Petrobras will invest 57% of the US$ 224.7 billion earmarked for investments up to 2015 in exploration and production. In total, it will be US$ 127.5 billion. More than 45% of these resources intended for the pre-salt findings until 2020 may mean 40% of the domestic production of oil to meet a demand that in ten years should reach 3.3 million barrels per day.

Petrobras's Business Plan had initially a budget investment for 2011 of US$ 48.68 billion. In November, the forecast was reduced to US$ 43.9 billion - the same level of 2010. For 2012, the Planning Minister, Ms. Miriam Belchior, says that Petrobras's in-country investment budget is of US$ 44.77 billion. Overseas, the investments planned by the Brazilian state company totals US$ 5.17 billion.

Another logistics big project is the deployment of the Brazilian ethanol integrated system. This ethanol pipeline of 850 kilometers will connect 45 producing municipalities and regions of São Paulo, Minas Gerais, Goiás and Mato Grosso to the Paulinia refinery [in Sao Paulo State]. Investments reach more than US$ 2.87 billion.

The confrontation between the supply of ethanol shock and the policy of stabilization in prices of gasoline has become a macroeconomic logjam to the Government. The strategy of combating inflation amplified the industry's problems, increasing uncertainty about the future of the sugar-alcohol production, new investment, the demand for gasoline and the future of the country's energy matrix.

The Government and industry entrepreneurs have been in a constant struggle, which intensified in recent months, to close a package of measures to encourage the ethanol production chain. The last drop was the reduction of a fuel tax known as CIDE on gasoline to help Petrobras to bear the increased costs of high oil prices without passing it on to consumers.

The decision highlighted the breakdown of economic parity between gasoline and alcohol. The industry wants tax incentives for the sugar cane producers and for the alcohol dispensed at the pump. Entrepreneurs complain about the government's delay in solving the problem of ethanol and gasoline price competition. The sector's entrepreneurs say that the lack of a solution to this problem may force Brazil to re-discuss the country's energy matrix and the participation of the two types of fuels on the market.

According to the President of the Aroeira Mill, Maurílio Biagi, the drop in production is a consequence of increased costs in recent years and the readjustment of prices for the consumer.

Uncertainties with respect to the medium and long-term scenario for the sector have limited the entry of new players in the market. Changes in the industry came by way of mergers or acquisitions, but with very limited opening of new mills and injection of new capital. The technical area of the Government admits that this is a bottleneck to be attacked.

The government recognizes that producers and mill owners have structural problems, but says that the difficulties have not yet been remedied for lack of goodwill on the industry side. Traditionally, whenever the mill owners "got the pinch", they ran to the government with new demands. This was a recurring practice until the Lula Government, which maintained a good communication with this industry. With Dilma Rousseff, however the matching requirements are clearer.

"The matter is complex; it is not simple. The government is already aware of that it needs a medium-and long-term strategy. In addition, that is because we already have a short-term problem, "said Gerardo Fontelles, Director of agro-energy of the Ministry of Agriculture.

For the Technical Director of UNICA - Sugar Mills Association, Antonio de Padua Rodrigues, the government is slow to act, what can deepen the problems until 2020. "We will not have sufficient ethanol or gasoline to meet the country's fuel needs," he warned. In his assessment, this is a "turning point" moment for the industry.

The Director complains that so far no fiscal cut has been mentioned on the consumption side, but only to the producer of sugar cane. "This does not increase competitiveness at the pump," he argued. In his assessment, the government lacks political will to understand the importance of this sector.

As the high prices of ethanol was a strong pressure factor in inflation this year, the government left the industry outside of the "REINTEGRA", a stimulus program to the manufacturing sector that gives back the businesses the equivalent of 3% of the exported values. The decision has deteriorated the trading environment. The government does not want to stimulate sales in foreign markets now to avoid new supply problems in the internal market.