Lobao Says Brazil Considers Raising Mix of Ethanol in Gasoline

Brazil is considering an increase this year in the amount of ethanol added to gasoline, Energy Minister Edison Lobao said, a move that could boost Petroleo Brasileiro SA’s (PETR4) earnings.

The government is reviewing supplies of the biofuel to determine if the measure can be implemented, Lobao said yesterday.

“We are working with the possibility of increasing the mix this year, at the end of the year,” Lobao told reporters in Sao Paulo. “We are in talks with producers and if they can give solid guarantees of supply we have all the interest in increasing the mix.”

Petrobras sells imported gasoline and diesel at less than cost in Brazil. The price gap combined with a weaker currency led the state company to post its first net loss since 1999 in the second quarter. Chief Executive Officer Maria das Gracas Foster said Aug. 3 that the company plans to bring domestic fuel prices into line with international prices to improve profit.

Petrobras reported on Aug. 3 a loss of 1.35 billion reais ($670 million), compared with a 2.94 billion-real average profit estimate among analysts surveyed by Bloomberg.

The company incurred losses of about 750 million reais from fuel imports this year, said Adriano Pires, head of the Brazilian Center for Infrastructure, in a June 29 interview. Increased ethanol levels could cut gas imports by 40 percent, he said.

To contact the reporter on this story: Arnaldo Galvao in Brasilia Newsroom at agalvao1@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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