Ethanol is usually used to produce a type of ether known as ETBE (ethyl tertiary butyl ether) which is then mixed into fuels.

But many industry players are calling for direct incorporation of ethanol into fuel to take place as only the majors hold agreements to produce ETBE.

"This large-scale operation will allow the direct blending of 20,000 cubic meters of sugar beet ethanol in 400,000 cubic meters of fuel," Leclerc said in a press release seen by Reuters on Monday.

"The mixing and distribution already takes place in equipment based in Strasbourg and will develop at a larger scale from March 2006 in Rouen," the retailer added.

SIMPLEC supplies 1,100 petrol pumps at its supermarkets.

"Ethanol made from agricultural products can directly be incorporated in unleaded super," Michel Edouard Leclerc, head of the privately-owned retailer Centres Leclerc, said on his personal blog.

"The offer is abundant. It doesn't require heavy investments and can be elaborated by a higher number of operators. But it's necessary that majors deliver the low volatility fuel needed for such a mix," he added.

France plans to raise the incorporation of biofuels in fuels to 5.75 percent by end-2008, seven percent by end-2010, and 10 percent by end-2015.