Petrobras to decide LNG terminal location in mid-July

Eric Watkins
Senior Correspondent

LOS ANGELES, June 6 -- Brazil's state-owned Petroleo Brasileiro SA (Petrobras) will decide in July where it plans to locate the country's third regasification terminal, according to a senior company official.

"The decision on the next terminal's construction will be taken in mid-July," said Maria das Gracas Foster, Petrobras gas and energy director, adding that the company will probably build the 7 million cu m/day terminal in either Santa Catarina state or Rio Grande do Sul state.

Brazil, which will soon start importing LNG from BG Group, needs a new terminal to meet demand growth in the southern region, especially due to declining imports from Bolivia.

The forecast is that the current consumption of 7.5 million cu m/day by the three southern states, Santa Catarina, Parana, and Rio Grande do Sul, will nearly double to 14.6 million cu m/day by 2012.

The greatest demand will come from Santa Catarina state, rising to 4.5 million cu m/day from 2.5 million cu m/day. Forecasts for Parana state see an increase to 5.9 million cu m/day from 2.5 million cu m/day, while Rio Grande do Sul state will see a rise to 4.2 million cu m/day from the current 3 million cu m/day.

Meanwhile, officials of the states of Santa Catarina and Rio Grande do Sul have been lobbying for the facility.

State-owned Santa Catarina Gas Co. (SCGas) June 2 presented its $1.5 billion project to supply gas to the southern region of the country in 2012 utilizing a section of the existing Brazil-Bolivia gas pipeline between Araucaria, in Parana, and Canoas, in Rio Grande do Sul state.

SCGas contends that the new facility would be justified by the fact that the diameter of the Bolivia-Brazil pipeline, which extends through Santa Catarina state, is enough to transport as much as 7.5 million cu m/day of gas toward Parana and Rio Grande do Sul states, about 0.5 million cu m/day more than required.

The SCGas plan calls for the establishment of a third Petrobras LNG terminal, at Sao Francisco do Sul. It also calls for construction of a 150-km subsea gas pipeline linking a Petrobras plant in the port with the new Caravelas-Cavalo Marinho offshore gas projects under development in the Santos basin.

In January Petrobras said it would invest $12 billion in the Santos basin by 2012, including development of the Urugua, Tambau, Caravela, and Cavalo Marinho fields as well as the construction of a gas treatment unit in Caraguatatuba. Petrobras said it was expecting 30 million cu m/day of gas production and 100,000 b/d of oil production (OGJ Online, Jan 29, 2008).

Last December, Brazilian natural gas distributor Sulgas proposed construction of an LNG regasification plant in Rio Grande do Sul state.

Sulgas Pres. Artur Lorentz said his firm was developing a technical study to try to bring an LNG regasification plant to the state. He said investments in construction could reach $1 billion, according to preliminary calculations, and that Sulgas aimed to conclude its studies in the first quarter.

In April 2007, Petrobras signed an agreement with the Norwegian company Golar LNG Ltd. for the chartering of two floating LNG vessels, one with a 14-million cu m/day regasification capacity that is due to start operations later this year, and the other with a 7 million cu m/day capacity due to start opertions in 2009.

The larger of the two vessels will be located in Guanabara Bay, in Rio de Janeiro, and the other in the port of Pacem, in the north-eastern state of Ceara.

Contact Eric Watkins at hippalus@yahoo.com.

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