biofuels :: energy :: sustainability :: ethanol :: sugar cane :: poverty alleviation :: Niger Delta :: Brazil :: Nigeria ::

Brazil wants to use ethanol as a weapon in the fight against poverty and violence in the world's most troubled regions. Staring with the Niger Delta is an extremely courageous step. In one year, 150 foreign oil workers have been kidnapped by militias who claim that the local government and elites have allied with the oil companies and refuse to share wealth with the local populations.

For the militias, oil companies are synonymous with poverty. They say oil and gas production destroys their environment and has ruined one of the people's only guarantees for income, the fishery industry. The government has not invested in the region which means people have no access to the most basic of goods, such as electricity nor kerosene, even though they live in one of the planet's most energy rich regions.

Brazil getting serious in Africa
The courageous step by Petrobras comes at a time when Brazil is making its goal of using biofuels for development more and more concrete.

Recently, the country established an Africa cell of its state-run tropical agronomy institute EMBRAPA in Ghana, Accra. From there, the world's top experts will assist African countries in food and biofuel production.

Likewise, a consortium of research organisations and companies has announced plans to create a 'Biofuel Town' near Lagos, Nigeria, in order to kickstart a biofuels industry in the country.

Brazil has also signed a host of bilateral and trilateral biofuel cooperation agreements with African and European countries, to help sub-Saharan Africa tap its vast bioenergy potential. Brazil wants to share biofuel technologies and knowledge, in order to help African countries alleviate poverty by investing the establishment of green fuel industries. So far, agreements have been signed with Senegal, Ghana, Nigeria, Angola and Mozambique, with others to follow soon.

Petrobras is rapidly becoming the most creative of all large energy companies. Besides its oil and gas operations, it invests in socially responsible biofuel production, involving communities and cooperatives of smallholders. Poverty reduction and social development are top of its agenda. When it comes to technological innovations, the company is a world leader in the development of new types of biofuel, amongst them 'H-Bio' (biodiesel) and cellulosic ethanol. Last year, the company was voted 8th most respected corporation in the world, but the kind of couregeous initiatives it is now undertaking in Nigeria may boost that ranking.

Image: armed militia patrolling the Niger River in the troubled Delta.

More information:
Agência Estado: Petrobras vai construir usina de US$ 200 milhões na Nigéria - May 30, 2007.

Último Segundo: Petrobras vai construir usina de álcool na Nigéria - May 30, 2007.