Petrobras, PDVSA Commit to Regional Gas Pipeline

Brazil's federal energy company Petrobras (NYSE: PBR) and Venezuela's state oil company PDVSA have committed to build the regional, 50Mm3/d-capacity natural gas pipeline linking Venezuela to Argentina, Petrobras said in a statement.

The heads of the two companies - Jose Gabrielli of Petrobras and Rafael Ramirez of PDVSA - met to discuss several projects that they are studying together.

The pipeline's economic and environmental feasibility studies should wrap up by December 2007, Brazil's Agencia Estado news service quoted Jose Gabrielli as saying.

The pipeline would be supplied from Venezuelan gas fields, including Mariscal Sucre that the two companies will develop together.

Mariscal Sucre's production is estimated at some 34Mm3/d, half of which would be sold by PDVSA in Venezuela's domestic market with the other half going to Brazil through the regional pipeline.

The pipeline initially would deliver gas to Brazil's northeastern region, ending in Suape port in Pernambuco state, Brazilian press reported. At a later stage, the pipeline would be extended to deliver gas in Argentina.

The first stage of the pipeline would wrap up after 2013, Agencia Estado reported.

The original pipeline proposal entailed linking Venezuela to Argentina, crossing the center-west region of Brazil with estimated investments of US$20 billion. In the revised project, the pipeline will go through Brazil's northeastern region to supply pent-up demand for natural gas.

Argentina, Bolivia and Uruguay have been invited to join the regional gas pipeline project.

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