By OGJ editors
HOUSTON, July 11 -- Petroleo Brasileiro SA (Petrobras) arranged for $1 billion in financing July 1 in New York to implement its Projeto Malhas ("Mesh" or grid project)—an expansion of the company's gas pipeline grids in the southeast and northeast regions in Brazil.
The expansions will enhance the natural gas transport capacity in the northeast to 9 million cu m/day of gas in the next 2 years and 14 million cu m/day in 2012. In the southeast region, capacity will be enhanced to13 million cu m/day in the next 2 years.
The southeast Brazil grid expansion includes construction of 442 km of gas pipeline between Campinas, in Sao Paulo state, and Japeri, near Rio de Janeiro, that will have an 8.7 million cu m/day capacity. The project also includes expansion of the gas compression system in Campos basin. Construction on the pipeline is slated to start the second half of this year after the Brazilian Environmental Institute releases the environmental permit, and it is scheduled for completion in January 2005.
The expansion of the northeast grid includes construction of seven pipelines and laterals totaling 962 km in length, construction of eight city gates, and the installation of two compression stations at Candeias and Catu in Bahia. These facilities will facilitate the fulfillment of natural gas demand already contracted in that region. Construction of expanded facilities in the northeast grid must be started in the second half also and completed in middle 2005.
New companies
Two new companies have been formed to facilitate the project—Nova Transportadora do Nordeste SA (NTN), and Nova Transportadora do Sudeste SA (NTS)—equity in which is held by Mitsui & Co 40%, and Itochu Corp. and Mitsubishi Corp 30% each. NTN and NTS will be responsible for securing the financial resources and investments required to finance construction of the pipelines and other facilities. Petrobras will secure customers to fill the transport capacity.
With financing of about 40% from Japan Bank for International Cooperation ($394 million), Projeto Malhas also will rely on 830 million reals (nearly $256 million) from the Brazilian Economic and Social Development Bank, and $250 million from a pool of international banks, with guarantees provided by Nippon Export and Investment Insurance and in part from capital derived from Japanese tradings.
The southeast and northeast gas pipeline expansion is the first of a series of projects to stimulate a more-comprehensive use of natural gas in the Brazilian power matrix, including its use as a raw material in the petrochemical industry.
Although Projeto Malhas was developed originally to meet the natural gas demands of its thermoelectric power plant expansion program (Programa Prioritário de Usinas Termelétricas or PPT), today its main objective is to ensure natural gas supply for the industrial sector and to stimulate more-extensive use of natural gas in cogeneration and distributed generation projects for heating and cooling in residential and commercial applications.
Petrobras also intends to increase consumption of natural gas in Brazil's automotive industry through the use of compressed natural gas (CNG) in urban transportation fleets, replacing diesel and improving the quality of the environment in large urban centers.
Other projects
Petrobras also has completed technical and feasibility studies for construction of nearly 1,200 km of new pipeline to connect the southeast and northeast grids. This mainline will deliver natural gas from Bolivia and future Petrobras discoveries in the Santos basin to markets in the northeast region.
In addition, Petrobras has studied the potential expansion of gas pipeline routes for the transport of CNG in order to supply consumers within 200 km of the city gates. Negotiations are under way with the governments of Amazonas and Rondônia states in northwestern Brazil for the construction of 550 km of gas pipelines between Urucu, Amazonas, and Porto Velho, Rondônia and 420 km from Coari to Manaus that would deliver gas from Urucu fields and introduce natural gas as an alternative for the industrial sector and power suppliers in the region.