Petrobras Starts Malhas Sudeste Natgas Line

Brazil's federal energy company Petrobras (NYSE: PBR) started construction of the 448km, 900mn-real (US$309mn) Malhas Sudeste gas pipeline Tuesday, a project that will boost natural gas transport capacity between the southeastern states of Sao Paulo and Rio de Janeiro, the company said in statement.

The line will start at Petrobras' Replan refinery near Campinas in Sao Paulo state and will take Bolivian gas to the Japeri terminal near Petrobras' Reduc refinery. The new line is expected to be concluded in 2007.

The current link between Sao Paulo and Rio de Janeiro has capacity to transport 12 million cubic meters a day (mcm/d). The Campinas-Japeri line is part of Petrobras' plans to invest US$3bn to expand the country's 8,860km natural gas transport network 47% by 2010 and meet an estimated natural gas demand growth of 14.2% a year in the same period. Current natural gas consumption in Brazil stands at around 37mcm/d.

The project also aims to open new markets to make exploration economically feasible of the 419 billion cubic meters of natural gas reserves in the Santos basin, analysts say.

Petrobras hired the CCDL Construções de Dutos consortium to build the Campinas-Japeri line. The group is comprised of Japan's Toyo Engineering Corporation and Brazilian engineering firm Camargo Correa, with fellow Brazilian engineering companies GDK and Azevedo Travassos and Argentina's Techint as subcontractors.

The new 28-inch line will have capacity to carry 8.6mcm/d of Bolivian gas to supply the gas-fired generators in Rio de Janeiro, but could also allow natural gas to be taken to the southern region of Minas Gerais state. Further, the line could be reversed in the future to take gas from the Santos basin to the interior of Sao Paulo state, the chief technical and concessions commissioner at Sao Paulo state's public services regulator CSPE, Zevi Kann, told BNamericas.

"For the local market [in Rio de Janeiro], the gas from Campos is more than enough, but if every thermoelectric plant is switched on there won't be enough gas," he said. "But in the future, if there is a greater amount of natural gas available in Campos or from the Santos basin, this pipeline could even be reversed. It is a structure that will always be there."

The gas-fired generators in Rio de Janeiro are the 350MW Eletrobolt, the 500MW RioGen, the 870MW Macaé plant and the 1,040MW TermoRio plant.

The remaining stretches of the Malhas project, which include a 1,200km expansion of the northeastern natural gas network and the 1,200km link between the southeastern and northeastern regions, have still to be cleared by federal environmental protection agency Ibama.

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