Brazilian state-run oil company Petrobras is considering an investment in sugar and ethanol producer Raizen as a way to re-enter the ethanol market, local newspaper O Globo reported on Saturday, citing sources.

Petrobras had previously said it was eying a return to the ethanol sector after having announced in its 2017-2021 strategic plan it would no longer produce biofuels, while Raizen is open to a new partner as it faces financial hurdles.

Petrobras and Raizen did not immediately respond to requests for comment.

O Globo said Petrobras could make a decision by year-end. The oil company is studying several options, including joining Raizen as a partner or buying assets from the firm, the report added.

Raizen, the world’s largest sugar maker and a leading ethanol producer, is controlled by Shell and Brazilian conglomerate Cosan . The company also has businesses in the fuel distribution sector.

Raizen earlier this week acknowledged the possibility of a new shareholder after reporting weak results, which caused its stock to plunge to a record low. Cosan said bringing in a new partner for the company was “an option we like.”

Raizen has been facing operational challenges and high debt. Recent measures put in place to reduce leverage included divestitures and shutting down a major mill.
Source: Reuters