Petrobras Wants Latin America Gas Pipeline to Aid Oil Exports

Petrobras Wants Latin America Gas Pipeline to Aid Oil Exports

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, plans to promote a South America- wide network of natural gas pipelines to reduce costs in the region and increase energy exports.

Rio de Janeiro-based Petrobras is studying a plan that would begin by extending pipelines in the southern half of the continent, Ildo Sauer, the company’s gas chief, said in an interview. A 50 million-cubic-meter-a-day pipeline, double the size of the Bolivia-Brazil gas pipeline, would be built starting in 2010 to link the region with Venezuelan gas fields.

By substituting natural gas for petroleum fuels used by industry and motor vehicles, and by using more biofuels such as ethanol, Petrobras and other Latin American oil companies can cut their countries’ energy bills and increase exports of higher-value crude oil and petroleum products, Sauer said.

“We envision an integrated pipeline system like those in North America and Europe,” Sauer said yesterday in his office at Petrobras headquarters. “By increasing our regional use of gas we can increase our exports of oil and substitute a cleaner and cheaper fuel for existing sources.”

The main trunk line of the pipeline network would eventually extend 5,000 kilometers (3,100 miles) pipeline from Guiria, Venezuela, near the country’s Marescal Sucre offshore gas field in the Caribbean, to Argentina, Venezuelan President Hugo Chavez and Brazilian President Luiz Inacio Lula da Silva said in a statement Jan. 18.

The entire system upgrade and expansion might cost as much as $20 billion, Sauer said.

Pipeline Schedule

The first part of the Venezuela-Brazil link, a pipeline between Guiria and Recife, Brazil, may begin carrying as much as 17 million cubic meters of gas a day by 2014 or 2015, Sauer said.

At Recife, the pipeline would join with Brazil’s northeastern system, which is in the process of being connected to Brazil’s main southern pipeline network. That network will be able to feed Venezuelan gas to Bolivia, Peru, Chile, Paraguay, Uruguay and Argentina, he said.

Gas in Argentina, Brazil, Peru and Bolivia may also be sent to different locations and the network used to reroute supplies when reserves in one country run low, he said.

Studies are far from complete, Sauer said, and will have to factor in rivers, mountains, environmental issues and rising costs.

In the past year, the cost of pipeline construction has doubled as Brazil expands its network and rising world energy prices place added demands on equipment suppliers, construction companies and pipe manufacturers, he said.

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