Algas Guarantees 80% of Sales Through 2006

Brazil's Alagoas state natural gas distributor Algas has guaranteed 80% of present sales levels through 2006 by renewing contracts to supply 315,000 cubic meters a day (cu. m/d) to petrochemical company Braskem and industrial complex Cinal, Algas CEO Gerson Fonseca told BNamericas.

"In the second year [of the renewal] we will be increasing supply by 14%, but the real expectations are that future supply will increase in 2006, 2007 and 2008 due to Braskem's investments," Fonseca said, adding that Algas has been supplying the companies for 10 years.

Braskem has announced 90mn reais (US$31mn) investments to expand PVC production Brazil. Braskem has two plants in Alagoas state: a PVC plant and a caustic soda plant. Cinal, the manager of local industrial complex, will use the gas for power generation and other industrial applications. The caustic soda plant will buy 170,000 cu. m/d of the gas while the PVC unit and Cinal will buy 73,000 cu. m/d each, Fonseca said.

"Gas consumption [in Alagoas] will take off when we start using it for power generation and for air cooling systems in buildings, especially in the tourism sector. Gas consumption in Alagoas has an enormous potential and any projection I make will be conservative," he said.

Algas sells a total of 394,000 cu. m/day, of which 83% goes to industrial consumers, 15% as vehicle fuel and the rest to commercial and residential consumers.

Algas plans to invest 9mn reais in 2004 in expanding its market in the commercial and transport sector, "to guarantee gas supply to smaller towns," Fonseca said. Some of the investment will be used to expand the 6-inch diameter, 127km gas pipeline, although Algas plans to transport gas by truck in other areas.

Federal energy company Petrobras has a processing plant in Alagoas that receives gas from an onshore well, making Algas one of the few gas distributors in Brazil's northeast to have local natural gas supplies.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports.

Click here for a Free two week trial to our Latin America Oil & Gas information service.