Petrobras to begin US$1bn gas pipeline construction

Brazil's federal energy company Petrobras (NYSE: PBR) plans to start construction this year of the Campinas-Rio de Janeiro and the Guamaré-Fortaleza gas pipelines, newspaper O Globo quoted Petrobras gas and energy director Ildo Sauer as saying. Together, the pipelines have an estimated cost of US$1bn and are part of Petrobras' Malhas project to expand the northeastern and southeastern networks. The project has been held up by the lack of environmental licensing, which has incurred losses of 1mn reais (US$322,000) a month to Petrobras since July 2003. Sauer expects the Brazilian congress to approve a bill in the next few days that reduces the environmental protection area around pipelines, making it easier for environmental protection agencies to grant licenses, O Globo reported. The new bill revokes a 1979 law that determines a 45-meter protection area on either side of a pipeline. Expansion of Petrobras 7,850km gas pipeline network is considered crucial to make the exploration of the newly found 419 billion cubic meters gas reserves in the offshore Santos basin feasible.