* Could produce an additional 30,000 bpd if needed
* Importing fuel a second option if ethanol price rises
By Denise Luna and Roberto Samora
RIO DE JANEIRO/SAO PAULO, Nov 3 (Reuters) - Brazilian state oil company Petrobras (PETR4.SA) could boost production of gasoline at its refineries by 30,000 barrels per day to avoid imports if consumption rises, the company’s supply director said on Wednesday.
In February, Brazil imported gasoline after a cut in output of sugar cane ethanol — widely used as a motor fuel in Brazil — made gasoline better value for money in most places and led to a temporary local shortage of the fossil fuel.
Motorists in Brazil fill up their tanks with ethanol roughly as much as they do with gasoline. A spike in the biofuel’s price can shift demand swiftly to its petroleum counterpart. Brazil’s flex-fuel cars can burn either fuel alone or both mixed.
Petrobras, which has not brought new refining capacity on-stream in decades, and has limited spare capacity, said it still had room to raise gasoline output if necessary.
“We follow this day to day, if the trend is for greater consumption of gasoline, the first thing we’ll do is boost domestic production,” Paulo Roberto Costa said in an interview.
He said the refineries can boost gasoline output by reducing production of other fuels that are less in demand, in this case cutting diesel production to gain gasoline capacity.
“If it’s necessary, we’ll import,” he said, adding there was currently no expectation that Brazil would have to do so.
The drop in ethanol supply earlier this year coincided with the harvest season in which agroindustry uses large amounts of diesel. That meant Petrobras had no choice but to keep diesel up instead of switching some capacity to gasoline. It ended up having to import gasoline as a result.
The same scenario could recur as rising sugar prices convince mills to produce more sweetener and less ethanol. But this time round, cane mills have larger stocks of ethanol that could contain price rises and prevent drivers switching.
Tiago Quintela Giuliani, a senior sugar and alcohol official from the Agriculture Ministry said stocks stood at 7.7 billion by mid October, 58 percent more than what they were around the end of 2009 when the harvest was finishing up.
Supplies could still rise to 14 billion liters by the end of the harvest, which would be sufficient to tide motorists over through the inter-harvest period until next year’s cane crop beginning around March.
Cepea, the economic research unit of the University of Sao Paulo said factory gate ethanol prices had risen 18 percent since early September.
But Petrobras’s Costa said it was impossible to know at this time whether imports would be required nor what amount would be needed given the unpredictable fluctuations of agricultural production.
“It’s going to depend on whether or not the ethanol factor affects prices at the pump, and how much that price increase could be,” he said. “We do refinery optimization every day based on these factors.”
Brazil is the world’s fifth-largest producer of motor vehicles, and in less than a decade it will likely boast a fleet of cars that can, with a few exceptions, run on any combination of ethanol and gasoline.
Cane mills are struggling to bring new capacity on-stream fast enough to keep up with local ethanol demand. Brazil expects strong economic growth and soaring output of cars in the coming years.
Petrobras is investing in several new refining projects, which are intended to boost domestic capacity in the coming years and eventually make Brazil an exporter of premium fuels. (Reporting by Denise Luna; Editing by Marguerita Choy)