Pipeline Construction Delays Startup of Peroa, Cangoa Gas Fields

Brazil's federal energy company Petrobras (NYSE: PBR) has postponed until the end of the first half of 2006 the start of production at the offshore Peroa-Cangoa natural gas fields in the Espirito Santo basin because of lack of transport capacity for the fuel, a company spokesperson told BNamericas.

"Without a pipeline to transport the gas from the field, it cannot start producing," the spokesperson said in reference to the PeroĆ” field, the first in line to start production.

The development project includes a fixed unmanned platform on Peroa and a 50km underwater pipeline from the platform to the gas processing plant onshore at the town of Cacimbas in Espirito Santo state.The pipeline in question is the 128km Vitoria-Cacimbas gas pipeline that Petrobras started building but stopped construction of in the fourth quarter of 2005 because the contractors, Spanish companies Masa and Dragados, abandoned the project, claiming adverse financial conditions.

This is the shortest stretch of the 1,400km strategic Gasene gas pipeline project Petrobras is planning to build to link the gas-rich southeastern region of the country with the northeastern region.

Press officials at Petrobras headquarters in Rio de Janeiro said a new tender to hire contractors to conclude the Vitoria-Cacimbas pipeline has started. The company declined to give details as to when the tender would be completed.

Petrobras announced last year that Peroa would start production in October 2005 and then the date was postponed to December. The entire supporting infrastructure is now ready except the pipeline.

"The platform has been tested and all the rest of the infrastructure is ready," said the spokesperson. "The information I have is that production could start before the end of the first quarter, but to be safe we are announcing startup by the end of the first half."

The company originally budgeted some US$278mn in the development of the fields and the supporting infrastructure, excluding the Vitoria-Cacimbas pipeline.

Peroa and Cangoa are two fields close to each other at water depths of some 67 meters in the northern region of Espirito Santo state in the basin of the same name.

Gas was first discovered in Cangoa in 1998 and in Peroa in 1996. The two fields together have estimated reserves of 15 billion cubic meters (Bm3) of gas, or 5% of Petrobras' total 296Bm3 proven gas reserves in Brazil at end-2005.

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