Tokyo Gas acquires 15% stake in Malhas project

Japanese gas distribution company Tokyo Gas has bought a 15% stake in two specific purpose companies created by Brazil's federal energy company Petrobras (NYSE: PBR) to operate and maintain two natural gas pipelines with a combined length of 1,260km, Tokyo Gas said in a statement. The other partners in the special purpose companies, NTN and NTS, are also Japanese: Mitsui with 35%, Mitsubishi with 25% and Itochu with 25%, the statement said. The pipelines are part of a US$3bn program to expand the country's natural gas transport network by 2010 and meet an estimated natural gas demand growth of 14.2% a year in the same period. Current natural gas consumption in Brazil stands at around 37 million cubic meters a day (Mm3/d). The project, known as Malhas, aims to open new markets to make exploration of the 419 billion cubic meters of estimated natural gas reserves in the Santos basin economically feasible. NTN and NTS will sign engineering procurement contracts with Japanese engineering company Toyo Engineering and other companies to build the pipelines. NORTHEAST NTN will operate an 820km expansion of the existing pipelines in Brazil's northeastern region. The northeastern stretch of the pipeline was budgeted at US$416mn but construction is pending environmental licensing. Environmental protection agency Ibama awarded on March 16 a license for a 177km, US$151mn stretch linking the town of Carmópolis in the state of Sergipe to Pilar in neighboring Alagoas state with capacity to carry 15Mm3/d, Ibama said in a statement. A smaller stretch of the northeastern part of the project in the northeastern region is expected to be licensed by end-May and the 600km final stretch of the project will be licensed by March 2006, Ibama said. SOUTHEAST NTS will build a 440km pipeline in the country's southeastern region to link the town of Campinas in São Paulo state to the town of Japeri in neighboring Rio de Janeiro state. The southeastern part of the Malhas project aims to increase existing gas transport capacity between the gas-producing region in Rio de Janeiro close to the offshore Campos basin fields and the São Paulo industrial hub. The Campinas-Japeri line, budgeted at 900mn reais (US$331mn), was started in September 2004.