Oil majors invest in ethanol, expect 2011 recovery

Major oil companies, anticipating a rebound in ethanol prices next year, are eager to stake claims in biofuels markets and benefit from new United States fuel blending allowances and other incentives, senior executives have 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 a big opportunity in new government targets for renewable energy investments, including a higher allowable proportion of ethanol mixed with US gasoline.

According to a report by Reuters, Vice-President of Shell Alternative Energies, Mr. Luis Scoffone, which this year formed a $12bn joint venture with Brazil‘s Cosan, said on Wednesday, that his company would this year exceed the nine billion litres of ethanol it distributed in 2009.

“Policies have created an international market for biofuels. Shell is working to meet the obligations and benefit from these opportunities,” Scaffone told a conference in Geneva.
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