An agreement in principle has paved the way for Petroleo Brazileiro SA to develop its gas reserves in the Amazon basin to support local power generation.
A terms-of-commitment agreement was signed between Brazilian state firms Petrobras, Eletrobras, and Gaspetro, along with the state governments of Amazonas and Rondonia and the gas distributors for those states, Cigas and Rongas, respectively. The agreement defines the conditions for the Urucú natural gas thermoelectric generation project.
The project involves replacing the fuel oil now burned in the generation units of the northern Brazilian states of Amazonas, Rondonia, and Acre with natural gas from the Solimoes basin of Amazonas. It is expected to entail an investment of about $600 million.
Burning gas to generate power will permit a substantial reduction in the price of electricity, however, to about $47/MW-hr from $117/MW-hr, says Petrobras.
The Urucú project involves adapting existing thermoelectric plants to burn gas and installing a 500-km electric transmission line from Porto Velho to Rio Branco, in Acre.
Natural gas will be used to generate about 500 MW in the existing generation facilities at Manaus. About 330 MW will be generated at Porto Velho, an increase from the current 100 MW. The Porto Velho generation facilities will be expanded so that electricity can be exported to Rio Branco.
Natural gas supply for thermoelectric generation is expected to start in December 2001 in both Manaus and Porto Velho, says Petrobras. To ship the required 5 million cu m/day of natural gas, a 420-km pipeline will be laid from Coarí to Manaus, and a 550-km line will link Urucú and Porto Velho.
Gas production
The province of Urucú is the only oil and gas producing region in the Brazilian Amazon. Reserves in the region are 160.7 million bbl of oil and 96.7 billion cu m of natural gas, or 24% of Brazilian reserves, says Petrobras.Production in the area totals 35,200 b/d of oil and about 1.88 million cu m/day of natural gas. This falls far short of the 5 million cu m/day of gas that will be needed to generate electricity once this project takes shape.
"The signing of the documents guaranteeing...(further)...development of the Urucú province should result in an increase in production from 34,000 b/d of oil to 55,000 b/d by the end of this year," said Petrobras. "The production of natural gas is also expected to increase, from 1.8 million cu m/day to 6 million cu m/day."
Public-private partnership
The Urucú thermoelectric generation project will be managed by Gaspetro, the natural gas subsidiary of Petrobras. The main public institutions directly involved in the project are Petrobras, Eletrobras, Eletronorte, Gaspetro, Brazil's Economic Development Bank (Bndes), the Ministry of Mines and Energy, the Finance Ministry, and the state governments of Amazonas and Rondonia.Although the Urucú project will involve many state-owned firms, private investors will make up the majority participation, says Petrobras.
For the piping of gas, the partners will be Gaspetro, Cigas, and private companies, for example. And for the thermoelectric generation, the Eletronorte generating units will be privatized under the national privatization program managed by Bndes.
At the moment, said Petrobras, the negotiations are concentrating on defining all of the companies and associations that will be involved.
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