Petrobras and Galp Energia sign a biofuel investment agreement

10/10/2008

Petrobras and Galp Energia SGPS signed an Investment Agreement today (10/10), in Lisbon, to create a joint-venture to develop a biofuel production and marketing project.

This agreement is the outcome of the breakdown of the Memorandum of Understanding the companies signed last May 18 which was aimed at studying the feasibility of joint biodiesel production, marketing, and distribution projects in the Brazilian, Portuguese, and international markets. The document was signed during a visit of president Luiz Inácio Lula da Silva to Portugal, in a ceremony held at Torre de Belém in the presence of Portugal Prime Minister José Sócrates.

Symbolically dubbed the Belém Project, the agreement foresees the production of 600,000 tons of vegetable oil per year in Brazil, which will be used to produce 500,000 tons of 2nd Generation biodiesel (2G Biodiesel) per year. Half of this volume will be produced in Portugal, while the other half at a location yet to be defined. The product will be marketed in Europe, prioritarily in the Iberian market.

The studies and analyses carried out jointly by Petrobras and Galp, after the above-mentioned memorandum was signed, indicated the deal is feasible, leading to a Business Plan for the development of the Belém Project.

The Investment Agreement aims at setting the standards for the relationship between the parts for project development. The companies intend to deepen the studies to confirm the premises used in the Business Plan and materialize the partnership to deploy the foreseen operations and activities. It also determines that, if project feasibility is confirmed, a company be incorporated with joint stock shared between Petrobras (50%) and Galp Energia (50%), or their affiliates.

Petrobras press release