Petrobras Starts Operations at Amazon Gas Plant

Brazil's federal energy company Petrobras started operations Thursday on the US$180mn UPGN-3 natural gas production unit in the Urucu area of Amazonas state, the company said in a statement.

The unit will boost local gas production to 10 million cubic meters a day (mcm/d) from 6mcm/d, and allow for an additional 500 tonnes a day of liquefied petroleum gas (LPG) to be processed. The extra natural gas production will be able to meet the needs of thermoelectric power generators, allowing plants to use gas instead of fuel oil.

The isolated power system in the north of Brazil accounts for 90% of national fuel oil consumption, a dependence that will end in 2006 with the completion of the 550km Urucu-Porto Velho and 420km Coari-Manaus pipelines. Switching to gas will lower power generation costs in the area by 7.5bn reais (US$2.562bn) over 10 years, President Luiz Inácio Lula da Silva said in a speech at the opening ceremony.

Lula defended the right of Amazonas to have industrial development in the same way that other areas of the country have developed, and said that those who say that the Amazon should not be more than a nature reserve forget that the area is home to 20 million people, who all want energy. "Without it, we won't be able to do anything," he said.

With UPGN-3 operating, the Solimões basin that houses the Urucu gas will start to supply Ceará state, the statement said.

The Urucu gas fields cover 10,000 hectares and are located at Coari, some 650km west of Manaus. There are 60 production wells in three fields - Rio Urucu (RUC), Leste Urucu (LUC) and Sudeste Urucu (SUC) - and total reserves are some 537 million barrels of oil equivalent (mboe/d). Production averages are 60,000b/d of oil and 9.5mcm/d of gas.

Oil, natural gas and LPG are processed at Polo Arara, from where oil and LPG are piped to the Solimões terminal and from there continue by ship to the Isaac Sabbá refinery in Manaus.

Lula was scheduled to sign Thursday the protocol documents for the construction of the gas pipelines from Urucu to Manaus, local press reported.

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.