Private group announces Brazil's two longest 'green fuel' pipelines

By Ana Mano

SAO PAULO (Reuters) - Brazil's privately owned Grupo Potencial will invest 200 million reais ($37 million) to build two "green fuel" pipelines in the south of the farm powerhouse, the company's Vice-President Carlos Hammerschmidt said on Monday.

The biofuel pipelines, which will be built starting next year if all permits are granted, will stretch 55 kilometers (34.2 miles) each and will the longest of the kind in the country.

One of the new pipelines will transport biodiesel and the other biofuels like ethanol, connecting the company's Lapa biodiesel plant to a cluster of fuel distributors. It will spare the environment of use thousands of tanker trucks and enable Potencial to boost its own clean fuels portfolio.

The plant sells 65,000 cubic meters of biodiesel monthly on average, and intends to transport half of this via one of the new pipelines.

Potencial's investment signals confidence that overall biofuels demand will rise as consumers demand less pollutant sources of energy, requiring efficient delivery options.

"It's a question of humanity's survival," Hammerschmidt said by telephone referring to the importance of growing global biofuels supplies to prevent ever-more common environmental disasters.

Brazilian biodiesel producers, with access to abundant raw materials like soy, are clearly at an advantage. Cargill and ADM, among others, already produce biodiesel here while BP is expanding its biofuels clout.

Potencial's project will also be transformational for the state of Parana, a traditional farm region and home to Brazil's biggest biodiesel plant, the firm's own Lapa compound, with capacity for 900 million liters. The investment is likewise a boost to Brazil's underdevelopment energy pipeline network, which is about 5% of that of the United States, Hammerschmidt said.

Potencial makes biodiesel at Lapa and plans to sell corn ethanol and soy-based sustainable aviation fuel in the future.

By 2027, Hammerschmidt said, the country will also start demanding 1% of the fuel used on airplanes be "sustainable aviation fuel" known as SAF.

Brazil's current mandatory biodiesel mix into diesel is 14% and is slated to be 15% next March.

Potencial also announced a 100 million reais investment to grow Lapa's production of glycerine, which derives from biodiesel and is exported to China.

($1 = 5.3878 reais)

(Reporting by Ana Mano; Editing by Marguerita Choy)