Confab signs US$463mn Gasene tube supply agreement

Brazilian steel tube maker TenarisConfab has received a letter of intent from China's Sinopec for a US$463mn order to supply steel tubes for the 1,200km Gasene pipeline, a company spokesperson told BNamericas. São Paulo-based Confab will supply 1,293km of 28-inch tubes for the project, which will connect Brazil's northeast and southeast gas pipeline networks. Delivery of the tubes is expected to take place between August this year and July 2006. The US$1.5bn Gasene link is considered one of the most important stretches of Brazil's US$3bn natural gas pipeline expansion project. The pipeline will transport gas from the energy-rich southeastern region to the energy strapped northeastern region, where companies and gas-fired power plants barely have enough gas to work with. Brazil's state oil company Petrobras (NYSE: PBR) last week contracted the pipeline with Chinese state oil company Sinopec. China's Exim Bank will finance the project, a mines and energy ministry spokesperson told BNamericas. The pipeline is being built in three segments: a 300km stretch linking Cabiúnas in the state of Rio de Janeiro to Vitória in Espírito Santo state; a 122km stretch linking Vitória to Cacimbas, also in Espírito Santo state; and a third 800km stretch linking Cacimbas to the Catú in northeastern Bahia state, where the gas will be fed into the exiting pipeline network that takes the gas up north. Construction on the Vitória-Cacimbas stretch has already started, while the other two legs are in the final commissioning stages, mines and energy minister Dilma Rousseff said earlier this week. The Gasene line should be concluded by September 2006 and commercial operations are due to start by the end of next year, Rousseff said. The link is projected to transport as much as 20 million cubic meters a day of natural gas at full capacity. Confab, which has annual production capacity of 500,000t of welded steel tubes, is a subsidiary of Luxembourg-based steel tube maker Tenaris (NYSE: TS).