Petrobras Granted $2.55 Billion to Construct Third Section of Gasene Natural Gas Pipeline

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Researched by Industrial Info Resources (Sugar Land, Texas)-- Petrobras (NYSE:PBR) has announced the construction start-up of the third section of the Gasene pipeline for the first quarter of 2008. The 300-kilometer pipeline, which stretches from Cabinuas to Vitoria, is expected to be finished this month. Operation began in November 2007 for the Vitoria-Cacimbas section, completion of the third section, Cacimbas-Catu, is scheduled for December 2009. The third section aims to contribute to the integration of energy supplies throughout Brazil.

The Cacimbas-Catu section is one of the projects included in the Brazilian government's Growth Acceleration Program (PAC). The 946-kilometer gas pipeline connects the Cabiunas terminal in Rio de Janeiro state to Catu in Bahia state. Natural gas produced in southeastern basins is to be sent to northeastern states to help cover domestic market demand. The installation license from Brazil's federal environmental agency Ibama and the construction authorization license from ANP, the national petroleum, natural gas and biofuels agency, were granted in mid-December.

In late December, financing and construction contracts were signed. Banco Nacional de Desenvolvimento Economico e Socila (BNDES), the country's official development bank, has signed the financing agreement to grant $2.55 billion for the construction of the pipeline. China Development Bank is expected to grant a $750 million loan through BNDES as part of the $2.55 billion.

Petrobras hired China's state-owned hydrocarbons company Sinopec, which is already in charge of the construction of the Cabinuas-Vitoria stretch, to execute the work on the third section of the Gasene pipeline. The latter is to have a capacity to supply up to 20 million cubic meters per day to the northeast; moreover, this production is expected to guarantee an important increase in the supply of natural gas for power generation in the area.

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