Greenergy forms Brazilian ethanol joint venture

LONDON (Reuters) - UK biofuels supplier Greenergy International said on Monday it has formed a joint venture with French sugar and ethanol group Bauche to source and sell sustainable Brazilian ethanol in the European market.

Greenergy, the leading importer of Brazilian bioethanol into Britain, will have a 70 percent stake in Sao Paulo-based Greenergy Brasil and Bauche the remaining 30 percent.

The new venture has been prompted by the expected imposition of rules in late 2010 or early 2011 under which biofuels producers will incur a penalty if they cannot show their fuel complies with social and environmental standards.

""We need as a company to be totally on top on traceability and environmental performance and that is why we have set up this company with Bauche," David Rees, a director of Greenergy International and chairman of Greenergy Brazil told Reuters.

Rees said the company would be shipping bioethanol primarily to the UK, at least initially.

He noted rising sugar prices had made Brazilian shipments of sugar-derived ethanol less competitive in the short-term. White sugar futures in London rose to a record peak last week and prices more than doubled in 2009.

"It is unlikely that anyone will be buying spot Brazilian ethanol today, but that's a very short term position," he said, adding shipments under existing contracts were continuing.

"Come March-April we will see the price being normalized and Brazilian ethanol will once again be competitive, particularly in those European countries with a lower import regime, including the UK," Rees said.

(Reporting by Nigel Hunt; Editing by William Hardy)