RIO DE JANEIRO – Brazilian state-controlled energy giant Petrobras said a 542-kilometer (335-mile) pipeline to transport ethanol from sugarcane-producing areas to the metropolises of Sao Paulo and Rio de Janeiro should come online next year.

The Brazilian company said Wednesday in a press release that the state-run Brazilian Environment Institute, known as Ibama, awarded the preliminary license for the project but that the company still needs an installation license before construction can begin.

Petrobras said in the statement that its goal is to begin construction of the pipeline this year with a view to bringing it on stream in the second half of 2011.

The company said the pipeline, which will have the capacity to transport up to 12.9 million cubic meters (455 million cubic feet) of ethanol annually, will be used to send the fuel from mills in the producing regions of Minas Gerais, Sao Paulo and the midwest to the biggest consumer markets and eventually to ports for export.

The pipeline, which will use existing pipeline sections to minimize the environmental impact, will be built by a partnership in which Petrobras, Japan’s Mitsui and Brazilian construction firm Camargo Correa are the shareholders.

Two years ago, Petrobras and Mitsui created a company to supply biofuels – mainly ethanol – to the Japanese market.

Petrobras plans to build a pipeline that will run from Uberaba, Minas Gerais to Vale do Paraiba, Sao Paulo and then connect to other existing pipelines in Sao Paulo and Rio de Janeiro states.

Brazil, the world’s leading producer and exporter of sugarcane-based ethanol, is making an international effort to promote this alternative fuel as a way to reduce emissions of greenhouse gases and help farmers in poor countries.

Petrobras announced last month that its $224 billion business plan for the 2010-2014 period includes $3.5 billion for the biofuel sector.

More than 7 million automobiles in Brazil are “flex-fuel,” meaning they can run on any mix of gasoline or ethanol; roughly 93 percent of new light vehicles made in the country have this technology.

Last year, Brazil produced 27.5 billion liters (7 billion gallons) of sugarcane-based ethanol fuel, more than five billion liters of which was exported, mainly to the United States.

Shares of Petrobras, which is a global leader in deepwater oil exploration and production, trade on the Sao Paulo, New York, Madrid and Buenos Aires stock exchanges, but the Brazilian government retains control through a golden share. EFE