Brazil's state-oil company Petrobras SA (PBR) plans to invest $330 million in an infrastructure network to transport and export sugarcane based ethanol, according to a Dow Jones News report.



Transpetro, PBR's logistics unit, signed a protocol of intention with Petrobras downstream unit BR Distribuidora, and the Sao Paulo state Transport Secretariat, to carry out a viability study for various ethanol projects, among them four pipelines exclusively built for ethanol, Transpetro's press department said without immediately giving further details.



So far, Petrobras transports ethanol through existing oil pipelines, but hopes to export about 8 billion liters of ethanol from 2010 on, according to the Agencia Estado newswire. For that, the company needs ways to ship ethanol without impurities. Brazil's gasoline mix currently has about 25% ethanol.



Three of the planned pipelines would transport ethanol from different Sao Paulo cane regions to Paulinia, where the Replan refinery is located, the Agencia Estado said. A fourth pipeline is slated to link the Guararema terminal in Sao Paulo state to the port of Rio de Janeiro for export purposes.



Construction on the ethanol pipelines is slated to start in two years, Sergio Machado, president of Transpetro, is quoted as saying on Agencia Estado. The company also plans to link the pipelines to river transport systems to receive ethanol from other sugar cane growing areas.



In addition to supplying the export market, Petrobras is eying increased domestic ethanol sales due to surging sales of flex-fuel cars that allow drivers to switch between the usage of gasoline and ethanol, or to use any combination of the two fuels.



The agricultural consultancy Datagro said Thursday it estimates that domestic demand for ethanol in Brazil will reach 13.15 billion liters in 2005, up from 12.44 billion liters in 2004.



"Most of the increase in ethanol production will be used to satisfy the rise in domestic demand," said Plinio Nastari, the president of Datagro.



Brazilian ethanol exports to the U.S. are expected to decline in 2005 due to increased ethanol prices in Brazil. But exports could rise in the future as an increasing number of countries are considering following Brazil's example by mixing ethanol in their gasoline fuel.