The largest sugar/ethanol company in the world and one of the largest global petroleum giants decided to join forces to develop the biofuel market in Brazil.

The Cosan Group and Royal Dutch Shell announced, on February 1, a joint venture in the country, calculated at US$ 12 billion, to produce sugar, ethanol and energy, as well as to supply, distribute and commercialize fuels. The two companies signed an understanding memorandum which should result in one of the largest deals in the world involving biofuels. Each company will have a 50% share.

By the agreement, Shell will inject US$ 1.625 billion in the new company over a period of two years. The treaty between the two giants will also include the oil company’s existing participation in the Iogen and Codexis companies, which will greatly further the development and implementation of biofuel technology. The announcement was made in São Paulo by Rubens Ometto Silveira Mello, president of the Cosan administrative board, Marcos Lutz, Cosan CEO, and Vasco Dias, president of Shell in Brazil, with the participation of several Shell executives from London.

Together, the two companies will control a network of approximately 4,500 service stations, with a total volume of close to 17 billion liters of fuel annually. The new company

generated by this alliance will start out with a revenue estimated at US$ 22 billion, US$ 17 billion of which will come from distribution.

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