Petrobras to begin construction of the third section of Gasene

abarrelfullabarrelfull wrote on 09 Jul 2012 12:32

December 27, 2007

PETRÓLEO BRASILEIRO S/A - PETROBRAS, [Bovespa: PETR3/PETR4, NYSE: PBR/PBRA, Latibex: XPBR/XPBRA, BCBA: APBR/APBRA], a Brazilian international energy company, announces that in the first quarter of 2008 it is to begin work on the construction of the third section of Gasene, the Cacimbas (ES)-Catu (BA) gas pipeline. This section will be 946km long and is scheduled for conclusion in December 2009. A start on construction work can now go ahead following the granting of the Installation License by the Brazilian federal Environmental Agency (Ibama) on December 18, and the Construction Authorization License (AC) by the National Petroleum, Natural Gas and Biofuels Agency (ANP) on December 20.

The gas pipeline finance and construction contracts were signed on this Thursday, December 27. The equivalent of a R$ 4.51 billion line of finance is to be granted by the National Economic and Social Development Bank (Banco Nacional de Desenvolvimento Econômico e Social - BNDES). A portion of these resources will come from on-lending of a line of credit to the BNDES from the China Development Bank (CDB), a Chinese financial entity, amounting to US$ 750 million.

Petrobras has hired the Sinopec Group to execute the work on the pipeline. The sixth largest hydrocarbons company in the world, the state-owned Chinese company is already responsible for building the Cabiúnas-Vitória (300km) gas pipeline, the second leg of Gasene, to be concluded in January 2008.

The Operations License for the first section of Gasene, the Cacimbas-Vitória (129km) stretch, was issued on October 11 2007 and has been operating commercially since November of this year.

Gasene represents a milestone in Brazilian gas pipeline infrastructure. The work will ensure the connection of the gas pipeline networks in the Southeast and the Northeast regions and represents the beginning of supplies of natural gas to the domestic market from the Espírito Santo Basin.

The Cacimbas-Catu section has a capacity to supply up to 20 MMm³/day to the Northeast. This additional volume of natural gas, which will be drawn from the Espírito Santo Basin, represents nearly double the amount that the region currently consumes.

As well as ensuring greater flexibility in meeting demands for the non-thermoelectric power plant market, the third section of Gasene will guarantee a significant increase in the supply of natural gas for electricity generation in the Northeast.

In addition to the LNG (liquefied natural gas) to be delivered to the Pecém (CE) regasification terminal (with a capacity of up to 7 MMm³/day), the volume of natural gas that can be transported along the Cacimbas-Catu section will allow electricity generation of 1,597 MW from natural gas in the Northeast as from 2010. Currently, the production of electricity from natural gas in the region amounts to 221MW.

As from 2008, the conclusion of the first two sections of Gasene (Cacimbas-Vitória and Cabiúnas-Vitória) will be instrumental in delivering an increase of 6.0 MMm³/day in natural gas to the Southeast region. Production will come from the Espírito Santo Basin. This basin is expected to be producing 18.7 MMm³/day by 2010.

The completion of the Gasene project will contribute to the integration of energy supplies throughout Brazil by allowing natural gas produced in the basins of the Southeast to be sent to the northeastern states as well as providing additional flexibility in meeting demand from the domestic market overall.

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