Groupo Potencial increases investment in Brazil's biofuels citing the war with Iran

A senior executive at Brazil's Grupo potencial said that the company plans to increase its investments in biofuels to 6 billion reais ($1.15billion) by 2030, due to a rise in oil prices as a result of a war with Iran. Potencial plans to build the largest biofuels facility in the world. The investments will be used to increase capacity at the corn ethanol plant and to boost the soy crushing to feed the biodiesel.

Carlos Eduardo Hammerschmidt is the vice president of?commercial relations, institutional relationships and new investments.

According to Hammerschmidt, the near-closure of the Strait of Hormuz — the main export artery of the?Gulf responsible for one fifth of global oil supplies — has caused a spike in fuel and oil prices. It also raises concerns about fuel shortages, in Brazil. He said that Brazil depends on imported fossil diesel for up to 30 percent of its needs. A higher biodiesel mix could help reduce fuel shortages.

Hammerschmidt said that Brazil requires a blend of 15% biodiesel in diesel, and 30% ethanol in gasoline. He thought the government could increase these rates.

He said that "biodiesel is a guarantee for national energy sovereignty."

Grupo Potencial has announced new expansion plans that will see its biodiesel production capacity almost double by the beginning of next year to 1.65 billion liters. Hammerschmidt stated that its corn ethanol plant will produce 1 billion liters of ethanol a year in 2030.

The combined expansions of the two projects will add 2.3 billion dollars to Potencial's previous investment forecast. Potencial is expected to fund the majority of this project with its own resources. He also said that revenue will reach around 20 billion reais per year by 2030.

He predicted that the price of crude oil will stay above $100 for many years to come.

(source: Reuters)