Offshore staff
(Brazil)- Brazilian industry group Fiesp and natural gas distribution company Comgas have called for fast track development of the 419-bcm Mexilhao natural gas field in the Santos basin, according to officials from both companies.
The announcement comes after a decision by federal energy company Petrobras to cancel investments in the 30 MMcm/d capacity expansion of the B2B Brazil-Bolivia gas pipeline that supplies 70% of gas demand in São Paulo state.
Bolivia's May 1st decision to nationalize its hydrocarbon reserves is seen as the major reason for Petrobras' decision to pull out of the B2B expansion.
"The Santos basin is a priority to guarantee supply expansion in the future," said Pedro Cauvilla, manager of the infrastructure department at Fiesp, which represents São Paulo state industry.
Industries in São Paulo rely heavily on natural gas, where it has risen to 12% of industrialists' energy use in 2004, up from 1.5% in 1990. The main reason for this increase is reportedly the increase in supply with the start of B2B operations in 2001.
Comgas CFO Roberto Lage stressed the importance of developing Mexilhao quickly, since "industries that have turned to gas cannot now turn back to other fuels."
The company sells gas in 53 towns in the state of São Paulo, including the city of the same name.
"Investments have to be made and since the amount of Bolivian gas will not be increased, Mexilhao is an alternative since it is 140 km away from our market," Lage said. "We have stressed the importance of Mexilhao to Petrobras and the São Paulo state government."
B2B currently carries some 24 MMcm/d in order to meet the expansion in demand through 2008 or 2009, after which Brazil will have to tap new sources of gas.
Petrobras has planned for some time to develop the Mexilhao field. It announced in January plans to invest $18 billion in the Santos basin in the next 10 years, funds mainly designed for Mexilhao.
On the same day Petrobras cancelled plans to expand the B2B, it also said it would both speed up Mexilhao development to start in 2008 and plans for liquefied natural gas (LNG) regasification terminals.
"An LNG regasification terminal on the São Paulo coast would also help guarantee gas supply in São Paulo," said Lage.
Petrobras is in talks to with Spanish oil company Repsol YPF to develop Mexilhao.
5/16/2006
