AP:

Brazil and Indonesia Thursday signed a biofuels agreement that will open the way for the Asian nation to start producing ethanol, Brazil's Agriculture Ministry said.

The agreement for Brazil to provide Indonesia with technical help to produce ethanol from sugarcane was signed in Jakarta by Indonesian Agriculture Minister Anton Apriyantono and his Brazilian counterpart, Luis Carlos Guedes, a ministry statement said.

Reducing dependency

Indonesia is trying to reduce dependency on oil while revitalising its agricultural sector. In addition to making ethanol from sugarcane, the Asian nation also wants to produce it from manioc.

The statement said Indonesia has set aside 2.2 million hectares (5.4 million acres) of land for the two crops, has earmarked US$1.42 billion (euro1.07 billion) to subsidise local farmers and has signed agreements with Indonesian and foreign companies that will pump another US$12.4 billion (euro9.38 million)into the sector.

Brazil, the planet's Number two producer of ethanol after the United States produces some 16.7 million litres (4.41 gallons) of ethanol a year, and hopes to increase that figure to 23.3 million litres (6.16 gallons) in four years.

The pact between Indonesia and Brazil comes a week after U.S. President George Bush and Brazilian President Luiz Inacio Lula da Silva agreed to promote ethanol use as a to fossil fuels, and to push for increased production in Latin America and the Caribbean.