Ethanol demand could be problem for Petrobras--CEO

NEW YORK, July 12 (Reuters) - A sharp increase in worldwide ethanol demand could "be a problem" for Brazil's Petrobras SA , the company's chief executive officer said.

"We could have a supply problem if demands jumps too fast," Jose Gabrielli de Azevedo told reporters in New York after a presentation to analysts and investors. "Brazil consumes most of its actual production, not to mention that exports capabilities would have to be adjusted."

Brazil is a leading producer and exporter of ethanol, derived from its huge sugar cane crop. Petrobras distribution arm blends its domestic gasoline with up to 25 percent ethanol and is seeking to increase ethanol capacity as part of its strategic plan.

"To supply ethanol to the U.S. is not our main priority," he said. "First we have our own market to supply, then we have contracts in place with Japan. Not to mention that market regulations in the U.S. and the auto industry will need to change for us to get real access to that market."

Petrobras plans to use a portion of its $87.1 billion four- year investment plan to add more ethanol-transporting vessels, he said, without giving details.

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