Petrobras, Sinopec
to Sign Gas Pipeline Deal in December
Business News Americas (BNamericas.com) 11/19/2004 URL:
http://www.rigzone.com/news/article.asp?a_id=18178
Brazil's federal energy company Petrobras (NYSE: PBR) and Chinese state
oil company Sinopec are expected to sign a contract in December for the
US$1.3bn Gasene natural gas pipeline connection, local press reported.
In September, the Chinese and the Brazilian governments signed a
memorandum of understanding (MOU) for the construction of the 1,175km
pipeline to link the country's southeastern region and the energy
strapped northeast.
China's Exim bank and Brazil's national development bank BNDES are
expected to finance the project. The Brazilian government was also
considering financing from Japan's international development bank JBIC
but loan conditions offered by the Chinese were better, a spokesperson
from Brazil's mines and energy told BNamericas, confirming press
reports.
Brazil's development minister Luiz Furlan said that Chinese investment
in Brazil could reach US$10bn over the next two years, the federal
government's news service Agência Brasil reported.
The line will link Macaé in Rio de Janeiro to Bahia state
capital Salvador, cutting across Espírito Santo state.
Macaé is where offshore oil and gas pipelines reach land from
the Campos basin oil platforms, and Salvador is where Gasene would link
into an existing gas pipeline that cuts across seven northeastern
states to Ceará state.
Construction is scheduled to start in January and would take three
years.
Gasene is considered strategic to guarantee supplies to gas-fired
plants in the northeast during the dry season, and make development of
the 419 billion cubic meter-natural gas reserves in Santos basin
economically feasible.
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Brazils new field
November 2003 www.offshore-mag.com
The new 14.8-tcf gas field discovered by Petrobras is of huge
significance
and is set to completely turn around the traditional dynamics of the
Southern
Cone gas market, according to a recent report by Wood Mackenzie.
The find is by far the biggest ever found in Brazil and one of the
largest ever in Latin America. International oil companies should
take heart that this new gas bonanza suggests exciting opportunities,
the
report states.
The new field (SPS-35) is located in Brazils Santos Basin.
Its reserves compare with the 7 tcf or so of gas that currently exists
in Brazil. Moreover, the existing 7 tcf is widely distributed
across
the country, much of it far from markets. The new find is located in a
very favorable position only 130 km offshore of Sao Paulo, the
country's
main gas demand center. Although the discovery is big in its own right
Wood Mackenzie says, its wider significance is that it reveals a play
that
could eventually yield far larger reserves. The discovery means
that
a significant new gas province has been opened up in Brazil, and this
will
have ramifications beyond the confines of Brazil itself. The new
SPS-35 discovery could turn around the traditional supply picture such
that Brazil might not now need any of its neighbors’ gas, Wood
Mackenzie
says.
To date, the whole notion behind building an integrated gas
market across
the Southern Cone has been based on the simple premise that Argentina
and
Bolivia have surplus reserves of gas, the report states, while
neighboring,
energy-hungry Brazil and Chile are both gas deficient. In
particular,
the real driver has always been perceived to be Brazil, with its huge
potential
appetite for imported gas.
The fact that the new find has been made by Petrobras, rather
than one
of the many international oil companies that have recently plowed
substantial
amounts of money into Brazil, is obviously a disappointment to those
wishing
to see a more diverse array of players in the country. However,
there
is plenty of open acreage available within the environs of SPS-35, and
any serious Southern Cone gas player will now need to focus on this new
opportunity, Wood Mackenzie notes.
The new gas bonanza will again throw the'spotlight on the fact
that
Petrobras is somewhat unusual among its peers in that it is a company
that
is spoiled for investment opportlmities, the report says.
However,
this could lead to possible constraints caused by resources and
finances.
With its new gas assets to exploit this situation becomes even more
real,
the report says-, and it might just tip the company toward starting to
look for partners to help out with some of its bigger projects.
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