Oil majors invest in ethanol, expect 2011 recovery

Reuters
By Laura MacInnis

GENEVA Wed Nov 3, 2010 12:38pm EDT

GENEVA (Reuters) - Major oil companies, anticipating a rebound in ethanol prices next year, are eager to stake claims in biofuels markets and benefit from new U.S. fuel blending allowances and other incentives, senior executives said.

Brazilian drought and high soft commodities prices have increased the cost and hurt demand for ethanol as an alternative fuel over the past year, raising questions about the viability of small-scale biofuels ventures.

But the big players see big opportunity in new government targets for renewable energy investments, including a higher allowable proportion of ethanol mixed with U.S. gasoline.

Luis Scoffone, vice president of Shell Alternative Energies, which this year formed a $12 billion joint venture with Brazil's Cosan, said on Wednesday his company would this year exceed the 9 billion litres of ethanol it distributed in 2009.

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