In order to meet growing demand, a total of R$ 6 billion was invested during the year in the natural gas transportation infrastructure, 71% more than in 2007

Increase in the supply of naturaL gas

Petrobras completed important infrastructure projects, relating both to gas pipelines and to liquefied natural gas (LNG ), thus providing continuity to the process of augmenting the supply of natural gas. The company’s average production, in 2008, reached 51.1 million m3/day, 17.8% more than in 2007.

The domestic supply of gas to the Brazilian market, excluding that used in the production process, injection and losses, and including partnerships, amounted to 29 million m3/day. Imports along the Bolivia-Brazil gas pipeline, which operated at 100% capacity for practically the whole year, added another 29 million m3/day, on average, representing a 12% increase in relation to the 2007 figure. This raised the total supply to the market to an average of 58 million m3/day.

To achieve this level of supply, a total of R$ 6 billion was invested in transportation infrastructure over the course of the year, 71% more than in 2007. Highlights, in addition to network extension, were the construction of the LNG import terminals and the Plan to Accelerate Gas Production (Plangás), which should raise domestic supply to the southeast of Brazil to 55 million m3/day by December 2010.

TRANSPORTATION

The company’s gas transportation pipeline network in Brazil was extended by 776 km, bringing the total to 6,933 km, and the following pipelines came on-stream:

  • Cabiúnas (RJ ) - Vitória (ES ), the first stretch of the Southeast-Northeast gas pipeline interconnection (Gasene), with a length of 303 km and capacity of 20 million m3/day, enables natural gas produced in the Espírito Santo Basin to be distributed to the rest of the southeast region;
  • Catu (Ba) - Itaporanga (Se),with a length of 196 km and capacity of 10 million m3/day, channels the natural gas from the Manati Field and Gasene. With the completion of this gas pipeline and the increased production from the Manati field, the state of Bahia has become a natural gas exporter to the northeast region;
  • Taubaté-Japeri stretch of the Campinas-Rio gas pipeline, with a length of 255 km and capacity of 8.6 million m3/day. The operational start-up of the Taubaté-Japeri stretch enables the transfer of up to 1.6 million m3/day of gas to the market, augmenting the delivery of gas imported along the Bolivia-Brazil gas pipeline to consumers in the southeast;
  • Branch gas pipeline to the Pecém LNG terminal, with a length of 22 km and capacity of 7 million m3/day.

The work on Gasene, connecting the southeastern and northeastern networks, is on schedule. The Cacimbas-Catu stretch, begun in 2008, which is 954 km long and has a capacity of 20 million m3/day, will come on-stream at the beginning of 2010.

In the northern region, the Urucu-Coari-Manaus gas pipeline, with a length of 660 km, should come on-stream in the second half of 2009. This endeavor will make it possible to send the gas from the Urucu field to consumers in Manaus, leading to environmental benefits from the replacement of the fuel oil and diesel used in the local thermoelectric plants.

Other projects started in 2008:

  • Gasduc III - 183 km: increases the transportation capacity between Cabiúnas and Rio de Janeiro (completion in 2009);
  • Caraguatatuba-Taubaté - 96 km: channels the production from the Mexilhão field (completion in 2010);
  • Paulínia-Jacutinga - 93 km: provides natural gas supplies to the south of the state of Minas Gerais (completion in 2009);
  • Japeri-Reduc - 45 km: channels LNG and natural gas for the thermoelectric market in the southeast region (completion in 2009).

LIQUEFIED NATURAL GAS

The Petrobras LNG project will provide greater flexibility and safeguard the supply of natural gas to the thermoelectric and non-thermoelectric markets. Brazil has pioneered the technique of transferring LNG from a supply ship to a regasification tanker, using cryogenic hoses – capable of withstanding a temperature of around minus 160 ºC – installed on a fixed pier.

August 2008 saw the inauguration of the country’s first LNG regasification terminal, at the port of Pecem, in Ceará. This installation will also provide support to Petrobras’ activities as a player in the international LNG market. The Pecém terminal has a regasification capacity of 7 million m3/day.

To connect the Pecém terminal with the northeast region’s transportation network (Gasfor), a branch gas pipeline was built, with the same 7 million m3/day capacity. Priority in the use of the gas that is processed at Pecém will be given to electricity generation, by the TermoCeará and TermoFortaleza plants, in the state of Ceará, and the Jesus Soares Pereira plant, in Rio Grande do Norte.

To conduct the LNG regasification process, Petrobras has leased the tankers Golar Spirit, which arrived in Brazil in July 2008, and Golar Winter, which is being converted in Singapore and should arrive in Brazil in May 2009. On its way to Brazil, the Golar Spirit took on its first cargo of LNG, in Trinidad & Tobago. The vessel has a regasification capacity of 7 million m3/day and can store 129 thousand m3 of LNG, equivalent to 77 million m3 of natural gas.

The second regasification terminal, in Guanabara Bay, has a capacity of 20 million m3/day, and should be inaugurated early in 2009. The LNG terminal’s 15 km long branch gas pipeline was completed in 2008.

COMMERCIALIZATION

The negotiations between Petrobras and the state distribution companies over the new natural gas supply contracts proceeded during 2008. New contracts were signed by eight gas distributors: Algás, BR-ES, CEG, Ceg-Rio, Cegás, Copergás, Potigás and Sergas.

DISTRIBUTION

The gas distribution companies sold an average of 50 million m3/day of natural gas in 2008, an increase of 20% over the figure for 2007. Petrobras has an equity stake in 19 of Brazil’s 27 state gas distribution companies, at percentages ranging from 24% to 83%, except for full control of a company in Espírito Santo.

The highlight in the non-thermoelectric segments was electricity cogeneration, which was up by 18% in relation to 2007. The consumption of the residential, commercial and industrial segments increased by 9%, 4% and 2%, respectively, while the automotive segment was down by 5%.

Meanwhile, the consumption of gas for electricity generation was up by 150% in relation to that of 2007, with a high level of production from the thermoelectric plants throughout practically the entire year.